COMMISSION OF THE EUROPEAN COMMUNITIES PRACTICAL GUIDE TO THE USE OF THE EUROPEAN COMMUNITIES' SCHEME OF GENERALIZED TARIFF PREFERENCES 1 March 1983 COMMISSION OF THE EUROPEAN COMMUNITIES Practical Guide to the Use of the European Communities' Scheme of Generalized Tariff Preferences 1 March 1983 This publication is also available in the following languages: FR ISBN 92-825-3525-8 ES ISBN 92-825-3526-6 Cataloguing data can be found at the end of this publication Luxembourg: Office for Official Publications of the European Communities, 1983 ISBN 92-825-3524-X Catalogue number: CB-37-83-085-EN-C Reproduction in whole or in part of the contents of this publication is authorized, provided the source is acknowledged Printed in Belgium The Practical Guide to the Use of the European Communities' Scheme of Generalized Tariff Preferences published on 1 March 1983 is available in English, French and Spanish. The various versions are updated each year and the Guide is improved and supplemented in the light of experience in order to cater more fully for the interests of the different users. The Practical Guide to the Use of the European Communities' Scheme of Generalized Tariff Preferences is available from the sales offices for official publications of the European Communities indicated on the back cover of this volume. For any other details or further information, apply to Commission of the European Communities, Directorate-General for External Relations — Service I C 3 Rue de la Loi 200 - 1049 Brussels Telephone 235 11 11 Manuscript finished 7 January 1983 CONTENTS Page Foreword 7 Explanatory notes for the rules of origin applicable to the Community's generalized system of preferences 12 The Community's generalized tariff preferences scheme for 1983 47 Beneficiaries of the Community's generalized tariff preferences scheme for 1983 353 Terminology 357 Symbols and abbreviations 359 Bibliography 361 Useful addresses 365 FOREWORD The generalized system of preferences (GSP) should be seen against initial decade. The Legal Framework Group decided in the multi• the background of an international effort, beginning with the lateral trade negotiations that the generalized preferences system launching of the First United Nations Development Decade in could be extended without this being made contingent on a further 1961, to encourage greater cooperation among the industrialized waiver. countries to promote the development of the poorest countries. The GSP idea was formally put forward by the Community and the In December 1980, the Council decided to extend the application of States associated with it (the AASM) at a GATT ministerial meet• the generalized preferences system for a further period of 10 years, ing in 1963. What it did, in fact, was to call into question, for the a period which brings it into line with the development strategy benefit of the developing countries, the rules of international trade framed by the United Nations for 1981-90. enshrined in the General Agreement. Painstaking work needed to be done on this subject at the first two UNCTAD sessions (1964 The new system applied by the Community, now enlarged by the and 1968) and by the Special Committee on Preferences from 1969 accession of Greece, remains autonomous, and this will enable it to onwards before finally culminating in October 1970 in the latter's continue to be as open as possible and ensure that it can still be 'concerted conclusions', which constitute the charter, as it were, of applied flexibly. As before, it contains differentiated arrangements autonomous, non-discriminatory generalized tariff preferences. In for agricultural, textile and industrial products; product coverage, June 1971 the GATT accorded a 10-year waiver on most-favoured• the conditions governing eligibility, the principle of duty-free ad• nation treatment, thus giving the go-ahead for the system, which mission and the system of ceilings for industrial products (including has the effect of exempting from customs charges the industrialized ECSC and textile products) have also been maintained for the first countries' imports of products originating in the developing coun• five-year period of application, at the end of which some of these tries, without reciprocity on the part of the latter. On 1 July 1971 aspects may be modified. In practice the main feature of the new the Community introduced, for a six-month period, its first GSP scheme is the extension to all industrial products of the system of scheme, which was subsequently renewed each calendar year. It was individually allocated and differentiated preferential entitlement, intended for member countries of the Group of 77 (the ' self-elec• which was introduced in 1980 but applied only to textile products tion ' process) and for Member States' or third countries' dependent covered by the Multifibre Arrangement. territories. Applications from other developing countries to join the Community's scheme were to be examined on their merits; Romania and China were included in the list of beneficiaries in 1974 and 1980 respectively. 