TRADE: EU Offers Incentives to ‘Green’ Developing Countries

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Brian Kenety

BRUSSELS, Jun 14 2001 (IPS) - The European Union is looking for ways to simplify its rules for imports from developing countries and to increase incentives for trading partners who respect international environmental and social standards.

The European Commission has proposed a regulation that would revise the Generalised Scheme of Tariff Preferences (GSP), set up in 1971 to give developing countries easier access to European Union (EU) markets. EU member states and the European Parliament must approve the proposal, which would cover the GSP’s final two years, 2002 to 2004.

The proposal seeks to simplify the GSP rules, harmonise current procedures and better target them to countries most in need, “rather than countries and sectors which are in a position to face international competition without preferential treatment”, the Commission said in a statement.

Furthermore, the proposal would double existing preferences for countries that respect international environmental and social standards – for example, preserving forests and biodiversity.

In the social sphere, beneficiaries would be required to apply all International Labour Organisation (ILO) conventions related to core labour standards, including the right to unionise.

“On the other hand, beneficiary countries committing ‘serious and systematic’ violations of those standards would run the risk of loosing their GSP status”, the Commission said.

“This regulation is designed to simplify the GSP regime, restore the level of its benefits and target them more effectively in the interests of developing countries”, EU Trade Commissioner Pascal Lamy said in an address before a plenary session of the European Parliament, which met in Strasbourg, France this week.

The Commission’s proposal would replace the current system, which divides products into three categories and offers preferential market access according to a complex system of tariff reductions.

“It is also intended to improve the effectiveness of special incentives to promote core labour and environmental standards”, said Lamy. “The scheme constitutes a further tangible example of the promotion of sustainable development, a central plank of EU trade policy”.

In the 1960s, industrialised countries created the voluntary GSP scheme under which they would grant autonomous and non-reciprocal trade preferences to all developing countries.

The EU’s GSP is implemented over a ten-year cycle: the present cycle began in 1995 and will expire in 2004. Trade preferences under the union’s GSP are available for imports from all developing countries. For some 90 developing countries and economies in transition, notably in Asia, the system provides the only preferential access to the union’s market.

The proposal would maintain duty-free access for all non-sensitive products, while all other products would be classified in one category of sensitive products, replacing the previous three categories (very sensitive, sensitive and semi-sensitive). For all other ‘sensitive’ products, exporters would benefit from a flat rate reduction of 3.5 per cent from the standard tariff rate.

Previously, the eligibility of countries and particular sectors was decided only at the entry into force of a new regulation. Under the proposal, this would be done once a year.

“However, in order to enhance predictability, eligibility of both countries and sectors will only be decided where countries meet the criteria during three consecutive years. The results of this permanent screening will be made public, so as to provide beneficiary countries with some early warning”, said the Commission.

Another measure, the special ‘drugs GSP regime’ established to help Andean and Central American countries in 1996 to replace drug- crop cultivation with alternative products, would be prolonged for a further three years, until 2004.

“This would be accompanied by a careful process of monitoring and evaluation in respect of each beneficiary’s efforts not only to combat drug production and trafficking, but also to comply with core labour and environmental standards”, said the Commission, the EU’s executive branch.