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EU: Reports Show Need to Fix GSP Trade Regulation

Despite Rights Conditionality, Abusive Governments Benefit from EU Trade Scheme

Police confront garment industry workers on the streets as they protest for a wage increase, Mirpur, Dhaka, Bangladesh, November 12, 2023. © 2023 Kazi Salahuddin Razu/NurPhoto via AP Photo

(Brussels) – The European Commission’s assessment reports on the EU’s Generalised Scheme of Preferences (GSP) expose serious abuses by many beneficiary governments, Human Rights Watch said today.

The scheme grants developing countries tariff-free access to the EU market, conditioned on their respect for certain human and labor rights obligations. But the reports, published on November 21, 2023, raise questions about how the European Commission handles the GSP’s human rights conditionality and highlight the need for reform to make the scheme more transparent and effective.

“The EU GSP reports show that some countries seem to be on notice that their trade benefits depend on their human rights record, while others fear no consequence for their abuses,” said Claudio Francavilla, senior EU advocate at Human Rights Watch. “Without clear, public benchmarks for compliance, the GSP rights conditions have little credibility, and a reform is patently needed.”

The GSP program includes three arrangements. GSP+ benefits are conditioned on a country ratifying and abiding by 27 international conventions, including core human and labor rights treaties. Standard GSP and Everything but Arms beneficiaries have no such obligation, but their benefits can be suspended in cases of “serious and systematic violations of the principles” in core labor and human rights treaties.

Despite serious human and labor rights violations, countries like Kyrgyzstan, Uzbekistan, Pakistan, the Philippines, and Sri Lanka continue to benefit from the GSP+ system. Bangladesh, Cambodia, and Myanmar also continue to benefit from the less stringent EBA arrangement, but are under “enhanced engagement” for their serious shortcomings.

Cambodia is the only current GSP beneficiary that has been stripped of part of its trade benefits. The decision followed the refusal by the government to backtrack on its political crackdown and on labor and land rights abuses, after years of “enhanced engagement” with the EU.

Sri Lanka lost its GSP+ benefits in 2010, but they were reinstated in 2017 amid promises of human rights reform that have yet to materialize. However, the EU has repeatedly and publicly raised specific concerns on both individual cases and ongoing legislative processes, such as the need to reform Sri Lanka’s notorious and abusive Prevention of Terrorism Act, and has made it clear that concrete progress is expected for Sri Lanka to retain its GSP+ status.

The EU has been more reluctant to insist on Kyrgyzstan, Uzbekistan, and Pakistan abiding by GSP+ obligations to encourage human rights progress and reforms.

Over the last two years alone, Kyrgyz authorities initiated a series of measures to crack down on independent media, civil society, and the political opposition. These include a law against foreign-funded groups, a Russian-style anti-LGBT law, and a blanket ban on protests in the capital, Bishkek.

Uzbekistan was granted GSP+ in 2021 after promises by the government to strengthen civil society and human rights. Two years on, the country no longer appears to be pursuing that agenda, with a sharp increase in spurious criminal and civil cases against bloggers and journalists, and a violent crackdown on peaceful protests in an autonomous region of the country.

Pakistan is by far the main GSP+ beneficiary, but the government has yet to consider reforming the highly abusive Blasphemy Law and Prevention of Cybercrimes Act, and political repression has intensified in the country over the past months.

Remarkably, the Philippines retained GSP+ benefits even at the peak of the murderous “war on drugs,” which may amount to crimes against humanity and continues with near total impunity. Instead of threatening the suspension of the Philippines’ GSP+ benefits, the EU supported a short-lived and long-overdue UN investigation, and froze negotiations for a bilateral free trade agreement.

The European Parliament and the EU Special Representative for Human Rights urged the Philippines to halt abuses and impunity in compliance with its GSP+ obligations. But in a July trip to Manila, EU Commission President Ursula von der Leyen partly frustrated those efforts, announcing the reopening of trade negotiations, and dispensing exaggerated praise on the Philippines’ new government for its limited human rights progress.

The EU’s engagement with Bangladesh has contributed to the public adoption of a series of reform commitments by the government, especially on labor rights. The EU has kept a critical approach, albeit focusing too narrowly on labor rights, while the authorities commit grave abuses including enforced disappearances, torture, and extrajudicial killings.

While progress has remained slow and egregious abuses persist, EU and European Parliament pressure has contributed to the release on bail of leading human rights defenders. However, Bangladesh’s intensifying repression ahead of the January 2024 elections further puts into question its eligibility for the EBA benefits.

Myanmar also retains its EBA benefits despite the military junta’s atrocities, although the EU deserves praise for using other approaches, including leadership, to set up a UN mechanism to advance accountability and the adoption of targeted sanctions against the junta.

These and other examples expose the extent of the EU Commission’s flexibility under the current GSP regulation. The Commission can determine whether serious human and labor rights abuses occurred, whether those abuses qualify as grave breaches of the GSP obligations, and whether to suspend the benefits accordingly. Nongovernmental groups and practitioners have long criticized these aspects of the regulation, calling for greater transparency in the monitoring process and predictability on the possible suspension of benefits.

A legislative reform of the GSP under consideration would introduce several improvements. Those include enhanced cooperation with local and international civil society groups in the monitoring process, and a requirement for all GSP+ beneficiaries to produce a public “plan of action” laying out concrete and timebound commitments for the implementation of their human and labor rights obligations.

But the reform has long been stalled in the negotiations between the European Parliament and the Council, which represents the EU governments. The Council wants to introduce a rule that would allow suspending a country’s GSP benefits if it refuses to cooperate on readmissions and the return of its nationals deemed to be in the EU illegally. The European Parliament rightly opposes those efforts, which stem from the EU governments’ reckless determination to curb migration at any cost.

Aside from being likely incompatible with World Trade Organisation rules, the Council’s position overlooks that, by promoting rights reforms, economic growth, and environmental protection, a well-functioning GSP system could contribute to addressing some of the root causes of forced migration. EU governments also seem to neglect that, for a large number of GSP beneficiary countries – especially EBA beneficiaries – the volume of GSP-related exports represents only a tiny fraction of their total exports to the EU. That implies that the EU has only limited leverage with some countries on migration.  

With the current GSP regulation set to expire on December 31, Parliament and Council agreed to extend it as is for another four years as an interim measure, while negotiations for a reform continue. But an agreement is unlikely unless EU member states reconsider their position, halt their efforts to condition GSP benefits on migration cooperation, or at the very least open up to a compromise to significantly limit the ill-conceived migration conditionality.

“The EU Council and Commission should realize that the idea of turning the GSP into a tool to blackmail developing countries for migration purposes is as despicable as it is foolish,” Francavilla said. “EU governments should see beyond their migration obsession and focus on a reform to make the GSP scheme more effective in promoting human and labor rights progress.”

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