Almost fifty years ago the United Nations Conference on Trade and Development urged developed countries to help developing countries integrate into the global economy by creating a Generalised Scheme of Preferences (GSP). The European Union (EU) was among the first supporters to answer to this call and while 12 other countries have also set up their own GSP, the European scheme is certainly the most progressive and generous.
The European Generalised Scheme of Preferences is a trade agreement with developing countries through which the EU provides non-reciprocal trade preferences to the beneficiaries upon compliance with certain criteria. The main objective of the scheme is to “assist developing countries in their efforts to reduce poverty and promote good governance and sustainable development by helping them to generate additional revenue through international trade”, reads the recital of the GSP Regulation. Three distinct arrangements compose the scheme and although all of them are to some extent conditional on respect for human, labour and environmental rights, the GSP Plus (GSP+) arrangement is the one most focused on human rights, sustainable development and good governance.
The conditions to access the trade preferences under GSP+ were set in the revised GSP Regulation of 2012. Article 9(b) of the Regulation stipulates that a GSP beneficiary country may benefit from the special incentive arrangement if “it has ratified all the relevant conventions and the most recent available conclusions of the monitoring bodies under those conventions do not identify a serious failure to effectively implement any of these conventions”. Ratification and effective implementation of the core conventions are therefore key criteria of GSP+.
The Commission has been entrusted with the task of monitoring the compliance of the GSP criteria. Article 13 of the Regulation states: “the Commission shall keep under review the status of ratification of the relevant conventions and shall monitor their effective implementation”. “The special incentive arrangement shall be withdrawn temporarily, where in practice a country does not respect its binding undertakings”. A six months enhanced engagement period should follow the announcement of the temporary withdrawal procedure where the Commission closely monitors and cooperates with the concerned beneficiary. After the expiry of that period, depending on its findings, the Commission decides to either terminate the temporary withdrawal procedure or to actually withdraw the trade preferences.
Monitoring the ratification and effective implementation of the 27 core conventions is obviously a delicate process, but it is necessary to encourage compliance with the criteria by triggering an enhanced engagement when required. Such decision was adopted in February for Cambodia based on the findings of grave human rights violations in the country. This set a good example of the EU using its clout in trade to incentivise respect for human rights and democratic values, while continuing to engage with the relevant national authorities and civil societies involved in the monitoring process.
The case of Cambodia is unfortunately more of an exception, hiding geopolitical motives, than anything else. In reality, the conditionality attached to GSP+ is very seldom enforced. To date, benefits have only been withdrawn three times in the EU’s GSP history; from Myanmar and Belarus (withdrawal from the whole scheme), and from Sri Lanka (withdrawal from GSP+). Pakistan (in 1997), El Salvador (in 2008) and Bolivia (in 2012) have been investigated but have escaped sanctions.
The Commission deemed it unnecessary to launch further enhanced engagement or temporary withdrawal procedures despite observers, including international monitoring bodies, decrying to the grave violations of the core conventions by some GSP+’s beneficiaries. While one must recognise that GSP+ has certainly contributed to the large ratification of core conventions, this does not match with progress in implementation on the ground. The effectiveness of GSP+ to truly enhance respect for human rights has been put in doubt by academics, international organisations, as well as by the European Parliament, in its report on GSP released in February 2019.
The sporadic enforcement of GSP+’s conditionality by the Commission has been heavily criticised by EU institutions and external watchdogs, and has led some to accuse the Commission of downgrading GSP+’s criteria. While the Commission, the Trade Commission specifically, enjoys broad discretion when it comes to monitoring, that discretion is not unfettered. Provisions of the GSP Regulation, an instrument that has been adopted following the EU democratic process, must still be strictly respected.
When asked about the rationale behind the maintenance of GSP+’s benefits for certain countries despite proof systematic and serious violations of core conventions by these same countries, the Commission’s answer, provided by Trade Commissioner Cecilia Malmstrom, is somewhat striking. Indeed, in its answers to Members of the European Parliament questioning coherency in the GSP monitoring process, the Commission seems to have reinterpreted the provisions of the GSP Regulation, replacing ‘effective implementation’ by ‘meaningful progress’.
The following example illustrates well how the Commission has slowly altered the criteria set in the GSP Regulation. Both former MEP Lola Caldentey and current MEP Fluvio Martusciello recently highlighted the grave discrimination Pakistani women face on a daily basis, indicative of the government of Pakistan’s clear failure to effectively implement provisions contained in the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW). In that context, both then questioned the Commission regarding the possible launching of an enhanced engagement procedure with Pakistan’s government, as it recently did with Cambodia. While the Commission acknowledged that there were serious concerns regarding Pakistan’s implementation of CEDAW, it outlined the ‘tangible progress’ made by the country, especially regarding the adoption of certain pro-women laws. “The EU’s primary concern is to ensure that beneficiaries continue to make meaningful progress”, the Commission concluded. In other answers, the Commission has provided similar arguments, for instance stating: “The Commission’s current assessment is that the country is making sufficient progress in key areas to justify maintaining its GSP+ status”.
It therefore seems like in its monitoring process the Commission has downgrading the criteria set in Articles 9 and 13 of the GSP Regulation. While the Regulation provides that the Commission should monitor the ‘effective implementation’ of the core conventions, and in case of serious failure benefits should be withdrawn, the Commission considers ‘meaningful progress’ sufficient for maintaining preferences. This change in criteria was made without consultation with the EU Parliament, other stakeholders, or the Council, in a non-transparent way but most importantly without adoption of any legal and democratic reform in GSP Regulation. Legitimacy of GSP, of the European foreign policy, and of the EU as a whole is at stake if institutions or geopolitical factors are placed above the law.
The new European presidency should be taken as an opportunity to reaffirm the role of the EU as a leader in the promotion of human rights and democratic principles.