1. Agricultural products Depending on the sensitivity of the product the preferential margin In March 1975, just over two years after its enlargement to nine can consist of a cut of varying depth in the customs duty, or even Member States, the Community was already announcing, via a total duty-free entry (there are 85 such products in 1983 with the Council resolution, that it intended to extend its scheme beyond the variable component being levied in some cases on five of them). Imports under the preferential arrangements are admitted without Also since 1980 a number of products (a total of 14 in 1982) have any restrictions as to volume. However, a safeguard clause mod• been included in the scheme solely for their benefit. The list of elled on Article XIX of the GATT enables duties to be reintro• these products has been considerably extended for 1983, as a result duced in part or in full if goods are imported under the preferential of which the least-developed countries will enjoy virtually the same arrangements in such quantities or at such prices as to cause or advantages as the ACP in respect of all agricultural products which threaten serious injury to Community producers of like or directly are not subject to levies or other such charges. This doubles the competitive products. This clause is selective, i.e. it may be applied number of products in the offer made to the least-developed coun• solely in respect of the country or countries causing the injury, tries; the detailed list is given on p. 277. ' which gives the safeguard mechanism some flexibility and prevents the other beneficiary countries from being harmed. It has never been invoked. 2. Industrial products The number of products ' in respect of which tariff preference is In accordance with Resolution 21 (II) of the second UNCTAD enjoyed by all beneficiary countries has risen from 145 in 1971 to Conference, primary industrial products are not covered by the 340 in 1983 (8 new products have been brought within the 1983 Community scheme. The fact that the Community has excluded scheme: horseradish 07.01 G III, frozen or dried okra, 07.02 ex B, these products has only a very limited impact since almost all 07.04 ex B, sweet peppers, 07.02 ex B, dates, 08.01 ex A, bilberries, industrial raw materials already enter the Community duty-free. 08.08 ex C, dried rose-hips fruit, 08.12 ex G, seasnails, 16.05 ex B). Over the years, some products have been included in the scheme For finished and semi-finished industrial products the Community because of specific undertakings given by the Community to devel• system has from the outset been based on three features: ceilings, oping countries, such as implementation of the Joint Declaration of duty-free entry and the principle that no products are excepted. Intent on the Asian Commonwealth countries, which was adopted Since the new system was put into effect in 1981, two additional in the final stage of the negotiations with the United Kingdom and features have been introduced — individualization and differentia• annexed to the Treaty of Accession. Thus products where preferen• tion of concessions — to take account of changing patterns of trade. tial imports were administered in the form of tariff quotas or ceil• Over the past few years a number of the beneficiary countries have ings were added to the agricultural scheme: cocoa butter, soluble speeded up their development and are now capable of exporting coffee, preserved pineapple other than in slices and flue-cured Vir• their products and marketing them in the Community on normal ginia tobacco in 1974, other types of preserved pineapple and other competitive terms. The granting of the tariff preference under the raw or manufactured tobaccos in 1977 (the last category is the only old GSP system's global ceilings led to an imbalance as these coun• case where there is a tariff ceiling on agricultural products). tries made greater use of the preferential arrangements. The butoir 2 mechanism was not an adequate correcting factor, as the less-com• Since 1979 the least-developed countries have enjoyed duty-free petitive countries were left only limited scope for taking advantage entry for all the products covered by the scheme, subject however, of the ceilings 2 and quotas 2 that had already been considerably to preferential volumes for raw or unmanufactured Virginia type eaten into by the most dynamic beneficiaries. In order to prevent tobaccos (for which there is a quota) and for other raw or unman• this, under the new scheme the global quotas and ceilings and the ufactured tobaccos (for which there is a ceiling). butoirs have been done away with and the principle of individual preferential amounts has been adopted (in the same way as for MFA textile products), according to the beneficiaries' relative com• 1 By 'products' is meant the different tariff entries distinguished in the GSP Regulation.