The EU and the Generalised System of Preferences
The European Community provided the initiative behind the Generalised System of Preferences (GSP), the principle of which was taken on board by the other industrialised countries at the 2nd Session of the United Nations Conference on Trade and Development (UNCTAD) in 1968. The objective of GSP is to assist developing countries' poverty reduction efforts by helping them to generate revenue through international trade and granting them tariff preferences. Although it has traditionally come under Article 133 of the EC Treaty (new Article 207 TFEU) and, therefore, in theory, under the common commercial policy, the GSP is in practice a tool of development. It offers some 130 developing countries tariff reductions or in some cases duty-free access for their manufactured exports and increasingly their agricultural exports as well. Being a tariff instrument, it operates purely at the level of tariffs which is already reduced thanks to GATT. Being an autonomous instrument, its preferences are granted (not negotiated) by the European Union and are complementary to the multilateral liberalisation of trade within WTO [see section 23.4].
The reform of the GSP involves simplification of the EU system of trade preferences through a reduction in the number of arrangements for the period 2006 to 2015 [Regulation 980/2005]. The Commission set out the guidelines for the application of the scheme of generalised tariff preferences for this period [COM/2004/461]. A new Council Regulation applies the scheme in accordance with those guidelines [Regulation 978/2012, last amended by Regulation 2015/1979]. The GSP scheme consists of: a general arrangement, granted to all those beneficiary countries which are not classified by the World Bank as high-income countries and which are not sufficiently diversified in their exports; a special incentive arrangement for sustainable development and good governance based on the integral concept of sustainable development, as recognised by international conventions and instruments(GSP+); and a special arrangement for the least-developed countries (Everything But Arms (EBA) granted to countries identified by the UN as least-developed which, due to a lack of diversification and insufficient integration into the international trading system, are vulnerable while assuming the special burdens and responsibilities resulting from the ratification and effective implementation of core international conventions on human and labour rights, environmental protection and good governance.