Forget EPAs With Europe, Go for GSP-Plus, Activists Say
The East African, Nairobi
Forget EPAs With Europe, Go for GSP-Plus, Activists Say
2 November 2008
By Philip Ngunjiri, Nairobi
Developing countries negotiating with the European Union for an economic partnership agreement (EPA) or a free trade agreement should apply for "GSP-Plus" status with the EU, Kenya Civil Society activists say.
The Generalised System of Preferences (GSP-Plus) status provides non-reciprocal preferences to a large part of the exports of developing country compared with the non-reciprocal nature of the EPAs.
"Moreover, the GSP-Plus status does not require the developing country to sign on to commitments in other areas such as services, intellectual property, investment, competition policy and government procurement. The EU requires that their EPAs contain these issues," said a group of civil society organisations in a press statement.
There is a deadline of October 31 for countries to apply in this round for GSP-Plus status. If this deadline is missed, the next opportunity will come in April 2010.
The statement was signed by ACORD, Kenya Human Rights Commission, Kenya Small Scale Farmers Forum, Resource Oriented Development Initiatives, Econews Africa and Oxfam International, among others.
With the deadline fast approaching, it seems surprising that few developing countries are aware of this attractive, non-reciprocal alternative to free trade agreements for market access to the European Union.
Approximately 120 developing countries are currently negotiating regional trade agreements or economic partnership agreements with the regional bloc.
It appears that the EU is requiring African countries in EPA negotiations to eliminate tariffs on about 80 per cent of EU products by import value, according to a recent report co-published by the Overseas Development Institute of the UK.
Leaders in many African countries have expressed serious concerns about the adverse effects that such drastic liberalisation will have on their economies. These concerns include the loss of tax revenue and a surge of imports that could cause dislocation among domestic farms and industries.
Officials of ACP countries are, however, also worried that by not signing on to EPAs with the EU, they could lose the preferences they enjoyed under the Cotonou Agreement. The World Trade Organisation waiver for EU preferences to ACP countries expired at the end of last year.
Pressure is now being put on African, Caribbean and Pacific countries to sign EPAs, with some having initialled an interim goods-only EPA. Some Caribbean countries have recently signed on to a version of the full EPA with the EU.
Several development groups and independent experts have noted that an interesting and viable alternative to these FTAs for many developing countries is to instead enjoy non-reciprocal market access into the EU via its Generalised System of Preferences (GSP).
The GSP is a unilateral WTO-compatible trade arrangement where the EU provides non-reciprocal preferential access to its market to 176 developing countries and territories in the form of reduced tariffs for their goods when entering the EU. It is implemented by a Council Regulation applicable for a period of three years at a time.
The EU’s GSP covers three separate preference regimes: The standard GSP, which provides preferences to 176 developing countries and territories on over 6,300 tariff lines; the special incentive arrangement for Sustainable Development and Good Governance, known as GSP-Plus, which offers additional tariff reductions to support vulnerable developing countries in their ratification and implementation of relevant international conventions in these fields; and the Everything But Arms arrangement, which provides duty-free, Quota-Free access for the 50 least-developed countries.
A report by Oxfam International and Third World Network Africa notes that the standard-GSP would not be satisfactory for African countries compared with their current preferential access under the Cotonou Agreement.
The report, "A Matter of Political Will," also points out that GSP-Plus would provide access to EU markets "at levels very similar to access under the Cotonou Agreement, in ways that are compatible with World Trade Organisation rules."
According to the EU, 15 countries currently benefit from GSP-Plus.
GSP-Plus would primarily be of interest to non-LDCs because according to the EU, the EBA preferential access to the EU market available to LDCs is more far-reaching than that available under the GSP-Plus.
The report finds that "In 88 per cent of the cases where the standard-GSP applies higher tariffs than Cotonou, duty-free access is provided under the GSP-Plus . Indeed, every single ACP export that would face a tariff jump of 20 per cent or more in its ad valorem duty under the standard-GSP would receive duty-free treatment under GSP-Plus.
In the majority of cases where GSP-Plus is not duty free, it offers the same level of access as Cotonou."
For example, excluding bananas and sugar, for the countries studied, the Report finds that GSP-Plus would provide exactly the same level of duty-free access as the Cotonou Agreement for Papua New Guinea, Zimbabwe, Mauritius and Cote d’Ivoire.
In particular, according to the report, GSP-Plus "would provide ACP countries with tariff-free access into the EU for all major export sectors, including horticulture, wood, and fish."
It also looks in more detail at the sectors which would face non-zero tariffs under GSP-Plus for a number of African countries and Papua New Guinea.
On comparative rules of origin, the report notes that the EU’s standard GSP, GSP-Plus and EBA do all have stricter rules of origin than the Cotonou Agreement. After looking in more detail at rules of origin issues such as cumulation, minimum tolerance and fish exports, it suggests some solutions.
The report outlines the procedure for applying for GSP-Plus and highlights its finding that a number of the countries studied have already met almost all the criteria for GSP-Plus.
According to the EU, the main qualifying criteria are that any GSP-Plus beneficiary country must be considered "vulnerable" and must also have ratified and effectively implemented 27 specified international conventions in the fields of human rights, core labour standards, sustainable development and good governance.
The EU’s Regulation defines a vulnerable country as one: (a) which is not classified by the World Bank as a high-income country during three consecutive years, and (b) of which the five largest sections of its GSP-covered imports into the Community represent more than 75 per cent in value of its total GSP-covered imports, and ( c) of which the GSP-covered imports into the Community represent less than 1 per cent in value of the total GSP-covered imports into the Community.
