Generalised System of Preferences

This article covers the concept of Generalised Systems of Preference (GSP) which is intended to provide least developed countries (LDCs) with the opportunity to export goods to other countries on preferential trade terms. These terms mean various goods such as textiles and clothing enter developed markets such as the European Union at reduced or zero rates of import duty.

At the end of the Brexit transition period the UK will have to set its own rules around GSP, as a result of the UK being independent of the European Union. This is one of many trade policy rules that the UK has to set as an independent trading nation.

The UK Approach to GSP During the Transition Period

On the 1st May 2020, the UK has updated its position on GSP both during and post the transition period. This is an important announcement as it impacts all UK importers who import from what are termed ‘GSP countries’, in turn this influences current and future supply chains.

During the transition period the UK will continue to apply the EU Generalised System of Preferences which are based on three types of preference status.

GSPReferred to as Standard GSP’, a partial or full removal of customs duties on two third of tariff lines.
GSP+A special incentive arrangement for sustainable development and good governance. It removes tariffs to 0% for countries that implement 27 international conventions related to human rights, labour rights, protection of the environment and good governance.
Everything But ArmsThe special arrangement for the least developed countries, providing the countries with duty-free, quota-free access for all products except arms and ammunition.

The UK Approach to GSP Post the Transition Period

The announcement from the UK indicates that from 1st January 2021 the UK’s GSP will continue to provide trade preferences to the same countries as the EU’s GSP. There will be 3 frameworks which will be titled as:

  • Least Developed Countries Framework (LDCF)
  • General Framework
  • Enhanced Framework

These frameworks will replicate the same market access as the EU’s GSP. For information, please see attached the full list of GSP beneficiary countries for the current three schemes.

Summary and Conclusion

Whilst some businesses will consider this as ‘business as usual we should not underestimate the importance of this announcement’ for many UK importers this will mean that they can continue supply chains in the same manner as at present and help to support the least developed nations.

As with all things customs and trade however UK businesses must ensure they are both transparent and that they correctly submit and process import entries utilising the Registered Exporter System (REX).

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