On 1 December, the Danish EU Council Presidency and the European Parliament reached a provisional agreement to revise the bloc’s Generalised Scheme of Preferences (GSP) Regulation (EU) No 978/2012 (the “GSP Regulation”). One of the main changes is the introduction of a temporary withdrawal option in Article 19(1)(c) for cases involving serious shortcomings related to a beneficiary country’s obligation to readmit its own nationals. In essence, the reform explicitly links migration policy with trade preferences for the first time. Whether this shift is understood as yielding to political pressure at home and abroad or as a strategic use of political momentum, one point is clear: the trade policy of the world’s largest internal market is becoming another example of a broader trend toward multi-purpose trade policy that ties non-trade objectives to trade instruments.

The agreement comes only days after the New York Times reported that the United States Department of State instructed its diplomats to press host countries to adopt stricter immigration rules. Alongside this transatlantic pressure, the EU faces significant internal pressure on migration policy. Recent polling in the bloc’s largest economy, Germany, shows the far-right Alternative für Deutschland (AfD) at 27 percent, making it the strongest political party and surpassing Chancellor Merz’s Christian Democratic Union (CDU). Support for more restrictive migration policies is similarly strong elsewhere in the EU. Evidence includes the recent electoral victory of the right-wing ANO party in the Czech Republic and polling in France indicating a steady rise in support for the far-right under Jordan Bardella.

Another trend is that despite the increase in the number of returns, Eurostat figures for 2024 indicate that return rates of third-country nationals remain low. Although 453,380 persons were ordered to leave an EU country, only 110,385 were actually returned, resulting in a return rate of approximately 24 percent.

This blog post first explains the background of the GSP Regulation and how migration policy came to be included in it. It then examines the regulation’s new readmission conditionality in Article 19(1)(c). Finally, it situates the recent review of the GSP Regulation within the broader phenomenon of multi-purpose trade policy.

What Is the GSP?

In 1968, the second United Nations Conference on Trade and Development (UNCTAD) called for the establishment of a Generalized System of Preferences (“GSP”). The system is designed to be open to all developing countries and based on the principle of non-reciprocity. Under GSP, developing countries receive preferential tariff treatment without being required to offer equivalent concessions, with the aim of promoting export growth in beneficiary countries.

Under the GATT—and later WTO—framework, the GSP was formally recognized with the adoption of the Enabling Clause in 1979, officially titled the Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries. The clause operates as an exception to the Most Favored Nation (MFN) principle of the General Agreement on Tariffs and Trade (GATT), which requires countries not to discriminate among their trading partners. Since 1979, parties to GATT and WTO have been permitted to grant preferential tariff treatment and more favorable non-tariff treatment to developing countries, including additional differentiation in favor of least developed countries (LDCs).

Several developed countries introduced their own GSP schemes, among them the EU and the United States.

The United States’ GSP Scheme (1974 – 2020)

The United States established its GSP scheme through Title V of the Trade Act of 1974 (19 U.S.C. §§ 2461–2467). Under this scheme—which expired on 31 December 2020—the President could designate beneficiary developing countries based on eligibility criteria set out in 19 U.S.C. § 2462. Under § 2462(c)(3), the President also had the authority to withdraw a country’s GSP status, as occurred in 2019 with India, which, according to the United States, was found not to provide equitable and reasonable market access.

The EU’s GSP Scheme

The EU’s GSP scheme is established by the GSP Regulation (Regulation (EU) No 978/2012), which, unlike its U.S. counterpart, was extended in November 2023 for the period 2024 to 2027. Recital 7 identifies the GSP Regulation’s objective as assisting developing countries in their efforts to reduce poverty and promote good governance and sustainable development by helping them to generate additional revenue through international trade.

The structure of the GSP Regulation is threefold. It comprises the Standard GSP, the GSP+, and the Everything But Arms (EBA) initiative. The Standard GSP provides partial tariff removal for low to lower-middle-income countries. Under the World Bank’s 2026 classification, low- to lower-income countries are defined as those with a GNI per capita between USD 1,135 and USD 4,495. The application-based GSP+ is a more far-reaching preferential scheme that reduces tariffs to zero for countries that accept the additional requirements, such as ratifying 27 conventions on human rights, sustainability, and good governance. The EBA initiative is the most favorable GSP scheme, but also the most limited in scope: it provides duty-free and quota-free access to the EU market for all products except arms and ammunition, but only to LDCs.

Although the EU GSP Regulation is considered the most far-reaching GSP scheme currently in place (at least in terms of market access), it provides several mechanisms to safeguard EU interests. One example is the graduation mechanism: once a GSP beneficiary exceeds the USD 4,515 GNI per capita threshold, it becomes an upper-middle-income country and is removed from the GSP.

Furthermore, preferences may be withdrawn under Article 19 of the GSP Regulation when certain conditions are met. One such withdrawal occurred in 2019 in the cases of Cambodia and Myanmar. A significant increase in imports of Indian rice from those developing countries into the EU market led the Commission to withdraw its preferences under the GSP Regulation to prevent further economic damage to European producers. Cambodia was involved once more in 2020, when part of the country’s tariff preferences under the EBA were withdrawn pursuant to Article 19(1)(a). This provision links the granting of trade preferences to compliance with core international human rights and labor standards, as set out in Part A of Annex VIII to the GSP Regulation. These standards include, e.g., the International Covenant on Civil and Political Rights (ICCPR), the Genocide Convention, the International Covenant on Economic, Social and Cultural Rights (ICESCR), and the Convention on the Rights of the Child. In the case of Cambodia, the Commission found that the government had seriously and systematically curtailed political participation and electoral rights, thereby violating Article 25 ICCPR, which guarantees, inter alia, the right to vote.

