The Hindu Business Line : EU regulation on trade preference likely in Oct

The EU adopted a communication in July setting principles that will guide the EU system of trade preference for developing countries for the next 10 years.

The communication is said to have been discussed with the member-states, the Parliament and the Economic and Social Committee of the EU, according to the Federation of Indian Export Organisation (FIEO).

The GSP is a key instrument to help developing countries reduce poverty by generating revenue through international trade.

The proposed guidelines for the GSP for 2006 - 2015 are: target the GSP on the countries that most need it - the Least Developed Countries and vulnerable developing countries such as small economies, land-locked, small islands and low income countries.

The commission proposes to reduce the five GSP arrangements to three: a general arrangement, duty-free and quota- free access to the EU market to the world's 50 poorest countries, and a new GSP plus tariff preference to countries with special development needs.

Also there will befocus graduation i.e., withdrawal of GSP on the most competitive products from those beneficiaries that are highly competitive in the community market and no longer need the GSP to boost their exports to the EU.

Small beneficiaries will not face graduation, and special consideration will be given to countries most in need.

Graduation is a sign that the GSP has successfully performed its function.

A new incentive to encourage sustainable development and good governance is proposed.

This will replace the former drugs, social and environment schemes with a new category - the GSP plus providing incentives for countries that accept the main international conventions on social rights, environmental protection and governance, including the fight against drugs production and trafficking besides adapting the rules of origin to enhance regional co-operation, the commission said.

The United Nations Conference on Trade and Development in 1968 recommended the creation of a `Generalised System of Tariff Preferences' under which industrialised countries were to grant trade preferences to all developing countries.

This authorised developed countries to establish individual GSP schemes.