The role of the Generalised System of Preferences (GSP) in determining carnation demand in the United Kingdom: implications for Colombian and Kenyan exports

Abstract

The goal of this paper was to assess how the EU Generalised System of Preferences incentive scheme to combat drugs production and trafficking (GSP+) affected carnation imports in the United Kingdom (UK). Colombian carnations enter the EU duty-free under the GSP+ incentive scheme which is less secure than the trade agreement between the EU and Kenya. If the EU withdrew preferences from Colombia, would Kenyan flower exporters be better off in the UK carnation market? The results of study showed that Colombian exports benefited from tariff-free access to the UK where the benefit was due to both trade creation and trade diversion. Additionally, the competition between Colombian and Kenyan carnations was found to be insignificant and there was no evidence that GSP+ negatively affected Kenyan carnations. The results showed that competing exporters (Kenya, the Netherlands and Spain) could actually be better off when Colombian carnations are given duty-free to the EU.