Within the scope of the Generalized System of Preferences, the EU enables economically weaker third countries facilitated access to the European Single Market. In exchange, these countries are expected to promote human rights, sustainability and good governance. However, criticism has time and again levelled at this instrument and its implementation.
The EU’s Generalized System of Preferences (GSP) is a unilateral trading instrument, which was implemented in 1971. The three different schemata of the GPS are basically open to all countries, whose gross national income – according to the World Bank – is below the “upper- middle income” (between 4,045 and 12,535 USD per capita) and enable the reduction or complete elimination of EU customs duties on imports of certain goods. The condition for preferential tariffs is the signing of 15 “core conventions of the United Nations and the International Labour Organisation (ILO) on human rights and labour rights.“
The most comprehensive form of customs facilitation is granted within the scope of the GSP+. This is awarded to particularly vulnerable developing countries, provided they fulfil far-reaching requirements with regard to sustainable development and environmental minimum standards.
Precarious situation for workers
However, as one can see from the Global Rights Index of the International Trade Unions Confederation (ITUC), the labour and human rights situation is extremely critical in many of the beneficiary countries. Hence, due to the “breakdown of the rule of law”, labour rights in no fewer than six of the countries – among them Syria, Somalia and Sudan – are not guaranteed at all. And even though most of the beneficiary countries have ratified all eight Core Labour Standards of the International Labour Organisation, they still experience violations of the stipulated standards.
In contrast to the sustainability chapters in the EU’s trade agreements, the GSP, as a unilateral instrument, does offer the option to impose sanctions. Hence, the EU Commission decided in February 2020, to rescind part of the exemptions of duty for Cambodia. The autocratic regime had previously taken increasingly vehement action against opposition politicians and trade unionists and had shown no willingness to cooperate with the EU. However, the withdrawal of tariff preferences also affects simple workers, in the case of Cambodia predominantly women working in the textile industry. “If you withdraw (customs) preferences, you go out to with the lawnmower on all producers and thus also meet the simple seamstresses and workers”, said SPD MEP and chairman of the trade committee, Bernd Lange. Though, in the case of Cambodia the EU had to send a clear signal. However, critics put part of the blame for the violation of human rights in the country on the hesitant attitude of the EU. The customs concessions for Cambodia had contributed to the fact that many investors from the Asian area were settling there, monopolizing the country and cultivating products for export to the EU in order to benefit as freeloaders from the guaranteed customs concessions. This had regularly resulted in the local population being expelled, expropriated forcibly or resettled without the EU taking appropriate action.
Demand for more participation, transparency and consequence
Due to the expiry of the current GSP regulation on 31 December 2023, the EU initiated a consultation process in May 2019, on the basis of which, it will decide on the instrument’s future. At the time of the mid-term review of the regulation in 2019, the GSP platform, a coalition of trade unions and civil society organisations, of which the European Trade Union Confederation (ETUC) is also part of, had already urged for the consequent, dynamic and comprehensive application of the instrument. In this context, the EU Commission was called upon to reconcile the regulation with the targets of the EU treaties and to align them more strongly with human rights and labour right provisions. The EU Parliament also marked the occasion by adopting a Resolution, in which it argues in favour of more transparency, better integration of the civil society and simpler rules of origin for vulnerable countries.
Lots of room for improvement
The self-proclaimed goal of the EU to promote sustainable development in the countries of the Global South within the scope of its trade policy, is to be welcomed in principle. Nevertheless, in practice the GSP still shows many weaknesses. Hence, the Südwind Institute criticises the inability of the instrument to balance the asymmetric trade relations between the African, Caribbean and Pacific (ACP) states on the one hand and the EU on the other as well as the still precarious situation for trade unions in some of the beneficiary countries – for example in Indonesia. It is vital to introduce more transparency and better integration of civil society, trade unions and human rights activists in order to prevent the GSP from having no or even a negative effect on the beneficiary countries and their population. Apart from the option to impose sanctions in case of non-compliance with agreements, one should also promote building up capacities for local actors such as trade unions and labour and environmental inspectorates respectively.
Apart from that, customs facilitation alone will not be sufficient to guarantee sustainable development in these countries. It is rather a question of also making European corporations discharge their duties to stop human rights violations they are responsible for and the destruction of the environment along their supply chains. In this context, the draft for a EU Supply Chain Act , which has been announced for early 2021, has to be welcomed, even if it means to wait and see how ambitious it will be in the end.