There are various explanations for the persistent stagnation of preferential imports
from the ASEAN countries. Although the European Commission has promised to
devote continuous effort to keep its GSP scheme effective for the developing countries,
two factors, however, threaten to reduce the value of tariff preferences for GSP
beneficiaries. First, multilateral trade negotiations will inevitably erode the preference
margins and will make it difficult to maintain proper utilization rates. Second, the
growing trend of regional trade agreements concluded by the EU and by the ASEAN
will lead to trade diversion and trade deflection (Zhou and Cuyvers, 2009) and it tends
to undermine the underpinning of the GSP. However, the EU’s GSP preferences will
remain vital for the least developed ASEAN members to expand their export growth
following a process of “GSP life cycle”, even in the long term.