A proposed adjustment to the framework surrounding countries utilising Generalised System of Preferences (GSP) sourcing may come to have a bearing on the stability of trading with such manufacturing partners.
Coming in well ahead of the December 31st, 2023 deadline that would mark the end (or renewal) of current arrangements, the European Parliament is now set to address a European Commission proposal that could come into law at the tail end of 2022, ahead of the deadline. Within, changes to GSP+ are most pronounced, with an easing of the conditions to be considered a “vulnerable country” under consideration.
There are now proposals that could adapt the reasons permitted to grant or withdraw GSP status, which at the present time is largely adaptable quickly only if a country is demonstrably involved in human rights or labour violations. A total of 5 treaty adaptations are proposed to be added to the 27 existing conventions.
The proposal put forward seeks to expand upon this, factoring in further specific environmental and good governance shortcomings, as well as a potential fresh stance on immigration. What’s more, the period within which changes can be made will be trimmed from six to two months where a rapid response is required to address concerns.
In summary, the proposed changes will tighten the policy, delivering a more stringent criteria to be considered a GSP+ territory and increase the possibility of faster withdrawal where conditions are breached. Protective measures will therefore be able to be implemented faster. For labels that rely on GSP Beneficiary country imports it highlights a greater need to be aware of global politics and to have some flexibility in supply should conditions change faster than previously.
GSP+ countries are relied upon to a good degree by the bicycle business, in particular sourcing has branched further afield during the pandemic, prompting many to look at a more diverse range of suppliers across the globe. A current guide to countries that fall within GSP and GSP+ can be found here, but for the bicycle industry countries of particular interest include Cambodia, India, Indonesia and Vietnam, among others.
The GSP scheme is designed to offer preferential access to EU markets for vulnerable countries whereby tariffs are removed or reduced in order to promote trade.
A deeper explanation of the background behind the EU’s proposals can be found at Lexology.com.