The WTO Legality of the EU's GSP+ Arrangement

In EC—Tariff Preferences, the Appellate Body held thatthe WTO Enabling Clause permitted developed countries to grantbetter tariff treatment to some developing countries than toothers, subject to certain conditions. It held further thatthese conditions were not met by the EU's so-called ‘drugsarrangement’, a system of additional preferences (normallyduty free treatment) for certain countries which the EU haddetermined were in need of special tariff preferences, thanksto their involvement in combating the production and traffickingof narcotics. In response to this ruling, when the EU renewedits GSP programme in 2005, it replaced its drugs arrangementand two similar, though less generous, labour and environmentarrangements with a new arrangement popularly known as the ‘GSP+arrangement’. Under this arrangement, additional tariffpreferences (normally duty free treatment), were made availableto developing countries committing to ratify and implement alist of human rights and good governance conventions. Accordingto the EU, the GSP+ arrangement complies with the AppellateBody's interpretation of the Enabling Clause. This article arguesthat it does not. This is primarily because of the substantivecriteria chosen by the EU to select GSP+ beneficiaries, whichdo not meet the Appellate Body's criteria for differential tarifftreatment of developing countries. Second, it is because theEU's requirement that would-be beneficiaries must have appliedby a certain date, replicates the problem of the ‘closedlist’ of beneficiaries that was fatal to the earlier incarnationof the EU's GSP program. The article concludes with some suggestionsfor designing a GSP+ arrangement more likely to meet the AppellateBody's conditions than the EU's present arrangement.