Incentives for development: The EC’s Generalised System of Preferences, India’s WTO challenge and reform

This article will examine trade conditionality in the Generalised System of Preferences (GSP) of the European Community (EC) in the light of the recent World Trade Organisation (WTO) case brought by India against the EC, and subsequent reform by the EC of the GSP system. It will focus particularly on the special incentive arrangements available to developing countries on the basis of adherence to specified standards in areas such as labour rights and human rights protection. The article demonstrated that, despite the EC-Tariff Preferences case being only directly concerned with the Drug Arrangements of the GSP, the jurisprudential approach of the Appellate Body has given further substantive detail to the legal obligations of the Enabling Clause, and the conditions under which GSP special incentive schemes can achieve consistency with WTO rules. Certainly the new EC GSP plus scheme avoids many of the concerns raised by a sanctions-based approach.

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