Afghanistan is a beneficiary of the EU's "Everything but Arms" (EBA) scheme for least developed countries. The World Bank considers Afghanistan a low-income economy with a per-capita income of $ 368.8 in 2021. Preferential imports to the European market from Afghanistan amounted to about €8.6 million in 2021.
The “Everything but Arms”(EBA) scheme is a permanent arrangement covering Least Developed Countries (LDC’s) as classified by the United Nations. This arrangement enables duty-free and quota-free access for all products (7200 products in total) originating in LDC’s except for arms and ammunition. Different from the Standard GSP and GSP+, LDC’s are not excluded from the scheme if they benefit from other preferential arrangements.
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Afghanistan is a landlocked economy with mountainous terrain and one of the poorest countries in the world. Years of conflict and the persisting political instability have left the economy highly dependent on international aid.
Afghanistan's main export commodities originate from the agricultural sector and include dried grapes, figs, almonds, pistachios, and other nuts, saffron and onions. Afghanistan also exports lac, precious/semi-precious stones and medical plants.
Afghanistan's most important trading partners are neighbouring Pakistan, Iran, and China. India is the most important export market, while most imports originate from Iran, China, and Pakistan.
Agriculture plays traditionally an important role for the Afghan economy, it employs the majority of the population and supplies the manufacturing sector with important inputs, such as raw cotton. The cotton textile industry is among the most important industrial sectors, together with cement, sugar, vegetable oil, soap, and shoes.
About 29% of overall imports from Afghanistan make use of EBA preferences. The preference utilisation rate, which represents the ratio of preferential imports to GSP eligible imports, currently stands at 49.2%.
Total trade with the EU summed up to € 387 million in 2021. With a share of 3.2, the EU only plays a minor role in Afghanistan's trade relations.
59% of Afghanistan's exports to the EU are eligible for EBA preferences.
Afghanistan currently has a preference utilisation rate of 49.2%
While Afghanistan’s preference utilisation rate shows some fluctuations, it follows an overall upward trend. Further potential to increase the use of preferences becomes evident when regarding the individual product sections. The preference utilisation rates of the two largest sections, fruits and vegetables and textiles, still show further potential. A number of product sections, including mineral products, machinery, and transport equipment currently do not use preferences at all.
Preferential imports from Afghanistan are highly concentrated on fruits and vegetables, accounting for a share of 93% of total eligible imports, with 79% utilisation rate. Eligibility rate of machinery and appliances section increased by 1216% between 2019-2020, which makes it the second largest product section. However, utilisation of preferences is less than 1%. Preferential imports from Afghanistan increased by about 140% between 2016 and 2018, and by over 140% between 2018-2019. This increase can be mainly attributed to a substantial rise in imports of fruits and vegetables and textiles. However, preferential imports experienced a decrease of 41%.
As a beneficiary of the EBA scheme, Afghanistan's preferential access to the EU market is not bound to the ratification of international conventions. Nonetheless, Afghanistan has a good level of ratification of international conventions. The country has ratified all 7 fundamental conventions on human rights and 5 of the 8 core conventions on labour standards. In addition, Afghanistan 8 conventions on environmental protection and 4 good governance conventions.
Throughout the period 2014-2020, the EU supported Afghanistan with a budget of €1.4 billion, which madeAfghanistan the largest recipient of bilateral development aid among all GSP beneficiaries. Focal areas included sustainable economic development, poverty reduction, governance, peace and security. More particularly the EU supported Afghanistan to foster small and medium enterprises, promote rural development, improve the quality of basic social services, enhance the quality of the health sector, increase domestic accountability, and improve the effectiveness of institutions.
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