Generalized System of Preferences (GSP)

A outline under which developed countries give preferential tariff treatment to goods imported from
certain developing countries.

GSP is the largest and oldest U.S. trade preference program that provides nonreciprocal, duty-free
treatment enabling many of the world's developing countries to spur diversity and economic growth
through trade

Who gives GSP?

The Generalized System of Preferences (GSP), introduced in 1971 under the guidance of United Nations
Conference on Trade and Development (UNCTAD), has contributed over the years to creating an
empowering trading environment for developing countries. The US introduced the GSP in 1976 under
the US Trade Act of 1974. However, the GSP structure has remained adjourned for all recipient countries
since July 31, 2013.

It involves reduced MFN tariff or duty-free treatment of eligible products exported by developing
countries like India, to the markets of developed countries, like Member States of European Union. The
preferences offered are, however, unilateral and non – discriminatory.

Benefits of GSP

exporters benefit indirectly – through the benefits that grows to the importer by way of reduced tariff
or duty-free entry of eligible products. Reduction or removal of import duty on a product makes it more
competitive in the developed foreign markets. The advantages of GSP are improving the present
condition of developing countries, expansion of export, expansion of industry, accelerating GDP growth
rate, reduce unemployment etc.

History of GSP

In 1964, on the first summit of UNCTAD, all countries discussed providing special facilities to developing
countries on international trade.

In the 2nd summit, in 1968, this topic got huge support. At first, the EU started the GSP system in 1971
while the USA started law about GSP in 1974 and implement it in 1976.

Countries that extend Preferential Tariff Treatment under GSP

 The following 15 countries grant GSP preferences: Armenia, Australia, Belarus, Canada, the European
Union, Iceland, Japan, Kazakhstan, New Zealand, Norway, the Russian Federation, Switzerland, Turkey,
United Kingdom and the United States of America.

"The Generalized System of Preferences is a trade advantage offered to many countries in the world
by the European Union and the United States,"

GSP is a trade scheme under which the US allows import of more than 5,000 goods from 122 least
developed and developing countries with lower or zero-duty benefit.

The United States has renewed trade preferences for 122 nations around the world, but
Bangladesh has been excluded from the list. The USA suspended Bangladesh from its GSP in June
2013 after two industrial disasters – Tazreen Fashions fire and Rana Plaza building collapse, citing
serious shortcomings in labor rights and workplace safety.

European Union

Since 1971, after the EU started the GSP system; it becomes the largest export destination of
Bangladesh. First, BD can export only industrial and agro-based products and from 2001 it achieves
access to an export of all products except arms and intoxicating products.

Sometimes EU renews or suspense GSP to some countries and products. Although there was a case filed
against BD over violating labor rights in June 2018 by International Trade Union Confederation, the
Clean Clothes Campaign and HEC-NYU EU Public Interest Clinic. The ongoing EU GSP facility will end this
December, and a new GSP scheme will be effective from January 01 for 2024-2034. The EU parliament is
now reviewing the new GSP regulation. Currently, Bangladesh's products have duty-free market access
to 38 countries.

Of the countries, 27 are the EU member-states.

The EU is Bangladesh's largest export destination.

Bangladesh has been enjoying duty-free facilities for exporting goods to different EU countries
since 2001 under the Everything But Arms (EBA) scheme.

Around 50% of Bangladesh's export earnings come from the bloc.

The country exported goods worth $23 billion to the bloc.

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United States of America

From 1972 USA is providing GSP facilities to different countries and products. Bangladesh got GSP
facilities from the USA on 1st January 1976.

According to the DOHA summit, the least developed countries will get GSP facilities of 97% of products.

Bangladesh, as an LDC, is the beneficiary of US Generalized System of Preferences (GSP) Program.

Bangladeshi products such as tobacco, plastic bags and articles, golf equipment, sleeping bags, bone
china and porcelain kitchen/ tableware, cereal based prepared foods, handloomed woven cotton
carpets and other textile floor coverings, spectacles and goggles, headgear other than rubber and
plastics, etc. are eligible to enter duty-free under GSP in the US market.

Recipients