Commercial Information Circulars

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Ref : EIC 230/20/1/1

5 November 2012

Dear Sirs,

Commercial Information Circular No. 900/2012

European Union (EU)* : Application of Scheme of Generalised Tariff Preferences for the Period from 1 January 2014 to 31 December 2023

Further to the Commercial Information Circular No. 314/2011 of 31 May 2011, the European Parliament and the Council of the EU have published a regulation (the Regulation) to announce the application of a new scheme of generalised tariff preferences (GSP) for the period from 1 January 2014 to 31 December 2023 and to repeal the current GSP scheme with effect from 1 January 2014. Full details of the Regulation can be accessed through the following link:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:303:0001:0082:EN:PDF.

DETAILS

2.The new GSP scheme continues to have a general arrangement and two special arrangements, including a special incentive arrangement for sustainable development and good governance; and a special arrangement for the least-developed countries. Some salient features of the general arrangement under the new GSP scheme are set out below -

Beneficiary Countries and Territories

a.Beneficiary countries of the general arrangement under the new GSP scheme are listed in Annex II of the Regulation. The Mainland of China is included in the list.

Product Coverage and Tariff Preferences

b.The products included in the general arrangement under the new GSP scheme are listed in Annex V of the Regulation. They are described by their combined nomenclature (CN) codes and grouped under various "GSP sections". Tariff preferences are differentiated according to the sensitivity of products, taking into account the situation of the sectors manufacturing the same products in the Union. There are two product categories, i.e. sensitive and non-sensitive.

c.Except for agricultural components, Common Customs Tariff (CCT) duties on non-sensitive products will be suspended entirely, while CCT ad valorum duties on most sensitive products will be reduced by 3.5 percentage points from the "most favoured nation" duty rate.

d.Where preferential duty rates calculated in accordance with the current GSP scheme (i.e. the GSP scheme applicable for the period from 1 January 2009 to 31 December 2011 and extended until 31 December 2013) on the CCT ad valorem duties applicable on the date of entry into force of the Regulation provide for a tariff reduction of more than 3.5 percentage points for the sensitive products referred to in (c) above, those preferential duty rates shall apply.

e.Where the rate of an ad valorem duty for an individual import declaration is reduced in accordance with the Regulation to 1 % or less, and where the rate of a specific duty for an individual import declaration is reduced in accordance with the Regulation to EUR 2 or less per individual euro amount, the duty shall be suspended entirely.

Rules of Origin

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

Product Graduation

g.The tariff preferences under the general arrangement of the new scheme for products of a GSP section originating in a beneficiary country shall be suspended when the average value of Union imports of such products over three consecutive years from that country exceeds the thresholds, which shall be calculated as a percentage of the total value of Union imports of the same products from all GSP beneficiary countries, listed in Annex VI of the Regulation, i.e. 17.5% for most products listed in Annex V, and 14.5% in the case of textiles and clothing.

h.Prior to the application of the tariff preferences provided for in the Regulation, the European Commission shall adopt an implementing act for application as from 1 January 2014 establishing a list of GSP sections for which the tariff preferences under the general arrangement are suspended in respect of a GSP beneficiary country.

Temporary Withdrawal and Safeguard

i.The preferential arrangements provided under 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 Union industry and which 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.

j.Among other safeguards provided under the new scheme, where a product originating in a beneficiary country is imported in volumes and/or at prices which cause, or threaten to cause, serious difficulties to Union producers of like or directly competing products, normal CCT duties on that product may be reintroduced.

Effective Date

k.The Regulation shall enter into force and apply from 20 November 2012. The tariff preferences provided under the new preferential arrangements shall apply from 1 January 2014 until 31 December 2023.

BACKGROUND

3.All along, the EU has accorded tariff preferences under the GSP scheme to a range of agricultural and industrial products originating from a number of developing economies to, inter alia, 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.

4.The current GSP scheme is applied under Council Regulation (EC) No. 732/2008, as extended until 31 December 2013 by Regulation (EU) No 512/2011. For details, please refer to Commercial Information Circulars Nos. 414/2008 of 11 August 2008, 640/2009 of 21 December 2009 and 314/2011 of 31 May 2011.

ENQUIRIES

5.For enquiries concerning the contents of this circular, please contact the undersigned at telephone number 2398 5350.

Yours faithfully,

(Leo LEUNG)
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.