A drastic reform in 1995 removed all quantitative restrictions on GSP preferential
imports. The scheme was no longer to be revised every year, but only once every three
years, in order to enhance the predictability of preferential market access for traders.
New graduation rules based on the interaction of the respective beneficiary countries’
development index and their product specialization index were applied. Moreover,
different GSP arrangements were established for industrial and textile products and for
agricultural products, respectively, granting a preference margin which decreased with
the degree of “sensitivity” of the product groups involved. This system was revised
again in 1998, as one single regulation came in place for all products. In the 2001 GSP
the complicated categories of very sensitive, sensitive, semi-sensitive and non-sensitive
products with distinctive tariff preferences, were reduced to two categories of sensitive
and non-sensitive products on the EU market. The 2001 reform[4] also introduced the special arrangement “Everything But Arms” (EBA) for the LDCs, aiming to reorient
preferences on the poorest developing countries that need these most.