Preferential duty programs usually change quietly, until they don’t. The upcoming updates to the EU’s Generalized System of Preferences (GSP) are one of those moments where the impact won’t be felt in theory, but directly at the point of customs clearance.
Between 2026 and 2028, several product sections will lose preferential duty treatment, key countries will exit the GSP entirely, and temporary suspensions already in place will continue to affect landed costs. For logistics professionals, customs teams, and finance leaders, this isn’t just a policy update, it’s a planning issue that touches pricing, contracts, and compliance.
Let’s break down what’s changing, why it matters, and what businesses should be doing now.
A Quick Refresher: How the GSP Actually Works
The EU’s GSP allows eligible developing countries to export certain goods into the EU at reduced or zero customs duty rates. These benefits are not permanent or universal. They depend on:
- Country eligibility
- Product section performance
- Import volume thresholds
- Broader trade and economic classifications
Once thresholds are exceeded or a country’s economic status changes, preferences can be reduced, suspended, or removed altogether. That’s exactly what’s happening in the next phase of the program.
What Changes Starting January 1, 2026?
From January 1, 2026, the EU will apply a new list of country-specific excluded product sections under the GSP. Products in these sections will no longer qualify for GSP preferential duties until December 31, 2028.
These exclusions are based on sustained high import volumes over three consecutive years, which signals that the products are competitive enough without preferential support.
This isn’t a blanket removal. It’s targeted, product-specific, and country-specific, making classification accuracy more important than ever.
India: The Most Significant Expansion of Excluded Sections
India sees the largest change in this update. From 2026 through 2028, the following sections will be excluded from GSP preferences for Indian-origin goods:
- Mineral products
- Organic and inorganic chemicals
- Plastics and rubber articles
- Textile materials
- Articles of stone, ceramics, and glass
- Pearls and precious metals
- Iron, steel, and other base metals
- Machinery and electrical equipment
- Railway equipment
- Motor vehicles, bicycles, aircraft, and ships
Compared to the previous 2023–2025 period, India added three new excluded sections, including minerals, rubber, and motor vehicles. For EU importers sourcing industrial goods or machinery from India, this can translate directly into higher duty exposure starting in 2026.
Indonesia: Key Commodity and Resource Sections Excluded
Indonesia will also face new exclusions under GSP from 2026, covering:
- Live animals and animal products (excluding fish)
- Oils, fats, and waxes
- Mineral products
- Wood and wood articles
These categories are especially relevant for bulk and commodity-focused supply chains. If your landed-cost models still assume GSP preference for these goods, they will need to be revisited.
Kenya: Targeted Exclusion in Agricultural Products
Kenya’s exclusion is narrower but still important. From 2026, live plants and floriculture products will no longer qualify for GSP preferences.
Given Kenya’s strong position in the EU floriculture market, even a single excluded section can have pricing and competitiveness implications for both exporters and EU importers.
Already in Effect: Ethanol from Pakistan
Not all GSP changes are future-dated. Since June 21, 2025, preferential duties for ethanol originating in Pakistan under GSP+ have been temporarily suspended.
This suspension will remain in place until June 2027 and was introduced due to market disruption within the EU. During this period, ethanol imports from Pakistan are treated as non-preferential, regardless of GSP+ eligibility.
For companies trading in chemicals, fuels, or industrial alcohols, this is a reminder that GSP benefits can be paused even mid-cycle.
A Bigger Shift in 2027: Countries Leaving the GSP Entirely
Beyond section-level exclusions, country eligibility itself changes in 2027.
From January 1, 2027, Kenya and Indonesia will no longer be GSP beneficiary countries at all.
Kenya exists due to a broader preferential trade agreement with the EU already in effect.
Indonesia exits after being classified as an upper-middle-income country for three consecutive years, which disqualifies it under GSP rules.
Once this happens, all goods from these countries will lose GSP tariff preferences, not just selected sections. This is a major shift and will impact long-term sourcing and contract strategies.
Looking Ahead: EBA Changes Coming in 2029
There’s also an early signal for future planning. São Tomé and Príncipe will be removed from the Everything But Arms (EBA) arrangement on January 1, 2029, following its graduation from least-developed-country status.
While this is further out, it reinforces a broader trend: preferential access is not permanent, and graduation is becoming more common.
Why do these Changes Matter Operationally?
From a logistics and customs perspective, GSP updates affect far more than duty rates.
They influence:
- HS classification accuracy
- Origin determination and supplier declarations
- Landed-cost calculations
- Contract pricing and Incoterm negotiations
- Customs valuation and audit exposure
If systems, master data, or classification rules aren’t updated in time, companies risk underpaying duty, something customs authorities rarely forgive.
What Customs and Finance Teams Should do Now?
The smartest companies won’t wait until January 2026 or 2027 to react. Practical next steps include:
- Reviewing product classifications against the new excluded sections
- Identifying suppliers and origins affected by upcoming removals
- Updating landed-cost models and pricing assumptions
- Validating GSP logic in customs and ERP systems
- Preparing internal teams for changes in duty treatment
This is especially critical for businesses using automated customs platforms, where incorrect preference logic can propagate errors at scale.
Where CargoWise Fits Into the Picture?
For companies running customs and trade compliance through CargoWise, these changes highlight the importance of keeping tariff treatments, origin rules, and preference logic fully aligned with EU regulations.
GSP exclusions and country exits don’t just require awareness, they require correct system configuration so declarations reflect reality at the time of import, not outdated assumptions.
Conclusion
The 2026–2028 GSP developments signal a clear direction. Preferential access is becoming more targeted, more conditional, and more closely monitored. For EU importers and global exporters alike, this means fewer shortcuts and more emphasis on compliance accuracy.
If you’re unsure how these GSP changes affect your trade lanes, product mix, or customs setup, now is the right time to act.
Schedule a call with Elicit Technology, we help customs and logistics teams interpret regulatory changes, assess real-world impact, and align CargoWise configurations so preference rules work exactly as intended, before duty surprises show up at clearance.
