The WTO Enabling Clause and Positive Conditionality in the European Community's GSP Program

Like virtually all developed countries, the European Community grants special trade preferences to developing countries by way of a generalized scheme of preferences, known as a GSP program. In addition, the EC operates a rewards-based system of 'special incentive arrangements', according to which developing countries may apply for further preferences if they can demonstrate compliance with specified environmental and labour standards. This article assesses this system of positive conditionality in light of WTO rules. It begins with an outline of the EC's GSP program and a discussion of the relevant governing instruments, in particular the 1971 GSP Decision and the 1979 Enabling Clause. It then discusses certain systemic issues, such as the implications of the fact that GSP preferences are granted on a voluntary basis, and the present legal status of the Enabling Clause. The article next addresses the substantive question whether the description of trade preferences as 'generalized, non-reciprocal and non-discriminatory' in the GSP Decision represents a condition of their legality under the Enabling Clause. The final section of this article analyses the meaning of these terms, with special reference to their drafting history, and presents a view on the legality of the EC's system of positive conditionality. Copyright Oxford University Press 2003, Oxford University Press.