Impact of the GSP 2014 Reform

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As of 1 January 2014, more than 80 countries and territories (including 20 high or upper middle income countries) will no longer be beneficiaries of the EU Generalized Scheme of Preferences (GPS). As a result, products originating in these 20 high or upper middle income countries will no longer benefit from a preferential trade scheme upon importation into the EU. As the list of removed countries contains some major economies, products originating in these countries will be impacted by the new regime. Companies should assess the impact on their business and explore the available options to mitigate the financial impact of the new GSP rules.

GSP Regime

The EU's Generalized Scheme of Preferences (GSP) helps developing countries by making it easier to export their products to the European Union. This is achieved by granting a preferential (often zero) duty rate to products originating in these countries upon importation into the EU. The current GSP regime provides preferential access to the EU market to products originating in 176 countries and territories qualifying for GSP. However, the new GSP 2014 provisions will exclude 87 countries / territories as beneficiary of the regime.

List of countries excluded from the list

Although for 67 countries / territories an alternative preferential regime has entered into force, 20 countries (listed as high or upper middle income economies) will no longer be able to benefit from a preferential regime when exporting goods to the EU. Products originating in the following countries will no longer benefit from the GSP regime as from 1 January 2014:

  • Argentina
  • Gabon
  • Palau
  • Bahrain
  • Kazakhstan
  • Qatar
  • Belarus
  • Kuwait
  • Russia
  • Brazil
  • Libya
  • Saudi Arabia
  • Brunei
  • Macau (territory)
  • United Arab Emirates
  • Cuba
  • Malaysia
  • Uruguay
  • Darussalam
  • Oman
  • Venezuela

In addition, for two additional countries (Iran and Azerbaijan) the GSP regime will also be suspended as from 22 February 2014. For several other countries the preference status will be retained, but as from 1 January 2014 the GSP preferential rates will be suspended for certain well defined product categories. Amongst others this will be the case for:

  • Animal products, fish, textile, rubber, plastics, vegetables, fruit, wood, base metals, motor vehicles, chemicals, footwear, machinery and equipment, etc. originating in China
  • Vegetables, fruit and nuts originating in Costa Rica
  • Mineral products, textiles, motor vehicles, bicycles and chemicals originating in India
  • Animal products, animal or vegetable oils and chemicals originating in Indonesia
  • Leather products originating in Nigeria
  • Preparations of meat and fish, prepared foodstuffs, beverages and spirits originating in Thailand

What should the industry do?

We recommend to analyze your existing supply chains and to assess the financial impact (also in relation to current commercial agreements with your customers). This would include the following:

  • Determine whether products originating in the above countries are imported into the EU
  • Assess the quantity of products imported in the EU to quantify the potential impact of losing preferential GSP status
  • Identify the ultimate countries of destination and / or usage of the affected products
  • Investigate current commercial agreements with customers

Various EU and national customs regimes and procedures are available to prevent the import duties becoming due or to mitigate the financial impact of the new provisions. EY can assist your company to identify and quantify the impact on your business and determine potential ways to avoid / limit the financial impact on your business. For more details, we refer to our subject matter experts on this issue.