EU Commission GSP consultation – Call for transparency

The European Commission is currently calling on citizens and stakeholders to provide feedback regarding its flagship trade programmes the Generalised System of Preferences (GSP).

The European Union’s GSP initiative has existed for over 40 years and aims to promote sustainable development of beneficiary countries and improving exports. Under the scheme, beneficiary countries are granted preferential market access in exchange for the commitment to implement core human, labour and environmental rights and principles. However, whilst economic benefits for countries benefitting from GSP are undeniable, there are still many questions regarding the scheme’s effectiveness, especially in terms of the promotion of sustainable development and the respect for core rights and principles.

The current regulation that governs this trade preferences program, GSP Regulation (EU) No 978/2012, entered into force on 1 January 2014 and will expire on 31 December 2023. In a midterm evaluation of the program, released in October 2018, the Commission identified some changes that could be incorporated to foster the effectiveness of the scheme. In the report’s conclusion the Commission expressed the opinion that overall the scheme has been effective and that no major modifications were required. This conclusion has not been shared by other observers of this scheme.

However the effectiveness of the GSP in terms of improving sustainable development records, and good governance, in certain beneficiary countries can seriously be called into question. It is striking to see that the issues of transparency and coherence within the monitoring process as well as beneficiaries’ failure to effectively implement aspects of the agreement have not been mentioned by the Commission. These shortcomings must be addressed if the GSP is to fulfil its primary objectives.

Under the current GSP Regulation, the Commission is responsible for assessing the compliance of beneficiaries with GSP’s criteria and the suspension or re-establishment of tariff preferences for a country are also left at the Commission’s discretion. As the sole body in charge of the whole monitoring process, the Commission must show utmost transparency and respect for the criteria laid down in the Regulation.

The call for increased transparency was made in a Resolution from the European Parliament in February 2019 when it recommended greater transparency and communication between co-legislators and stakeholders. In its opinion on the Resolution, the Committee of Foreign Affairs of the European Parliament states that it ‘regrets the fact that the scorecards used for the monitoring of GSP+ beneficiary countries remain confidential’.

But the most significant issue has been some recipient’s failure to comply with core conventions. The GSP has implemented a system that incentivises beneficiaries to adhere to and ratify fundamental human, labour and environmental rights Conventions, but the implementation of monitoring of these Conventions is sadly lacking. Adoption of core human rights instruments becomes meaningless if it is not followed by a proper implementation. This is especially worrying for countries benefitting from GSP+, which are required to comply with stricter criteria in terms of human rights and labour rights.

In that regard, the case of Pakistan is very telling. The country has been granted tariff preferences since 2014 and is now one of the biggest GSP+’ beneficiaries. Despite ratification of all 27 core Conventions required by GSP+’s criteria, a serious failure to implement some of these Conventions has been highlighted by international NGOs, human rights monitoring bodies and European institutions. Substantial numbers of human rights violations by Pakistan have been reported by international monitoring bodies, such as the UN. The monitoring and evaluation of GSP+ should therefore take into account the reports and investigations should be launched in case of allegations of non-compliance with certain GSP’s requirements, as this has been stressed by the Committee on Foreign Affairs and the Committee on Development in their respective opinion on the Parliament’s Resolution.

Furthermore concerns over Pakistan’s activities and relationships with certain terrorist organisations has grown in the international community to the point that in June 2018, Pakistan was re-entered onto the International Financial Action Task Force (FATF) grey list for State Sponsor of Terrorism, and it has yet to be convince FATF authorities that it is not complicit in State sponsored terrorism activities.

The case of Pakistan also shows that economic opportunities and ratification of core Conventions does not suffice to ensure effective implementation and respect of these Conventions, demonstrating that much more needs to be done in order for GSP to reach the objectives for which it was established.  

A recent inception impact assessment (Ref. Ares (2019)3145531) released by the Commission on the 13th of May, 2019 presented different policy options for the GSP and analysed the likely economic, social and environmental impacts. It also presented measures of the GSP’s impact on fundamental rights as well as for addressing the administrative burden for each policy option. If the European Commission intends to tack the current issues that were pointed out in its impact assessment, they need to seriously address a wide range of prominent issues. The priorities of promoting sustainable development and good governance, fostering transparency, and effectively implement of the core Conventions must be better represented in the monitoring and evaluation process.

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