General Preferential Tariff Treatment

The Department of Finance has recently announced its intention to withdraw the benefits of the General Preferential Tariff Treatment (GPT) from the countries that will be acceding to the European Union. The planned effective date for this withdrawal is set for May 1, 2004 and the countries affected by this change are Cyprus, the Czech Republic, the Republic of Estonia, Hungary, the Republic of Latvia, the Republic of Lithuania, Malta, Poland, the Slovak Republic and the Republic of Slovenia.

The GPT was originally introduced in 1974 for a ten-year period in an effort by developed countries to assist developing countries in expanding their exports and stimulating economic growth. It has since been renewed twice and was due to expire on June 1, 2004, however, the Department of Finance recently announced that the General Preferential Tariff Treatment and the Least Developed Country Tariff Treatment will both be extended for an additional ten years. The subject EU countries will not benefit from the GPT since their accession to the European Union would constitute membership in a highly developed and integrated economic entity and as such, the purpose for granting the accession countries would no longer exist.

According to trade statistics, annual imports from the accession countries affected by the withdrawal of GPT is approximately $100 million which accounts for 11.8 per cent of annual imports from the subject countries. The balance of imports from these countries benefit from duty free entry under the Most Favoured Nation Tariff Treatment. An estimate of additional duties that will be collected as a result of GPT withdrawal is approximately $4.2 million.

Please contact PBB Global Logistics’ Trade & Regulatory Services with any questions or concerns in this matter.

Email: trsca@pbb.com
Telephone: 905-871-6500