European Commission adopts safeguard measures on ethanol from Pakistan

The EU’s GSP removes import duties from products coming into the EU market from vulnerable developing countries.

By removing such import duties, the EU’s GSP helps developing countries alleviate poverty and create jobs in line with international values and principles, including labour and human rights, environmental protection, and good governance.

“Significant market disruption”

However, according to ePURE and iEthanol, the EU’s domestic ethanol industry has faced “significant market disruption and loss in competitiveness” since a surge in imports from Pakistan in 2022.

Therefore, the suspension of tariff preferences on ethanol imports from Pakistan under Article 30 of the Generalised Scheme of Preferences (GSP) Regulation is a long-overdue safeguard measure in response to “persistent and documented injury” suffered by the EU’s domestic ethanol industry.

The Commission’s decision marks an important step toward restoring fair competition in the EU’s non-fuel ethanol market.

Unfortunately, it comes after an extremely long delay in implementing safeguards which, by definition, call for urgent measures as soon as the damage is proven. This administrative slowness has only deepened the harm to European ethanol producers, resulting in substantial loss of market share, capacity reductions, and the erosion of established client relationships, the joint statement said.

Concerns over the exclusion of fuel ethanol

Moreover, the trade bodies highlight that serious concerns remain about the exclusion of fuel ethanol from the scope of the measures.

This loophole is an invitation to circumvention and fraud, potentially undermining the intended impact of the safeguard action.

These measures reflect the seriousness of concerns voiced by EU Member States and acknowledge the structural damage experienced by the domestic ethanol industry.

But, given the market dynamics, the industry called for a three-year duration of the measure as opposed to the two-year duration proposed by the Commission.

Industry stakeholders will regularly provide market intelligence to the European Commission and Member States to ensure proper implementation and to monitor for circumvention.

Call to correct an administrative flaw

The GSP+ regime’s core objective is to support sustainable development and good governance.

However, Pakistan’s export performance and market behaviour in the ethanol sector suggest that GSP+ is no longer serving its intended purpose in this case.

The safeguard action under Article 30—invoked by the Commission for the first time ever—demonstrates the extent of the market disruption.

ePURE and iEthanol note that it is regrettable that the normal route of Article 29 of the GSP Regulation, which provides for the automatic suspension of GSP+ preferences based on statistical thresholds, could not be followed as a consequence of a flawed methodology and product scope stemming from an administrative error.

For instance, nicotine patches and e-cigarette fillings were counted together with ethanol, which distorted the statistical thresholds crucial to activate the safeguard instrument.

During the revision of the GSP Regulation, this mistake must be urgently corrected to allow for the proper activation of Article 29 as foreseen by the legislators when the Regulation was initially adopted. Given our economically challenging experience, the ongoing revision of the GSP Regulation should ensure that safeguard clauses remain accessible and promptly enforceable whenever the competitiveness of European industries is clearly at stake, the statement concluded.