This report provides a technical analysis of the costs that would be incurred by African, Caribbean and Pacific (ACP) states if their exports to the EU were subject to the tariffs applicable under the Generalised System of Preferences (GSP) rather than those that apply at the present time. The report does not imply that this will happen, that it should happen, or that the GSP is the only alternative to the status quo for those countries that do not join Economic Partnership Agreements (EPAs).
On the contrary, the report concludes that application of the Standard GSP regime does not fulfil the commitment made by the EU in Article 37 (6) of the Cotonou Agreement. It would result in the EU taxing ACP exports, generating revenue that compares unfavourably with aspects of Union-level aid, and is likely to result in the complete cessation of some ACP exports to the EU with significant adverse economic effects.
Another conclusion is that application of the Standard GSP would not put the ACP on a level playing field with other suppliers to the EU. In many cases competitors receive more favourable, non-reciprocal access than would the non-LDC ACP. The ACP would be disadvantaged compared to some other developing countries, increasing the likelihood that exports will slump.
The most plausible way to satisfy Cotonou Article 37 (6) – including the requirement for WTO conformity – is to apply the GSP+ to the ACP from the end of 2007, following the precedent established for the Andean and Central American states, and to make special provisions for the handful of products not covered (which could include extending the GSP+ regime in some cases). This would provide a breathing space – which some ACP states may use to complete EPA negotiations.