EU's new
Generalised System of Preferences (GSP)
(changes from 1 January 2014)
By Mr Pekka PENTTILA
(pekka.penttila@eeas.europa.eu)
Trade and Economic Section
Delegation of the European Union to Thailand
1
AGENDA:
 New EU GSP scheme
 Impact to Thailand
 Looking forward
(EU-TH FTA)
2
1. New
EU GSPTH-EU
Scheme.
3. Looking
forward:
FTA
3
EU GSP schemes

The Generalised System of Preferences (GSP) is a scheme of
generalised tariff preferences that offers preferential access to
imports (duty reduction or elimination) into the EU market from
developing countries. The rules determine which country pays
less or no duty when exporting to the EU.

Provided on unilateral basis – a development tool

3 schemes; standard, GSP+ and EBA

Sensitive (MFN- 3,5%) and non-sensitive products (zero)

Wide product coverage – only 9% of tariff lines carry normal duty
( EBA 2%)

Graduation mechanism for competitive sections
To note: 25% of tariff lines are subject to 0% duty. When added to the 66% tariff lines covered by
GSP or GSP+, this implies that only 9% of lines carry normal duty for GSP and GSP+ beneficiaries—
New EU GSP
New scheme: Basic rules published on 31 October 2012
(Reg.978/2012). New preferences applied from 1
January 2014
 Why reform? - 3 main objectives
 Focus the preferences on partners most in need:
Least Developed Countries and other poor economies
with no other preferential channels to access the EU
market. Reflection of different trade, financial and
development needs of countries.
 Enhance GSP+, to support partners that implement
international conventions on environment, labour and
human rights
 Make the system more transparent and predictable
for economic operators
Fact: more advanced economies place a lot of competitive pressure on LDC
and other poorer country competitors—which lag behind. Preferences must be
5 re-focused to help those most in need.
Focus on partners most in need
GDP per capita
(US$, 2009: World Bank)
Some EU Member States…
Bulgaria
Romania
Lithuania
6,423
7,500
11,141
Some GSP beneficiaries…
Malaysia
Brazil
Saudi
Arabia
7,030
8,230
14,799
Some beneficiaries
wealthier than EU MSs
6 Advanced
developing economies accounted for 35% of all benefits
Focus on partners most in need
New "dynamic" approach
Once the new GSP entered into force, status of countries
is revised continuously. When a country no longer fulfils
criteria to be beneficiary, the partner exits the beneficiary list
with ample transition periods to ensure economic
operators can adapt.
Two cases:
 World Bank lists the country as 'high-income' or
'upper-middle income' three years in a row. At the
beginning of the following year, the country is no
longer beneficiary of GSP and a transition period of
one year is granted for the economic operators to
adapt.
 If a preferential market access arrangement
(typically, a bilateral Free Trade Agreement) applies
(even on a provisional basis), a transition period of
two years is granted.
7
Focus on partners most in need

From 1 Jan 2014 onwards 89 beneficiaries instead of 176
divided in 3 groups:
 40 countries benefit from 'Standard' GSP
 Everything But Arms (EBA, tariff and quota-free access for
all goods except arms to 49 Least Developed Countries)
 GSP+ (enhanced preferences for countries that ratify and
implement international human and labour rights, environment
and good governance conventions) ( 13 countries so far)
 Slightly increased product coverage (19 more tariff lines)
 New scheme for 10 years – better predictability for traders
 Graduation calculated on 3-year basis and higher thresholds (
17.5% instead of 15%)– better predictability
8
2. forward:
Impact to Thailand
3. Looking
TH-EU FTA
9
Thailand-EU Trade relations

For many years, the EU is 2nd largest export market - after
ASEAN.

Thai exports in 2013: Euro 18 billion.


In 2013, EU was the fourth largest source of imports (8% of total
TH’s imports)- after Asean, Japan and China.
Major exports to the EU: electrical equipment (39%), food
products (12%), plastic (10%), jewelry (7%), textiles& garments
(5%) .

EU imports in 2013: nearly Euro 15 billion.

