Commercial Information Circulars

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Ref : CR EIC 230/20/1

11 August 2008

Dear Sirs,

Commercial Information Circular No. 414/2008

European Union (EU)* : New Scheme of Generalised Tariff Preferences for the Period from 1 January 2009 to 31 December 2011

Further to Commercial Information Circular No. 229/2007 of 8 June 2007, the Council of the European Union (the Council) has published a regulation (the Regulation) to announce a new scheme of generalised tariff preferences (GSP) for the period from 1 January 2009 to 31 December 2011. The Regulation can be accessed through the following link: 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:211:0001:0039:EN:PDF.

DETAILS

2. Under the GSP scheme, the EU accords tariff preferences to a range of agricultural and industrial products originating in 171 developing economies listed in Annex I of the Regulation. 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 of China 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 of the Regulation indicates products of sections in respect of which tariff preferences will be removed for the beneficiary country concerned as from 1 January 2009. The term "section" refers to sections of the Common Customs Tariff (CCT) as laid down by Council Regulation (EEC) No 2658/87 of 23 July 1987. For the purpose of this new GSP scheme, Section XI(a) comprises CCT Chapters 50-60 and Section XI(b) comprises 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 of the Regulation 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 2006 to 31 December 2008), 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 of the Regulation 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 2009 to 31 December 2011. The special incentive arrangement for sustainable development and good governance and the special arrangement for least developed countries will be applicable from 1 January 2009 onwards. 

ENQUIRIES

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

Yours faithfully,

(TANG Yu Him)

for Director-General of Trade and Industry

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