Local view for "http://purl.org/linkedpolitics/eu/plenary/2004-10-14-Speech-4-015"
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Mr President, the Generalised System of Preferences has now been in existence for nearly 30 years. It consists of granting preferential tariffs, or reductions in customs duties, to nearly 180 developing countries, on the basis of general principles which we revise every ten years. As it encourages European importers to source supplies from these countries, the Generalised System of Preferences is in fact an aid to development through trade.
That said, it is true that the rules in force today were drawn up several decades ago, at a time when the European Union was more defensive in its trade policy than is the case today. We must therefore adjust them in order to move away from the old system and to take into account the fact that processes today have changed. For example, in the context of globalisation and international division, as a result of which production processes have been splintered among different countries, renewed attention must be paid to the issue of whether there should be a cumulation of origin between the country from which the goods originate and certain countries from which other inputs used in the manufacture of the same goods may come. It is therefore in this spirit that we intend to put forward proposals, following the Green Paper which we published with Mr Bolkestein late last year. For example, and as just suggested by Mr Barón Crespo, research could be carried out into ways in which the system could be relaxed in order to encourage the regional integration of countries benefiting from preferences.
The reform’s third objective is to target preferences at the countries which need them most. This is clearly a politically sensitive issue, as there will be winners and losers as a result of any reform of this kind. We intend to target the system of preferences at the beneficiary countries which need it most, which in reality means the smallest developing countries, those which are landlocked and those which are the most vulnerable, and not the large countries which already occupy positions of increasing significance in international trade, such as China’s position in the international textile and clothing trade. We will of course keep the ‘Everything But Arms’ system in place for the poorest countries, as trade integration under this system is one of the characteristic features of the EU’s development policy.
As well as limiting the criteria, we will therefore also need to continue helping a certain number of countries to gain access to our market and, once they have done so, to follow this up with a system of graduation. Quite simply, and in response to Mrs Morgantini’s first comment, we wish to carry out a radical simplification of the graduation system in order to meet the requirements of the World Trade Organisation, following cases against India on the drugs regime which were heard before WTO panels and which we lost at least partially. Our response on this issue will be to target graduation at the idea of competitiveness of beneficiary products. The key criterion will be market share, and the trigger for graduation will be a given percentage of imports into the Community. From the moment when a developing country achieves a certain share of the market in the European Union, we will consider that we have done what is necessary to help it export and that, to use a metaphor, the country can now fly with its own wings. Where will the threshold lie? It is still a little early to give you any figures, as we are in the process of discussing the issue within the Commission. This will clearly have consequences for the countries concerned. That said, I can already assure you that whatever the final figure we choose, it will be the very large exporter countries which could be affected, and not the majority of our beneficiaries, of which there are a total of 180, as I just mentioned.
The last point upon which I wish to speak, Mr President, is in response to the oral questions. I understand from Mrs Morgantini’s speech that she is concerned that this House should be able to express its opinion fully on this new project. It goes without saying that we hope that this House will give its opinion, as this reform is important both from the point of view of development and from that of trade policy, and I should like to thank Mr Barón Crespo for his comments on the work of this Commission, in particular in its relations with Parliament, an aspect which will remain unchanged. It is quite simply the case that we have a number of time constraints, to which I referred very recently when I spoke before the parliamentary committee which is responsible for such issues.
Firstly, we could not begin this reform before the arrival of the new Member States last May. It is absolutely essential that we involve them in a decision which will be binding upon the Union until 2015. Secondly, it was necessary to wait for the decision on a dispute brought before the WTO, namely the proceedings instituted against us by India with regard to the drugs regime. This decision was taken in April 2004, and it was then that we were able to start in-depth work.
In addition, as this reform is to enter into force on 1 January 2006, it should be completed one year earlier if possible. Why one year earlier? In order to allow beneficiary countries and economic operators to adapt to it. This means that the first implementing regulation should be adopted during the next few months. Next week, on 20 October, I will present it to my colleagues, and it will be available to you immediately afterwards. I am aware and I understand that Parliament requires a certain amount of time; we will of course do all that we can to ensure that it has this time, and, as you know, our staff is entirely at your disposal.
To put it in simple terms, the goal is to help developing countries to export goods to us. These are developing countries and, by definition, they need more time than others to adjust to rules which can sometimes be complicated, even if the system we are putting in place will be a simplified one. My feelings are therefore that they will need at least nine to ten months, and this is the message I would like to convey to this House. I am sure that those of you who are committed to the system for development policy reasons will understand my concern on this point.