EU among the biggest investors in Thailand (after Japan).
10
IMPACT TO THAILAND
From 1 January 2014
 List of graduated sectors for the period from 1 January 2014 to
31 December 2016 has been adopted by the Commission on
17 December 2012.
 Thailand saw three exports sections graduated (2
new sections) and therefore out of the GSP benefits,
but at the same time will have less competition in
other exported items, where competitors countries
have lost GSP benefits in total or in part.
11
Graduated sectors (period 2014 – 2016)

Thailand

Two newly graduated sections:
S-4a: Preparations of meat and fish;
Shrimps: processed 7%
20%
Tuna: processed
24%
20.5%
S-4b: Prepared foodstuffs (excl. meat and fish), beverages, spirits and
vinegar;
Wine Vinegar: 4.4 € /hl

6.4 € /hl
Already graduated section
S-14: Pearls and precious metals is still graduated.
Imitation jewellery (of base metal): 0%
4%
 As explained, graduation comes because these sectors are already very
competitive and keeping tariffs reduced would harm fair competition.
12
Graduated sectors for 2014 – 2016
(if a country is
granted GSP+, graduation does not occur)
China: (6 newly graduated sectors): S-1a: live animals and animal products excluded
fish; S-1b: fish, crustaceans, mollusc and aquatic invertebrates; S-2b: vegetables and
fruits; S-2c: coffee, tea, maté and spices; S-2d: cereals, flour, nuts, resins and plaiting;
S-4b: prepared foodstuffs (excl. meat and fish), beverages, spirits and vinegar (27
graduated sectors in total).
India: (5 newly graduated sectors): S-5: mineral products; S-6a: inorganic and organic
chemicals; S-6b: chemicals, other than organic and inorganic chemicals; S-8a: raw
hides and skins and leather; S-17b: road vehicles, bicycles, aviation and space, boats
and parts thereof. S-11a: textiles, remains graduated.
Indonesia: (2 newly graduated sectors): S-1a: live animals and animal products
excluded fish; S-6b: chemicals, other than organic and inorganic chemicals; S-3: animal
or vegetable oils, fats and waxes remains graduated.
Ecuador: (2 newly graduated sectors): S-2a: vegetable products; S-4a: preparations of
meat and fish.
Ukraine: (1 newly graduated sector): S-17a: railway and tramway vehicles and
products.
Nigeria: (1 newly graduated sector): S-8a: raw hides and skins and leather.
Costa Rica: (1 newly graduated sector): S-2b: vegetables and fruits.
Vietnam: sectors 12a (footwear) and 12b (headgear, umbrellas etc. ) no longer
graduated
IMPACT TO THAILAND:
Country Exit
In 2015

TH is classified by the World bank as an Upper Middle Income
Country (UMIs) 3 years in a row (2010-$4,320, 2011-$4,620 and
2012-$5,210).

The Commission Decision to defer GSP privileges from TH took
place in October 2013.

A 1-year transition period will be given to the economic operators
to adjust themselves.

Therefore, TH will fully exit from the EU GSP scheme 1 Jan 2015.

This means all sections will be graduated.

TH will no longer be a "beneficiary country" (but will remain as
"eligible country").
14
Impact to exporters (by SCB)
15
Strongly affected products (high tariff gap, high utilization, reliance to
EU markets)
16
SCB estimates an important loss of
market share due trade diversion
17
IMPACT TO THAILAND:
Regional Cumulation
18
IMPACT TO THAILAND
During 2014:
 The "beneficiary" country conditions of the EU
GSP scheme still remain, and certain agricultural
foods (tuna, shrimps, fish… listed on Annex 13.b)
originated in Thailand can be used for "Regional
Cumulation" with other ASEAN Member States.
19
IMPACT TO THAILAND
After 2015:
 As a "non-beneficiary" country of the EU GSP
scheme, materials originating in Thailand cannot
be used for "Regional Cumulation" with other
ASEAN Member States.
Art. 2 of Commission Implementing Regulation 530/2013 of 10 June 2013
"Regional Cumulation between countries within the same group shall
apply… if the countries involved in the cumulation are, at the time of
exportation of the products to the Union, beneficiary countries"
20
IMPACT TO THAILAND
For example: RMs originating from TH cannot be cumulated in Myanmar
21
Find your import tariff to the EU:
http://exporthelp.europa.eu
Thank you
for your
attention!
Question &
Answers