mid-term evaluation of the eu’s gsp...a project funded by the european union mid-term evaluation...

A Project funded by the European Union

MID-TERM EVALUATION OF THE EU’S GSP: PRESENTATION OF THE MAIN FINDINGS

Civil Society DialogueWednesday 7 November 2018

This project is financed by the European Union and executed by DEVELOPMENT Solutions. Any views expressed are those of the consultant and do not represent an official view of the European Union.

A Project funded by the European UnionA Project funded by the European Union

Content

I. Introduction• The EU’s Generalised Scheme of Preferences

• Mid-Term Evaluation of the EU’s GSP

II. Main Findings• Economic Impact

• Social and Human Rights Impact

• Environmental Impact

III. Recommendations


I. INTRODUCTION


The EU’s Generalised Scheme of Preferences

Contribute to poverty eradication by expanding exports from countries most in need

Promote sustainable development and good governance

Safeguard the EU’s financial and economic interests

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The EU’s Generalised Scheme of Preferences

• A general arrangement for low or lower-middle income countries

Standard GSP

• A special incentive arrangement for sustainable development and good governance for vulnerable countries

GSP+

• “Everything but Arms” arrangement for Least Developed Countries

EBA


Mid-Term Evaluation of the EU’s GSP

Regulation (EU) No. 978/2012 introduced reforms to the scheme that entered into force on 1 January 2014:

• Revised list of beneficiary countries

• Expanded product coverage

• Improved mechanism for graduation

• Enhanced mechanism for temporary withdrawal

• Relaxed eligibility and increased monitoring under GSP+

Further discussed in Chapter 1.2 of the Mid-Term Evaluation


Mid-Term Evaluation of the EU’s GSP

Assess whether the objectives are on track to be achieved

Assess the scheme’s effectiveness, efficiency, coherence and relevance

Formulate conclusions and recommendations


Economic analysis

1. Identification of policy changes

• Changes in beneficiary countries

• Country-sector combination of graduation or re-instatement of trade preferences

• Changes in GSP tariffs

• Changes in the Rules of Origin (RoO)


Economic analysis (II)

2. Descriptive and diagnostic analysis

• Analysis of the structure of the EU’s tariff regime

MFN, GSP and other PTAs

• Utilisation rate

Preferential imports as a percentage of GSP eligible imports

• Preference margins

Difference between GSP tariffs and MFN tariffs

• Analysis of export diversification by number of product lines traded and Herfindahl Index


Economic analysis (III)

3. Econometric modelling (Bilateral Gravity Model at Product Level)

• Assess impact of the GSP reform on exports from beneficiaries

• Assess impact on exports from countries that are no longer eligible under the scheme


Social, Human Rights & Environmental Analysis

1. General impact analysis

• Literature review

• Application of the GSP Regulation

• Ratification and implementation of UN and ILO conventions

• Stakeholder consultation


Social, Human Rights & Environmental Analysis (II)

2. Case studies on selected GSP+ and EBA beneficiaries

• In-depth analysis of social, human rights and environmental indicators

• Ratification and implementation of UN and ILO conventions by Bolivia and Pakistan

• Stakeholder consultation


Stakeholder Consultation

1. Stakeholder outreach activities

2. Interviews and meetings

3. Civil Society Dialogues


Stakeholder Consultation (II)

4. Local workshops in Bangladesh, Ethiopia, Bolivia and Pakistan


Stakeholder Consultation (III)

5. Online Public Consultation• 961 responses

• High sectoral and geographical concentration

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ITALY BELGIUM SPAIN FRANCE GERMANY

GREECE PORTUGAL ROMANIA CZECH REPUBLIC THE NETHERLANDS

THE PHILIPPINES PAKISTAN BANGLADESH


II. MAIN FINDINGS


Share of EU imports by tariff regime

YearImport value

MFN=0 MFN>0 GSP FTAs/PTAs Other

(EUR millions)

2011 1,578,724 62.5% 21.5% 5.8% 9.5% 0.7%

2012 1,631,256 63.6% 20.0% 5.8% 9.8% 0.9%

2013 1,530,711 61.9% 20.2% 6.1% 10.7% 1.1%

2014 1,534,073 60.4% 23.1% 3.9% 11.6% 1.1%

2015 1,557,035 56.6% 26.1% 3.9% 12.4% 1.1%

2016 1,546,772 56.1% 26.1% 4.1% 12.8% 0.9%

Further discussed in Chapter 2.2.1 of the Mid-Term Evaluation


Total value of EU imports under GSP

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2011 2012 2013 2014 2015 2016

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GSP+ EBA Standard GSP



Total value of EU imports by GSP beneficiaries

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2011 2012 2013 2014 2015 2016

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GSP+_8 EBA_49 Standard GSP_23



0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Textiles

Footwear, etc.

Machinery

Base metals

Plastics

Live Animals

Raw hides and skins, etc.

