26 August 2005 – Foreign Affairs Assistant Secretary for European Affairs Jaime J. Yambao announced that the European Commission (EC) will implement a new and simplified European Union Generalized System of Preferences (EU GSP) from January 2006 to December 2008 that will give developing countries – including the Philippines – preferential access to the EU market.

Assistant Secretary Yambao explained that the EU's GSP is a system of tariff preferences granted unilaterally by the EU for products originating from developing countries such as the Philippines.

The system aims to promote industrialization, regional integration and sustainable development in beneficiary countries by helping them generate revenue through international trade.  Thus, preferential access to the EU market is provided to developing countries through the EU GSP, which is the most generous of all developed-country GSP systems.

Assistant Secretary Yambao said that under the previous EU GSP (between 1999 to 2003), the share of developing countries in total EU imports grew from 33% to 40%.  In particular, the Philippines ranked 16th in 2003 as a GSP-user based on EU preferential imports.

Total Philippine exports to the EU were about 6.4 billion €, of which 1.2 billion € were GSP-eligible, and 584 million € actually exported under the GSP, giving a utilization rate of 47%.

Assistant Secretary Yambao further said that the new regulation simplifies the EU GSP to three general schemes:

1) A “General Scheme” for the 178 GSP beneficiary-countries, meaning a reduction of 3.5 percentage points over the normal customs duty for sensitive products,  reduction of duties to zero for non-sensitive products, MFN minus 20% for textile/clothing;

2) An “Everything but Arms” scheme for least-developed countries, meaning duty-free and quota-free access for all products except weapons; and

3) A new “GSP Plus” incentive scheme for vulnerable countries that meet their clear, transparent and non-discriminatory criteria related to sustainable development and good governance, meaning duty-free access for around 7,200 products.

However, the Philippines was not provisionally granted the "GSP Plus" incentive as it does not fulfill some of the conditions laid down in the Regulation.

Assistant Secretary Yambao stated that the new "GSP Plus" incentive scheme is targeted at vulnerable countries which have ratified and effectively implemented 27 key international conventions on human and labor rights, good governance including the fights against drug production and trafficking, and sustainable development.  The "GSP Plus" scheme will apply on a provisional basis from 01 July 2005 until 31 December 2005.

The Assistant Secretary added that a new "graduation" scheme will be applied every three years to enhance stability and predictability for traders and investors, except for the textiles and clothing sector.  This sector will be reviewed annually to properly reflect the possibility of sharp increases in EU textile and clothing imports.

No Philippine sector is expected to "graduate" under the new scheme until 2008, Assistant Secretary Yambao said.  Moreover, the EU is in the process of reforming the Rules of Origin that govern the GSP eligibility to simplify and, where appropriate, relax some rules for wider market access for developing countries.  END