Fears over bid to widen GSP system

Date: 23/11/00

By Simon Coss

THE European Commission faces an uphill struggle to convince member states to widen the scope of the Union's regime for preferential trading with the world's poorest nations.

The Generalised System of Preferences (GSP) is designed to encourage growth in under-developed countries by offering them virtually duty-free access to the EU's markets.

The scheme is currently aimed at the African, Caribbean and Pacific (ACP) nations - essentially western Europe's former colonies. But in September, three Commissioners - trade supremo Pascal Lamy, agriculture chief Franz Fischler and development head Poul Nielson- came forward with a plan to extend the programme to 48 extremely poor countries in other parts of the world.

Under the proposal, the EU would grant duty-free access to 919 different products from these least developed countries (LDCs) as well as from the ACP states. The list of goods covered by the new regime includes everything from agricultural products to textiles to scrap metal. Only weapons would be excluded.

The Commission insists the GSP needs to be widened to show that the Union is serious about helping LDCs integrate into the global trading system. "There has been plenty of talk about how new market access for poor countries is critical," said Lamy recently. "But talk is cheap. It is time we put access to our markets where our mouth is."

EU foreign ministers had a first chance to examine the Commission's proposal last month. But diplomats warn that even though governments gave broad support to the planned reforms, problems could arise when member states begin examining them in detail.

Insiders say certain governments, such as France and Italy, are likely to find some of the suggestions hard to swallow.

Experts say southern member states are worried that granting LDCs duty-free access to the Union's markets could lead to a flood of fraudulent imports from the countries' other trading partners.

At last month's foreign ministers' meeting, the Commission pledged to put safeguards in place to prevent this, but diplomats say many EU governments want further assurances.

The fate of the Commission's proposals will provide a good indication of how plans for a more radical overhaul of GSPs are likely to fare. The current ten-year regime expires in 2004 and EU governments have pledged to review the scheme before the end of 2001.

Article forms part of a survey on trade.