The WTO Legality of the EU's GSP Arrangement

In EC Tariff Preferences, the Appellate Body held that the WTO Enabling Clause permitted developed countries to grant better tariff treatment to some developing countries than to others, subject to certain conditions. It held further that these conditions were not met by the EU's so-called drugs arrangement , a system of additional preferences (normally duty free treatment) for certain countries which the EU had determined were in need of special tariff preferences, thanks to their involvement in combating the production and trafficking of narcotics. In response to this ruling, when the EU renewed its GSP programme in 2005, it replaced its drugs arrangement and two similar, though less generous, labour and environment arrangements with a new arrangement popularly known as the GSP+ arrangement . Under this arrangement, additional tariff preferences (normally duty free treatment), were made available to developing countries committing to ratify and implement a list of human rights and good governance conventions. According to the EU, the GSP+ arrangement complies with the Appellate Body's interpretation of the Enabling Clause. This article argues that it does not. This is primarily because of the substantive criteria chosen by the EU to select GSP+ beneficiaries, which do not meet the Appellate Body's criteria for differential tariff treatment of developing countries. Second, it is because the EU's requirement that would-be beneficiaries must have applied by a certain date, replicates the problem of the closed list of beneficiaries that was fatal to the earlier incarnation of the EU's GSP program. The article concludes with some suggestions for designing a GSP+ arrangement more likely to meet the Appellate Body's conditions than the EU's present arrangement