5th Mar 2024

Brussels wants to halve recipients of EU trade benefits

The European Commission has published proposals to slash the number of countries benefiting from preferential EU trade concessions in half, prompting a quick reaction from certain states likely to suffer repercussions.

Announcing the plans in Strasbourg on Tuesday evening (10 May), EU trade commissioner Karel De Gucht said cutting the number of states which benefit from the EU's Generalised System of Preferences (GSP) scheme from 176 to around 80 would help target the trade support measures towards countries most in need.

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  • "This is not protectionism," insisted De Gucht (Photo: European Parliament)

Current GSP members pay reduced or zero duties on exports to the EU worth roughly €60 billion a year, equivalent to just under 4 percent of the Union's imports.

De Gucht hailed the advances made by "higher or upper-middle income countries" such as Russia, Malaysia, Saudi Arabia or Qatar in recent years, saying the world was a changed place from 1970 when the GSP was devised.

"Their income is similar or even higher than that of some EU member states. So we thought that trade preferences did not make that much sense anymore," the former deputy prime minister of Belgium told journalists.

A final list of countries to be stripped of their current privileges will only be produced immediately prior to enforcement, based on World Bank criteria from the previous three years, the commission said.

Brazil rejected the notion that the world's poorest states would benefit from the move however, with the Latin American giant among middle-income countries likely to lose out if EU member states and the European Parliament accept the proposals.

"The profile of Brazil's exports under the GSP does not match the profile of the least developed countries' (LDCs)," Brazilian ambassador to the EU Ricardo Neiva Tavares told EUobserver.

"The withdrawal of Brazil from the GSP in itself will not bring any advantage to LDCs, [instead] preserving the benefit for some other major emerging economies."

Brazilian jobs in labour-intensive sectors like footwear would suffer, while European producers and consumers could face increased costs, added Neiva Tavares.

De Gucht also presented plans to widen the EU's GDP-plus scheme, a more far-reaching system of trade concessions which the EU grants to poorer countries in return for democracy and human rights commitments.

EU nations decided to suspend Sri Lanka's GSP-plus status in February last year, following allegations of human rights abuses by government forces during Colombo's struggle with Tamil rebels.

Also on Tuesday, MEPs sitting in plenary in Strasbourg approved a separate commission proposal to grant duty-free access to 75 Pakistani export products, mainly textiles, as the country still struggles to recover from devastating flooding last year.

The euro-deputies opted to introduce a safeguard clause however, allowing restrictions to be reinstated if imports threaten EU producers.

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