Brazil and Argentina are among almost 100 countries expected to lose tariff breaks for their textile and clothing exports to the European Union (EU), under a planned reform of the EU's Generalised System of Preferences (GSP) system.

The European Commission on Tuesday (May 10) announced it wanted to focus import duty concessions on poorer countries, and that those regarded by the World Bank as high or upper middle income states would no longer qualify from January 2014.

Other countries likely to lose out would include Russia, Saudi Arabia and the United Arab Emirates. There would also be formal losses of GSP status for Mexico, South Africa, Turkey, Chile and Algeria, but these countries (and others - especially many neighbouring the EU) already have good market access through free trade and association agreements.

Major textile exporters such as Vietnam and Indonesia would probably hang on to GSP, but that status could be lost in future if their growing wealth gained them World Bank-certified upper middle income countries (with average per capita income of US$3,946 to US$12,195).

The same would apply if their clothing and textile exports surged above 12.5% of all EU GSP imports of these products. This is also why GSP preferences do not currently cover Indian and Chinese clothing and textile exports to the EU.

Explaining, the proposals - which need to be approved by the EU Council of Ministers and the European Parliament - EU trade commissioner Karel De Gucht said: "If we grant tariff preferences in this competitive environment, those countries most in need must reap the most benefits".

He also announced changes to the EU's GSP+ system which offers even better market access, underlining the need for beneficiary countries to follow international sustainable development and good governance conventions (including human rights) and to have vulnerable economies. Sri Lanka last year lost its GSP+ status over human rights concerns.

The European textile and apparel industry claims the plans to revise the GSP+ scheme could also result in easier access for imported textiles from Pakistan.

It says plans to  lift the 'Vulnerability Threshold' of GSP+ from the current 1% to 2% will have a severe impact on  EU textile and clothing firms.

“This increase was tailor-made in order to include  Pakistan among the beneficiary countries,” believes EURATEX  president Alberto Paccanelli. “If this proposal is approved , Pakistan will be allowed to export to the EU without paying any duty.”

Paccanelli continues: “Pakistan is among the top world  exporters in textile and clothing and the fourth largest EU supplier. In 2010 its exports to the EU increased by more than  20% in value and 6% in volume.

“This decision, apart from having a negative impact on EU industry, will erode  the preferences of the countries in need in favour of a stronger and already prevailing market player.
 
“Euratex recognises that overall the Commission proposal makes  an effort to concentrate the preferences in the countries that need them.

“Unfortunately in our sector  this effort was precluded for political reasons as we choose to benefit a country which does not need any  special treatment.”

Yesterday (10 May) the European Parliament backed earlier EC plans to issue temporary duty concessions to some Pakistani textiles to help the country recover from the flooding that devastated much of the country last summer – but added a safeguard clause allowing restrictions to be reintroduced if imports threaten EU producers.

The proposals would mean the reduction or removal of duties on 75 Pakistan-made products, mostly textiles, for one year, with the option to extend this by another year.