Welcome

to the Presentation
Session
 Chittagong Independent University
Department of law

Project Presentation
Subject : International Trade law
Program : LL.M
Semester : 3rd
Project Topic : Generalized System of Preferences (GSP)

Md. ABDUL KHALEK

ID No: L-17254016
Chittagong Independent University
2
GENERALISED SYSTEM OF PREFERENCES (GSP)
Introduction
1 The Generalized System of Preferences (GSP) is a
non-contractual instrument by which industrially
developed countries extend tariff concession to goods
originating in developing countries.
The Generalized System of Preferences (GSP) gives
nonreciprocal U.S. tariff treatment to certain products
imported into the United States from designated
beneficiary developing countries (BDCs). The United
States, the European Union (EU), and other developed
countries have implemented similar programs since the
1970s in order to promote economic growth in developing
nations.
Generalized System of Preferences (GSP)
What is the Generalized System of Preferences (GSP)
Traditionally, the GSP has been an autonomous commercial
policy instrument, directed towards development. It has
been based on the most classical commercial policy
instrument of all the tariff. The objective has been to offer the
developing countries a more preferential tariff compared to
that given to developed countries in order to enable a more
favorable access to the developed market for their exports.
The GSP concept and programs were established based on the
premise that preferential tariff rates in developed country markets
could promote export-driven industry growth in developing
countries. It was believed that this, in turn, would help to free
beneficiaries from heavy dependence on trade in primary products
(e.g., raw materials), and help diversify their economies to promote
stable growth.
The main objectives of granting trade preferences to
developing countries are to:
 Enhance their export earnings;
 Promote industrialization, and
 Encourage the diversification of their economies.
 To analyze the
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 know which countries and under what conditions are
beneficiaries of the GSP
 To know how to use the rules of origin under the
Generalized System of Preferences .
 contribute to poverty eradication by expanding exports
from countries most in need;
 promote sustainable development and good governance;
Why USA Denies the facility GSP.
The new GSP programmers will make trade benefits
retroactive to July 31, 2013.
Obama suspended Bangladesh from GSP in June 2013 based
on Bangladesh’s failure to meet statutory eligibility
requirements related to worker rights.
After two industrial disasters – Tazreen Fashions fire and
Rana Plaza building collapse, the US suspended GSP for
Bangladesh in June 2013, citing serious shortcomings in
labour rights and workplace safety.
 Economic growth and development in the
developing world: (GSP)
 1. The U.S. GSP program isn’t particularly big.
The U.S. program dates to the Trade Act of 1974. Under the
GSP, the U.S. government selects a group of poor countries
and a set of products, and it offers these countries lower-
than-normal tariffs than it applies to imports from all other
World Trade Organization countries.
 2. GSP is not generous, partly by design. The other half of
products is where the GSP program’s limits kick in. Because
the U.S. government unilaterally determines where to give
zero tariffs under the GSP, exclusion of certain products and
countries can be subject to domestic politics.
3. Political economists have long been skeptical of GSP’s
benefits .
 Another major concern with the GSP i temporary its
uncertainty. The U.S. program has always been and
sometimes suffers periods of nonrenewal. But even when
operational, products and country eligibility are always at
the discretion of the U.S. government.
4 Ending GSP could nevertheless prove locally
disruptive
The United States as offering lower tariffs to imports that
contain high levels of U.S. content arising through global
value chains. Anytime President Trump cuts off sales by
foreigners to America, those foreigners will no longer buy
the parts and components currently supplied by U.S.
companies and workers.
 Benefits of GSP
 Indian exporters benefit indirectly– through the benefits that accrues
to the importer by way of reduced tariff or duty free entry of eligible
Indian products.
 Reduction or removal of import duty on an Indian product makes it
more competitive in the developed foreign markets. it more
competitive in the developed foreign markets.
Countries that extend GSP benefits
Presently, 29 preference giving countries are extending GSP concession
through their respective Schemes. These are Australia, Canada, Czech
Republic, European Union, Japan, New Zealand, Norway, Bulgaria,
Hungary, Poland, Russian Federation, Slovakia, Switzerland, and USA.
It is to be noted that the GSP schemes offered by the various donor
countries and their rules of origin differ fundamentally. Goods
complying with the conditions of the GSP of
the USA, for example, will not necessarily comply with the EU GSP.
Product Coverage.
Most of the GSP product coverage includes
agricultural and industrial exports with a few
but often notable exceptions. The exceptions
established by the United States GSP include
textiles and apparel, certain footwear, certain
leather products (handbags,
luggage), certain watches and watch parts,
canned tuna, and petroleum and petroleum
products.
 GSP Eligible Products.
According to the GSP statute, the President is authorized to
designate additional products as duty-free under GSP, following a
product review and analysis by the U.S. International Trade
Commission (USITC). The USITC’s role is primarily to determine if
the products would be import-sensitive if imported duty-free by
GSP beneficiaries. 8 Section 202 of P.L. 114-27 gave the President
authority to amend the list of eligible products by designating
certain cotton and cotton waste products as duty-free to eligible
least-developed
The President must advise Congress of any changes in beneficiary
developing country and product status, as necessary.73 Additional
GSP reporting requirements include an annual report to Congress
on the status of internationally recognized worker rights within
each BDC, including findings of the Secretary of Labor with respect
to the beneficiary country’s implementation of its international
commitments to eliminate the worst forms of child labor.
 Country Eligibility Criteria
 certain mandatory and discretionary criteria. The law
prohibits When designating BDCs and LDBDCs, the
President is directed to take into account the certain
exceptions) the President from extending GSP treatment to
certain countries, as follows:47

 other industrialized countries (Australia, Canada, EU member

states, Iceland, Japan, Monaco, New Zealand, Norway, and
Switzerland are specifically excluded);
 communist countries, unless they are a WTO member, a member
of the International Monetary Fund, and receive Normal Trade
Relations (NTR) treatment from the United States; must also not
be “dominated or controlled by international communism”;
 Country Eligibility Criteria( cont…)
 countries that collude with other countries to withhold
.
supplies or resources from international trade or raise the
price of goods in a way that could cause serious disruption
to the world economy;
 countries that provide preferential treatment to the
products of another developed country in a manner likely
to have a significant adverse impact on U.S. commerce;
 countries that have taken steps to repudiate or nullify
existing contracts or agreements of U.S. citizens (or
corporations, partnerships, or associations that are 50%
or more owned by U.S. citizens) in a way that would
nationalize or seize ownership or control of the property,
including patents, trademarks, or copyrights
 Conclusion
The Generalized System of Preferences (GSP) is a
U.S. trade program designed to promote economic
growth in the developing world by providing
preferential duty-free entry for up to 4,800
products from 129 designated beneficiary
countries and territories. GSP was instituted on
January 1, 1976, by the Trade Act of 1974.
GSP exempts WTO member countries from MFN for
the purpose of lowering tariffs for the least developed
countries, without also lowering tariffs for rich
countries.
Thank
You