Generalized System of Preferences (GSPs)

Generalized System of Preferences (GSPs)

Subject : International relations

Section : International organisation

Context: India seeks restoration of GSP status withdrawn under Trump administration. India was the largest beneficiary of the Generalized System of Preferences (GSP) status in 2017, with $5.7 billion worth of imports into the US given duty-free status. About 2,000 products including auto parts and textile materials were allowed to enter the US duty-free.

About Generalized System of Preferences (GSPs)

• It was instituted in 1971 under the aegis of United Nations Conference on Trade and Development (UNCTAD).
• It is aimed at creating an enabling trading environment for developing countries.
• The countries which grant GSP preferences are Australia, Belarus, Canada, the European Union, Iceland, Japan, Kazakhstan, New Zealand, Norway, the Russian Federation, Switzerland, Turkey and the United States of America.
• The provision and utilization of trade preferences is a key goal the Istanbul Program of Actions adopted at the UN LDC IV in 2013, as further reaffirmed in SDGs Goal 17.
• The objective of UNCTAD’s support on GSP and other preferential arrangements is to help developing countries to increase utilization of GSP and other trade preferences.

European Union’s Generalized System of Preferences (GSPs)

• It is a set of EU rules allowing exporters from developing countries to pay less or no duties on their exports to the European Union.
• The EU adopted a new Generalized Scheme of Preferences in 2012.

The Generalised Scheme of Preferences (GSP) has 3 strands:

• GSP general arrangement: for all beneficiary countries
• GSP+: A special scheme with entire removal of tariffs on essentially the same product categories as those covered by the general arrangement.
• The countries need to ratify and implement international conventions relating to human and labour rights, environment and good governance.
• Everything But Arms: A special arrangement for least developed countries (as recognised and classified by the UN) giving them duty- and quota-free access for all products, except arms and ammunitions.

About UNCTAD

• It is a permanent intergovernmental body established by the United Nations General Assembly in 1964.
• Its headquarters are located in Geneva, Switzerland.
• It is part of the UN Secretariat.
• Its goals are to maximize the trade, investment and development opportunities of developing countries and assist them in their efforts to integrate into the world economy on an equitable basis.
• Its objective is to formulate policies relating to all aspects of development including trade, aid, transport, finance and technology.