Trade: Council and Parliament strike a deal to reinforce rules on trade preferences to developing countries

The Council presidency and the European Parliament’s negotiators reached a provisional agreement on the revised Generalised Scheme of Preferences (GSP) regulation that grants EU trade preferences to developing countries.

The new framework adds improvements to the current system, such as stronger links to respect for human rights and the environment, and a better monitoring and transparency of the scheme. As called for by the European Council, a new link between the trade preferences granted to beneficiary countries and their cooperation on migration and the readmission of their nationals illegally present in the EU is introduced.

Key elements of the provisional agreement

Revised GSP framework

The revised framework maintains the three main strands of support of the current scheme, Standard GSP, GSP+ and EBA, with improvements such as:

international conventions: more international conventions on human and labour rights will need to be respected in order to be a GSP beneficiary. The proposal provides for an urgency procedure for the rapid withdrawal of preferences in case of violations of the principles of these conventions
greener GSP: possible withdrawal of GSP benefits in case of serious and systematic violations of the principles of the conventions on climate change and environmental protection
poorest countries transition: countries that will stop being considered as least developed countries (LDCs) in the next decade, and therefore receiving the broadest EU’s support from GSP’s EBA arrangement, will still be able to benefit from generous tariff preferences via GSP+ support if they commit to strong sustainability standards
graduation thresholds: the share of imports in a specific sector beyond which a Standard GSP country temporary loses preferences will be lowered by 10% (from 57% currently to 47%). The objective is to focus better on preferences on less competitive products and create more opportunities for other GSP beneficiaries, in particular the LDCs
rules of origin: the revision introduces a specific process to ensure that the cumulation of rules of origin responds to the requesting country's development, financing and trade needs
transparency: the new rules improve the monitoring and implementation of GSP+ commitments, for instance, through increased transparency and participation of the relevant stakeholders

Readmission

As a part of the work to create a more fair and effective approach to migration, the co-legislators also agreed that GSP preferences may be withdrawn if a beneficiary country does not co-operate with the EU on the readmission of their own nationals.

Henceforth the Commission will monitor compliance with readmission obligations and have the possibility to act. To ensure transparency, the Commission will have to inform the Parliament and the Council when such decisions are made.

Safeguards for sensitive imports

The agreement includes provisions for reintroducing duties in case of sudden and significant rises in imports from a beneficiary country to protect Union producers.

A specific automatic safeguard mechanism for rice imports has been introduced, using a tariff rate quota (TRQ) system. Under this mechanism, in the event of an significant surge of rice imports above historical imports to the EU, these imports will be subject to MFN (most favoured nation) tariffs for a specific period to prevent serious disturbances to the EU rice market.

The co-legislators agreed that no additional automatic safeguards should be created for other agricultural products.

The agreement focuses specific safeguard measures on textiles and ethanol imports. These safeguard measures would apply to GSP and GSP+ countries but would not apply to everything but arms (EBA) countries. Furthermore, the safeguard measures would only apply if the value of these imports from the country concerned exceeded 6% of the value of total EU imports of the product concerned and 47% of the imports of all GSP beneficiaries.

The co-legislators also propose to give clear timelines for assessments by the Commission under a special surveillance mechanism and to make a reference to ‘an upsurge of imports’ as a factor to be taken into account. In addition, the special surveillance mechanism has been strengthened to allow the EU to take action when imports of agricultural products create disturbances on the EU market.

Next steps

The provisional agreement will now be endorsed by the Council and the Parliament, before being formally adopted. The legislation will apply from 1 January 2027.

Background

The EU's generalised scheme of preferences (GSP) is a trade policy that offers vulnerable developing countries and territories preferential access to the EU market through reduced or zero tariffs on their exports. The scheme has three main arrangements designed to support different stages of development:

standard GSP, granting a partial or full removal of customs duties on two-thirds of all tariff lines to low and lower-middle income countries
GSP+, offering complete duty-free access for the same two-thirds of tariff lines to vulnerable low and lower-middle-income countries, provided they ratify and effectively implement 27 international conventions related to human rights, labour rights, environmental protection and good governance
everything but arms (EBA), the most generous treatment, granting duty- and quota-free access for all products (except arms and ammunition) to the world's least developed countries (LDCs).