Prepared foodstuffs

Vegetable products

Manufactured articles

Other

After Before

Share of major EU imports under GSP



HS Section Description2011 2016 Change

EBA GSP+ GSP EBA GSP+ GSP EBA GSP+ GSP

Section I Live Animals; animal products 5.9% 5.8% 3.0% 6.6% 5.6% 2.3% 0.7 -0.2 -0.7

Section II Vegetable products 4.1% 4.1% 2.1% 4.2% 4.1% 1.6% 0.1 0.0 -0.5

Section III Animal or Vegetable fats and oils 5.6% 5.6% 2.9% 5.5% 5.5% 2.8% -0.1 -0.1 -0.1

Section IV Prepared foodstuffs 10.1% 10.1% 3.6% 10.5% 10.4% 3.0% 0.4 0.3 -0.6

Section V Mineral products 0.7% 0.7% 0.7% 2.4% 2.4% 1.8% 1.7 1.7 1.1

Section VI Products of the chem. & allied inds 4.3% 4.3% 3.8% 0.8% 0.8% 0.8% -3.5 -3.5 -3.0

Section VII Plastics and Articles thereof 4.6% 4.6% 3.9% 4.3% 4.1% 3.6% -0.3 -0.5 -0.3

Section VIII Raw hides and skins, leather, furskins 3.0% 3.0% 2.3% 4.6% 4.6% 3.9% 1.6 1.6 1.6

Section IX Wood and articles of wood 2.4% 2.4% 1.8% 3.2% 3.0% 2.1% 0.8 0.6 0.3

Section X Pulp of wood or other fibrous… 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0 0.0 0.0

Section XI Textiles 8.0% 8.0% 1.6% 8.0% 8.0% 1.6% 0.0 0.0 0.0

Section XII Footwear, headgear, umbrellas… 8.0% 8.0% 3.7% 8.2% 8.2% 3.7% 0.2 0.2 0.0

Section XIII Articles of stone, plaster, cement… 4.0% 4.0% 2.6% 4.0% 4.0% 2.6% 0.0 0.0 0.0

Section XIV Pearls, precious, semi-precious stones 0.6% 0.6% 0.6% 0.6% 0.6% 0.6% 0.0 0.0 0.0

Section XV Base metals and articles of base metal 1.8% 1.8% 1.5% 0.0% 0.0% 0.0% -1.8 -1.8 -1.5

Section XVI Machinery and mechanical appliances 2.4% 2.4% 2.1% 1.8% 1.7% 1.4% -0.6 -0.7 -0.7

Section XVII Vehicles, aircraft, vessels, transport 4.9% 4.9% 3.1% 2.3% 2.3% 2.1% -2.6 -2.6 -1.0

Section XVIII Optical, photographic... Instruments 2.5% 2.5% 2.3% 4.9% 4.9% 3.1% 2.4 2.4 0.8

Section XIX Arms and ammunition 2.2% 2.2% 2.2% 2.4% 2.4% 2.3% 0.2 0.2 0.1

Section XX Miscellaneous manufactured articles 2.6% 2.6% 2.5% 2.6% 2.6% 2.5% 0.0 0.0 0.0

Section XXI Works Of Art, collectors' Pieces... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0 0.0 0.0



Utilisation rate

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

EBA Countries

Standard GSP Countries

GSP+ Countries

After Before



Export diversification

Export diversification by number of non-zero tariff lines• Standard GSP beneficiaries continued to diversify their exports

• Diversification increased for GSP+ and EBA beneficiaries

Calculations of the Herfindahl Index confirm this• Positive impact on diversification by Standard GSP and GSP+ countries

• EBA countries have the least diversified export portfolio



Gravity modelling

• GSP beneficiaries increased trade with EU under GSP

• Tentative negative impact on countries that ceased to be eligible

• Countries with a trade agreement may have experienced a negative impact due to country-specific circumstances or as unintended effect of the GSP



Social and Human Rights impact

• GSP as facilitator for social development and adherence to labour and human rightso Requires adequate domestic policies and measures

• Improvement on a variety of social indicatorso Indirect effect

• Economic growth and export opportunities can also lead to worsened social and human rights situationo Land grabbing, e.g. Ethiopia and Cambodia

o Violation of labour rights, e.g. Bangladesh


Social and Human Rights Impact (II)

• Conditionality to comply with fundamental human rights and labour standards.

• Conditionality of GSP+ incentivises beneficiares adhere to fundamental labour and human rights conventions, e.g. Sri Lanka

• GSP+ provides incentive for Standard GSP beneficiaries to ratify and implement UN and ILO conventions, e.g. Pakistan

Further discussed in Chapter 3 of the Mid-Term Evaluation


Environmental impact

• No strong evidence that increased trade and economic growth contributed to environmental protectiono LDCs and developing countries prioritise growth and poverty reduction

• Limited impact on sustainable developmento Export expansion supports economic growth and production

• Negative impact of textile and clothing production, e.g. Pakistan, Bangladesh

• Some evidence that exporters improve environmental performance of their production processeso E.g. textile factories in Bangladesh


Environmental impact (II)

• Sustainable development increasingly important in policy dialogue in beneficiary countries

• Conditionality of GSP+ incentivises beneficiaries to implement UN conventionso Influenced by the beneficiary’s reliance on EU market

• No legal conditionality for Standard GSP and EBA to adhere to environmental standards and comply with international conventions

Further discussed in Chapter 4 of the Mid-Term Evaluation


Assessing Relevance, Effectiveness & Efficiency

• Relevance: Trade impact remains positive and vital for countries most in need

• Effectiveness: Focus on countries most in need; improved monitoring of UN and ILO conventions for GSP+ beneficiaries

• Efficiency: Utilisation rates and preference margins remained largely unchanged. Reliance and strategic partnership with monitoring bodies in the implementation of the Regulation

• Limited reduction of regulatory burden due extended and intensified EU monitoring



III. RECOMMENDATIONS


Recommendations on implementation

• Greater transparency on GSP+ monitoring and dialogues

• Promotion of information exchanges and stakeholder sensitization programmes

• More effective application of safeguard provisions

• More effective application of temporary withdrawal mechanism



Recommendations after expiry of scheme

• Update the list of conventions on core human and labour rights and environmental protection

• Harmonisation of Standard GSP and GSP+ arrangements

• Consider to include selected trade in services

• Ensure coherence between GSP and FTA/PTA regimes



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GSP Evaluation

mid-term evaluation of the eu’s gsp...a project funded by the european union mid-term evaluation...

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