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What Is GSP

The EU's Generalized System of Preferences (GSP) provides tariff concessions for developing countries exporting goods to the EU market. There are three GSP regimes: standard GSP offers reduced tariffs on 66% of items, GSP+ offers deeper cuts for vulnerable countries that ratify international conventions, and Everything but Arms gives least developed countries full duty-free access on 99% of items except arms. Pakistan qualifies for GSP+ status due to its low exports to the EU concentrated in few sectors and its status as a low-income country, but faces challenges in effectively implementing the 27 international conventions required to maintain this special access.

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39 views

What Is GSP

The EU's Generalized System of Preferences (GSP) provides tariff concessions for developing countries exporting goods to the EU market. There are three GSP regimes: standard GSP offers reduced tariffs on 66% of items, GSP+ offers deeper cuts for vulnerable countries that ratify international conventions, and Everything but Arms gives least developed countries full duty-free access on 99% of items except arms. Pakistan qualifies for GSP+ status due to its low exports to the EU concentrated in few sectors and its status as a low-income country, but faces challenges in effectively implementing the 27 international conventions required to maintain this special access.

Uploaded by

Rizwan Javaid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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What is GSP?

o The EU’s Generalized System of Preferences (GSP) is a mechanism in which developing and least
developed countries are granted easy access to export their products to European Union.
o This is done through tariff concessions for their goods when entering the EU market.

Three separate regimes covered under GSP:

1. The standard GSP arrangement (GSP) provides for duty reductions on about 66% tariff lines.

2. The specific incentive arrangement (GSP+) offers deep tariff cuts for vulnerable countries that ratified
and implemented international conventions relating to human and labor rights, environment and good
governance.

3. Everything but Arms (EBA) arrangement offers full duty free, quota free access for all products except
arms and ammunition for 49 LDCs on 99% of all tariff lines.

Better focus on the country’s most in need:

o Previously, 177 countries were getting benefitted from GSP scheme.


o New GSP scheme focuses on 90 countries which need GSP trade preferences: the most
o 49 - least developed countries under EBA
o 41- ‘low income’ and ‘lower middle income’ countries as classified by the World Bank.
o Partners which are no longer eligible for GSP:
o 87 countries have been declared as non-eligible for GSP:
o 33 Overseas countries and territories (already have access—do not need GSP)
o 34 Partners which have been granted preferences through other tracks (e.g. bilateral
agreements, autonomous arrangements—do not need GSP)
o 20 'High income' or 'upper middle income' partners, as listed by the World Bank

GSP+ Beneficiaries:

o 9 countries, including Pakistan, Ukraine and Philippines) were granted GSP+ status in
December 2013.
o All eligible countries in the list of GSP+ must apply in written under the new rules to obtain
GSP+ status.
o Countries which meet the criteria will be entered into GSP+ as they apply.

Criteria to qualify for GSP+:

1. Ratify and effectively implement 27 specified international conventions.

2. Undertake to maintain the ratification of the conventions and accept regular monitoring and
reviewing of the implementation.

3. The country is declared vulnerable.


A vulnerable country means a country:

o which is not classified by the World Bank as a high-income country during three consecutive
years;
o whose exports to the EU are heavily concentrated in a few products.
o with a low level of exports to the EU (it represents less than 2% in value of total GSP covered
imports).
o less diversified as 75% of its exports focus on few sectors of EU.

Does Pakistan qualify for GSP+?

Vulnerability:

o Pakistan’s exports contribute at 1.6% of EU’s global GSP imports,


o 94% of Pakistan’s exports concentrate only 7 sectors of products.
o Pakistan is a Low-Income country as specified by the world Bank.
o Pakistan Qualified!

Requirements for GSP+:

o Sign
o Ratify
o Implement

Challenges for Pakistan:

o Chronic energy shortages.


o High cost of production.
o Less competitiveness in international markets.
o Almost 50% of the textile units in textile city of Faisalabad have been shut down due to cuts
in gas and electricity supply.
o Volatile prices of raw materials.
o Difficulty in achieving the required market standards,
o Higher costs of certification.
o To implement and maintain the 27 conventions set by EU.

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