GSP policy for the 1990s
The Generalised System of Preferences, designed 20 years ago to
promote industrialisation and development in the Third World, is due to be
reviewed this year.
A number of findings emerge from an analysis of the way it
1. Erosion of the preferential margin, in particular by the
successive reductions in customs duties negotiated under GATT, has made GSP less
attractive than it was.
2. The system changed from being an alternative to a
supplementary system to GATT when the developing countries stepped up their
involvement in the multilateral negotiations and their integration in the world
trade system became one of the aims of these negotiations.
3. GSPs usefulness as a supplementary instrument is
attenuated by the fact that the Community scheme is complicated to manage and
short on stability and transparency.
An instrument of this kind is still a necessary part of the
Communitys development policy, but it will have to be revised in the light
of developments since its inception if it is to work properly.
The idea of the proposed guidelines is to make GSP attractive
again so it can go on doing a useful job. Experience suggests that this means
simplifying it, first of all, in particular by doing away with the quantitative
restrictions hampering utilisation, and ensuring that there is a proper system
for taking the sensitivity of products and the competitive position of countries
And this means making a special effort to improve the way the
LDCs use the system, particularly the rules of origin.
Lastly, a look should be taken at the consequences of expanding
international trade to non-traditional sectors- a trend clearly reflected in the
extension of the sectors covered by the multilateral negotiations going on under
GATT and one which should also be taken into account in the general framework of
cooperation with the developing nations.
The Community should revise GSP in line with the developing
countries more active involvement in the outcome of the Uruguay Round and
their greater acceptance of multilateral discipline. The most advanced of the
developing countries also think that the countries of Eastern Europe should open
their markets to the LDCs.
A comparable degree of harmonisation of donor country policies
should also be sought to ensure a fairer spread of the costs of liberalisation.
The Commission feels, therefore, that the new scheme for the
other developing countries cannot really be finalised until the results of the
Uruguay Round are known - which means carrying over the 1990 system, on a
provisional basis, into 1991. And the improved rules of origin arrangements for
the LDCs will be put into effect in 1991 as a contribution to the Conference of
Paris scheduled for September