GSP Schemes

As stated in Resolution 21 (ii) taken at the UNCTAD II Conference in New Delhi in 1968,
“The objectives of the generalized, non-reciprocal, non-discriminatory system of preferences in favor of the developing countries, including special measures in favor of the least advanced among the developing countries, should be:
• To increase their export earnings;>br> • To promote their industrialization; and
• To accelerate their rates of economic growth.”
Under GSP schemes of preference-giving countries, selected products originating in developing countries are granted reduced or zero tariff rates over the MFN rates. The least developed countries (LDCs) receive special and preferential treatment for a wider coverage of products and deeper tariff cuts. The idea of granting developing countries preferential tariff rates in the markets of industrialized countries was originally presented by Raul Prebisch, the first Secretary-General of UNCTAD, at the first UNCTAD conference in 1964. The GSP was adopted at UNCTAD II in New Delhi in 1968.
In 1971, the GATT Contracting Parties approved a waiver to Article I of the General Agreement for 10 years in order to authorize the GSP scheme. Later, the Contracting Parties decided to adopt the 1979 Enabling Clause, Decision of the Contracting Parties of 28 November 1979 (26S/203) entitled "Differential and more favorable treatment, reciprocity and fuller participation of developing countries", creating a permanent waiver to the most-favored-nation clause to allow preference-giving countries to grant preferential tariff treatment under their respective GSP schemes.
There are currently 13 national GSP schemes notified to the UNCTAD secretariat.
The following countries grant GSP preferences: Australia, Belarus, Canada, the European Union, Iceland, Japan, Kazakhstan, New Zealand, Norway, the Russian Federation, Switzerland, Turkey and the United States of America.

Origin of the GSP

The idea of tariff preferences for developing countries was the subject of considerable discussion within the United Nations Conference on Trade and Development (UNCTAD) in the 1960s. The Generalized System of Preferences was proposed at the first meeting of the UNCTAD with a view to assisting the developing countries in their exports and development efforts. In 1971, the GATT enacted two waivers to the MFN that permitted tariff preferences to be granted to developing country goods. Both these waivers were limited in time to ten years. In 1979, as part of the Tokyo Round, the GATT established a permanent exemption to the MFN obligation by way of the enabling clause. This exemption allowed contracting parties to establish systems of trade preferences for other countries, with the caveat that these systems had to be "generalized, non-discriminatory and non-reciprocal' with respect to the countries they benefited (so-called "beneficiary" countries). Countries were not supposed to set up GSP programs that benefited just a few of their "friends. The Enabling Clause has thus created a permanent legal basis for trade preferences provided by developed countries, both generally for all developing countries under GSP regimes, and also for specific more preferential treatment of the least-developed countries. One important aspect of the Enabling clause is that it did not impose any legal obligation on GATT countries to extend such trade preferences. In other words, developed countries can provide trade preferences for developing countries, but they are not legally bound to do so. As a result, trade preferences under the GSP continue to be granted unilaterally by the developed countries concerned, and so can always be changed and even withdrawn completely, without violating GATT/WTO commitments.
Translate »