“Sustainable Reintegration”: How Migration Entered the GSP Regulation

The political debate on whether to use the GSP Regulation to link trade and migration policy, thus leveraging the EU’s economic power to improve readmission cooperation, began long before recent U.S. efforts to urge European countries to tighten their migration policies. The idea of leveraging EU trade policies to address the European migration crisis, and making tariff preferences conditional, can be traced back to the Commission’s 2021 proposal to revise the GSP Regulation. In its proposal, the Commission clarified that poverty eradication and support for sustainable development and good governance remain the GSP Regulation’s overarching objectives, although with the explicit caveat that EU interests should not be jeopardized. One manifestation of this sharper emphasis on EU interests is the proposal’s reference to broadening the withdrawal grounds, including by expanding the scope of the instrument to cover additional areas, such as migration.

The proposal envisioned this expansion by adding the following Article 19(1)(c), which applies across all three GSP arrangements:

“The preferential arrangements referred to in Article 1(2) may be withdrawn temporarily, in respect of all or of certain products originating in a beneficiary country, for any of the following reasons:

(c) serious shortcomings in customs controls on the export or transit of drugs (illicit substances or precursors), or related to the obligation to readmit the beneficiary country’s own nationals, or serious failure to comply with international conventions on antiterrorism or anti-money laundering.”

The Commission justified this linkage by citing the need to increase coherence between trade, development, and migration policies. It considers sustainable reintegration in the country of origin essential, for example, to avoid a “brain drain.”” Beyond this development-based argument, the Commission emphasized the significance of readmission under international law, citing the obligation of every state to readmit its own nationals under international customary law and multilateral conventions, such as the Convention on International Civil Aviation.

The proposal gained political momentum during the Czech and Swedish Council Presidencies. In December 2022, the Council agreed on a negotiating mandate for the revision of the GSP Regulation. Although it proposed several changes to the Commission’s proposal, it left the extension of the withdrawal procedure pursuant to Article 19(1)(c) in cases of a beneficiary country’s failure to comply with readmission obligations untouched. The legislative record shows that the Council was eager to make the linkage between readmission of nationals and development more explicit. This explains why it added a new Recital 26 referring explicitly to UN Sustainable Development Goal 10, target 7, which calls for facilitating orderly, safe and responsible migration and mobility of people. The Recital concludes by stating:

“Improving sustainable reintegration and capacity building would also strengthen the local development in the partner countries.”

The Commission and the Council thus sought to justify, from the outset of the legislative process, the integration of migration policies into the GSP Regulation on sustainable development grounds. In doing so, they anticipated potential criticism that emerged as the proposal gained political momentum under the Swedish Council Presidency.

The Readmission Conditionality as Another Example of Multi-Purpose Trade Policy?

In a widely noticed 2023 piece, Nicolas Lamp articulates a new approach to trade policy he calls “multipurpose trade policy.” Traditionally, trade policy pursued market access and development as its major objectives. Under a multipurpose approach as articulated by Lamp, trade policy tools pursue a broader range of objectives, including sustainability, resilience, the promotion of labor rights, and national security:

“The key distinguishing feature of the more recent shift to multipurpose trade policy is that other policy objectives no longer come into the picture as externalities of trade liberalization or as safeguards against unfair competition. Instead, those other policy objectives have taken a place alongside, and in some cases the place of, trade liberalization as the immediate objectives that trade policy is supposed to pursue.”

The new readmission conditionality is another example of this trend. Contending that the readmission of migrants to their country of origin has anything to do with export competitiveness or the integration of developing countries into global supply chains is far-fetched. Instead, a simpler and more persuasive explanation is that this trade policy seeks to induce behavioral change in partner countries on a non-trade matter: migration enforcement.

The strategy of linking policies that at first glance have little to do with one another is well known from the Trump Administration’s tariff negotiations. One example is the deal with China, namely the acceptance of Chinese students into the United States in exchange for China’s supply of rare earth minerals.

What, then, should we make of this shift in EU GSP policy, this movement from “carrots to sticks“ and another step from traditional trade policy to multipurpose trade policy? By making tariff preferences contingent on cooperation with EU migration policy, Brussels embraces an increasingly prevalent model of multipurpose trade policy in which trade serves strategic, political, and security agendas. Rather than treating migration policy as an external consideration, the revised EU GSP Regulation embeds it directly into the logic of preference withdrawal. This revision underscores the extent to which trade policy has become a vehicle for advancing parallel policy objectives, even where the connection to trade is merely indirect.

Whether this shift will enhance return rates, historically a difficult policy goal, or instead undermine development objectives and the EU’s normative credibility remains an open question. Notably, this blog post does not assess whether readmission-based conditionality can, in practice, promote sustainable development in countries of origin (as suggested by the Council through the addition of Recital 26). The Council’s reliance on development-oriented justifications to embed readmission obligations into the GSP Regulation raises a broader question that warrants separate analysis.