As a major trading power, the EU is the largest trading partner for the developing
countries. In 2008 the total volume of EU’s GSP preferential imports, amounting to
e68.6 billion, was larger than the volume of imports under the US, Canadian and
Japanese GSP systems combined. It is generally accepted that the EU’s GSP is by far the
most generous system currently applied for the developing world (UNCTAD, 1999).
The Association of Southeast Asian Nations (ASEAN) had preferential access from the
beginning in 1971 of the EU’s GSP and was its main beneficiary. These trade preferences
enabledASEAN’s agricultural, industrial and textile products to enter into the European
market at lower tariffs. Despite these special provisions in the EU’s GSP, critics have
noted that such GSP schemes are either cosmetic, poorly enforced or less effective on
promoting export growth in the developing countries[3].
Although there are many studies on issues of EU trade preferences, little has been
written on whether the EU’s GSP really works and to what extend the EU’s GSP enhances
the export growth of the developing countries. This article attempts to fill this gap by
analysing the trade flows between theEUandASEANbeneficiary countries by referring to
trade data at the sectoral level and at individual beneficiary country level. Our analysis
suggests that using the EU’s GSP to promote the exports growth of the ASEAN
countries has very limited effectiveness. Although the total EU imports from the ASEAN
countries experienced a significant increase during the period 1990-2007, but the
preferential imports under the GSP scheme remained stagnated at same period. However,
the least developed ASEAN members reported very high utilization rates and successfully
exploited GSP preferences for pushing up their exports to the European market.