The system which was adopted ten years ago will expire in late 2005, and in 2006 a new ten-year cycle will begin. This is why I presented a Commission communication to the Council and to Parliament last July, the aim of which was to outline the general principles which will act as a basis for implementing legislation during this new period. This legislation will in turn provide a framework for Council regulations, and it will be possible to revise these regulations every three years in order to adapt them to economic realities, if experience shows that these have changed.
The European Union is the most generous partner by a long way with regard to trade preferences, and nearly EUR 53 billion of trade flows benefit from them, without mentioning the ACP regime. These figures mean that we exceed by a long way all the other countries in this field, as only USD 17 billion of trade flows benefit from preferences granted by the United States, which is the second largest donor. In addition, we are all aware that the EU’s enlargement to include ten new Member States can only increase its superiority in this area.
In response to Mrs Morgantini and Mr Barón Crespo, the results produced by the GSP have been evaluated, and we have been provided with all the figures which are currently available. The evaluation shows that, broadly speaking, the system has produced positive results, but that there is still room for improvement. Be that as it may, the system has produced positive results; for example, the latest definitive figures available show that, between 2000 and 2002, our imports under this system grew from EUR 47 billion to EUR 53 billion, which is a significant growth, especially as certain products were removed from the GSP list for technical reasons. Similarly, the GSP utilisation rate, or the ratio of trade flows which are theoretically eligible for GSP to imports which actually benefit from GSP, has regularly increased over the past few years, and currently stands at nearly 55%. These are therefore the positive aspects, which demonstrate that the system works.
In contrast, the current incentive regimes, and in particular all matters relating to the application of the social and environmental clauses, have had little success, as only two beneficiary countries, Sri Lanka and Moldova, which are not exactly giants of global trade, benefit from the social clause. We should take these experiences into account, and the objectives of the Commission’s proposed reform are therefore to make the system of preferences simpler, more generous, more targeted at the countries which need it and more objective.
Firstly, the system must be made simpler. Why? Because a simpler system will be more targeted at developing countries and at operators in these countries who need security. This is why we propose moving from a five-pillar system, which is what we have at present, to a three-pillar system. The five pillars include the general arrangements, the social clause, the environmental clause, the drugs regime and the ‘Everything But Arms’ initiative, which is in force for the least advanced countries. I propose a move from five pillars to three; general arrangements will be kept in place, and the ‘Everything But Arms’ initiative will exist for the least advanced countries. There will also be an intermediary regime called GSP Plus, which will encourage sustainable development in all its aspects, including those relating to social, environmental and good governance issues and to the fight against drugs. GSP Plus will abolish customs duties for beneficiary countries which have committed themselves to ratifying and applying the main international conventions in the field.
Which conventions would this involve? We propose choosing conventions which are, so to speak, ‘unquestioned’ in the international arena, such as the United Nations pacts on political, economic, social and cultural rights, the International Labour Organisation’s fundamental Conventions, or the United Nations Convention against Corruption. Accession to some of these conventions will be mandatory in order for countries to benefit from GSP Plus, for example the two United Nations pacts, the eight International Labour Organisation Conventions, conventions against racial discrimination or that concerning women and all conventions relating to torture, children’s rights and genocide. We will of course demand that these conventions be ratified, and indeed not merely ratified but also applied effectively – this in response to Mrs Morgantini’s second comment. We expect there to be a two-fold evaluation in this area, the first being carried out when applications are assessed, as access to GSP Plus will be refused to beneficiary countries which make no commitments in this field. The second evaluation will consist of asking the competent international organisations to carry out some kind of evaluation of the application of each convention. A country such as Belarus, for example, whatever progress it makes with ratifying these conventions, could not at present be eligible. So much for conventions.
The system will therefore be simpler, and also more generous. Why more generous? Because customs duties are frequently eroded during multilateral trade negotiations, which means that the comparative advantage for countries benefiting from the system of preferences is also eroded. We must therefore compensate for this tariff erosion if we wish to maintain the benefits gained by developing countries from the GSP, and we propose extending the coverage of the GSP to include a certain number of new products, so that this tariff erosion is compensated by a growth of the export base. We are in the process of discussing this growth within the Commission, with a new deadline next week, and this is a point to which I shall return. We will deal with issues which are difficult, delicate and sensitive, but upon which we wish to make progress, as is the case with fisheries products.
Still on the subject of a greater generosity, and in response to Mrs Morgantini’s third comment, we intend to put forward proposals to adapt the rules of origin. As has been shown in a large number of studies, the rules of origin are a necessary condition for access to trade preferences. The conditions which we impose with regard to the origin of products do not exist in order to take with the left hand what we give with the right, but in order to guarantee that preferences actually benefit the country at which we are targeting them, and not others instead. In order to achieve this, conditions regulating origin and checks of origin are required."@en1
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