New Delhi, Jan 17 (KNN) The thresholds for graduation under Generalized System of Preferences (GSP), a unilateral tariff preference scheme on goods provided by developed countries to beneficiary developing countries (BDCs), has been revised, according to the EU GSP concept note.

GSP preferences could include both zero duty and concessional custom duty access to imported goods originating in the beneficiary developing countries.

The thresholds for graduation prior to 2015 for any GSP beneficiary were that the average imports over three consecutive years from them exceeds 17.5% of total EU GSP imports.

However, for textile and apparel, the threshold was 14.5% of total EU GSP imports.  Subsequently, the EU took out a regulation 1978/2015 dated 28 August, 2015 wherein these thresholds were revised. This was on account of some countries like China, Ecuador, Maldives and Thailand being removed from the list of beneficiaries under the EU GSP which led to the total base of GSP imports into EU decreasing significantly.

The revised thresholds for graduation as per Regulation 1978/2015 and effective from 1.1.2015 is 57% general; 17.5% for plants (HS6),  animal/vegetable fat & oils (HS15) and minerals (HS 25); 47.2% for textiles and clothing

This would mean that any beneficiary country would be graduated out of a product category when this threshold is breached.  India has been graduated out of many product categories based on its exports going beyond these thresholds.

The major countries who grant GSP preferences to developing countries are Australia, Belarus, Canada, European Union (EU), Japan, Kazakhstan, New Zealand, Norway, Russia, Switzerland, Turkey and the United States (US). However, the GSPs granted by the EU and the US are the most comprehensive in terms of quantum of exports from developing countries.  Many of the developed countries also provide additional tariff preferences to a specified class of developing countries with most providing the largest coverage of preferential or zero duty access to exports from Least Developed Countries (LDCs).

The GSP principle was conceptualized by the United Nations Conference on Trade and Development (UNCTAD) and adopted during the UNCTAD II Conference in New Delhi in 1968.

The objective of the GSP as enunciated in Resolution 21 (ii) adopted at the UNCTAD II Conference are to increase BDCs export earnings;promote BDCs industrialization; and  accelerate BDCs rates of economic growth. (KNN Bureau)