What is GSP?
The GSP is a preferential tariff system that provides a formal exemption from the more general rules of the World Trade Organization (WTO). In short, this means that WTO members must treat imports from all other WTO members equally as they treat imports from their "best" trading partners.
- The Generalized System of Preferences (GSP) is an umbrella that covers most of the preferential schemes that industrialized countries give to developing countries.
- It involves reducing most-favored-nation (MFN) tariffs or enabling tax-free entry of eligible products exported from beneficiary countries to donor markets.
Developing countries automatically receive the GSP if:
- Classified by the World Bank as an income level below "upper middle income"
- Do not benefit from other arrangements (such as free trade agreements) that give them preferential access to the EU market
- In addition, if GSP+ is granted, the beneficiary must ratify 27 international conventions (see GSP+ above) and work with the Commission to monitor the implementation of these conventions.
LDCs automatically get the benefits of the "everything but arms" arrangement, even if they have another arrangement.
GSP benefits
- Promote economic growth and development in developing countries by helping beneficiary countries increase and diversify trade with developed countries.
- Jobs - The transfer of GSP imports from terminals to consumers, farmers and manufacturers has provided tens of thousands of jobs in developed countries.
- The GSP increases the competitiveness of firms because it reduces the cost of imported inputs that firms use to manufacture goods.
- GSP promotes global values by supporting beneficiary countries in providing workers' rights to their people, enforcing intellectual property rights and supporting the rule of law.
There are several ways that GSP regulations can ensure that the interests of European industry are safeguarded:
- GSP beneficiaries who are “high-middle-income” countries will be removed from the GSP.
- GSP beneficiaries may lose preferences for specific product categories deemed sufficiently competitive: Suspension of tariff preferences 2017-2019External link.
- EU industries can request safeguards based on evidence that imports from GSP beneficiary countries have caused serious economic hardship to the industry: safeguards for Cambodian and Myanmar rice.
