Commercial Information Circulars

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Ref : CR EIC 230/20/1

7 July 2005

Dear Sirs,

Commercial Information Circular No. 242/2005

European Union (EU)* : New Scheme of Generalised Tariff Preferences for the Period from 1 January 2006 to 31 December 2008

Further to Commercial Information Circular No. 148/2004 of 1 June 2004, the Council of the European Union (the Council) has published a regulation to announce a new scheme of generalised tariff preferences (GSP) for the period from 1 January 2006 to 31 December 2008. A copy of the regulation is at Attachment (pdf format) for reference.

DETAILS 

1.  
2. Under the GSP scheme, the EU accords tariff preferences to a range of agricultural and industrial products originating in 178 developing economies listed in Annex I (pdf format) of the Attachment. The purpose is to encourage them to increase and diversify their exports as well as to provide them with better market access to the EU. While Hong Kong has graduated from the scheme since 1 May 1998, the mainland of China continues to be one of its beneficiaries. Over the years, a number of mainland products, such as certain chemicals, plastics items, toys, textiles and textile articles, footwear, jewellery, consumer electronics and watches and clocks have already graduated from the scheme while some others, such as clothing items, were excluded from the start. Nevertheless, the mainland still enjoys tariff preferences in respect of some agricultural, animal and mineral products.

3. Salient features of the new GSP are summarised below -

Types of Arrangements

1. The new GSP scheme consists of a general arrangement granted to all the beneficiary countries and territories and two special arrangements (viz., a special incentive arrangement for sustainable development and good governance and a special arrangement for least developed countries) taking into account the various development needs of similar-situated developing countries.

Products Removed from Tariff Preferences

2. Column C of Annex I (pdf format) of the Attachment indicates products of sections in respect of which tariff preferences will be removed for the beneficiary country concerned as from 1 January 2006. The term "section" refers to sections of the Common Customs Tariff (CCT) as adopted by Council Regulation (EEC) No 2658/87. For the purpose of this new GSP scheme, Section XI(a) comprising CCT Chapters 50-60 and Section XI(b) comprising CCT Chapters 61-63.

Product Coverage and Tariff Preferences

3. The products which are covered by the new GSP scheme are listed in Annex II (pdf format) of the Attachment and described by their combined nomenclature (CN) codes. Preferences are differentiated according to the sensitivity of products, taking into account the situation of the sectors manufacturing the same products in the Community. There are two product categories, i.e. sensitive and non-sensitive. Except for agricultural components, tariffs on non-sensitive products will be entirely suspended while those on sensitive products will be reduced by 3.5 percentage points of the most favoured nation duty rate. Tariffs for products of CN Chapters 50 to 63 (textiles and clothing) will be reduced by 20%.
4. Where tariff preferences applied for sensitive products calculated in accordance with (c) above result in a higher rate of duty than those applied under the current GSP scheme (the GSP for 1 January 2002 to 31 December 2005), the current preferential duty rates shall continue to be applied. However, this shall not apply to products of sections in respect of which those tariff preferences have been removed for the country of origin concerned.
5. Where tariff preference applied in accordance with (c) above result in ad valorum duty rates of 1% of less, or specific duty values of EUR 2 or less, such duties will be entirely suspended.

Rules of Origin

6. Tariff preferences are provided to imports of products originating in the specified beneficiary countries. The rules of origin concerning the definition of the concept of originating products, the procedures and the methods of administrative co-operation are laid down in Commission Regulation (EEC) No. 2454/93.

Product Graduation

7. The tariff preferences for particular products of a section originating in a beneficiary country shall be removed if the average value of Community imports from that country of products included in the section concerned and covered by the arrangement enjoyed by that country exceeds 15% of the value of Community imports of the same products from all countries and territories listed in Annex I (pdf format) of the Attachment over three consecutive years. The threshold for CN Chapters 50 to 63 (textiles and clothing) shall be 12.5%.

Temporary Withdrawal and Safeguard

8. The preferential arrangements provided for in the new GSP scheme may be temporarily withdrawn, in respect of all or of certain products originating in a beneficiary country, for certain specified reasons, such as serious and systematic unfair trading practices which have an adverse effect on Community industry and have not been addressed by the beneficiary country; and fraud, irregularities or systematic failure to comply or to ensure compliance with the rules of origin of products. Moreover, where a product originating in a beneficiary country is imported on terms which cause, or threaten to cause, serious difficulties to a Community producer of like or directly competing products, normal CCT duties on that product may be reintroduced at any time.

Effective Date

9. The new GSP scheme will apply from 1 January 2006 to 31 December 2008. The special incentive arrangement for sustainable development and good governance has entered into force on 1 July 2005 and will apply until 31 December 2008. The special arrangement for least developed countries will applicable from 1 January 2006 onwards.

ENQUIRIES

4. For enquiries concerning the content of this circular, please contact the undersigned at telephone number 2398 5351.

Yours faithfully,

(Ricky CHENG)

for Director-General of Trade and Industry

* The EU includes Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden and the United Kingdom.