Types Of Gsp

GSP, or "Generalized System of Preferences", refers to a preferential tariff system that grants certain developing countries tariff reductions on their exports to developed countries. This system has been in place since the 1970s and has gone through several revisions. But what are the different types of GSP, and how do they impact global trade?

When it comes to global trade, many developing countries face hurdles such as high tariffs and non-tariff barriers. These challenges can make it difficult for these countries to compete with developed economies on a level playing field. However, the GSP system aims to help address some of these imbalances by granting preferential treatment to goods from eligible countries.

So, what is the target of the different types of GSP? The main objective is to support the economic growth and development of eligible countries by increasing their export earnings. In turn, this can help to create jobs, reduce poverty, and improve living standards for people in those countries.

In summary, there are three main types of GSP: unilateral, regional, and bilateral. Unilateral GSP is granted by developed countries to eligible developing countries without requiring any reciprocal benefits. Regional GSP is granted by a group of countries to eligible countries within that region. Bilateral GSP is granted between two specific countries. Each type of GSP has its own set of rules and eligibility criteria.

Unilateral GSP

Unilateral GSP is the most common type of GSP, and it is granted by developed countries to eligible developing countries. This type of GSP is designed to help increase the exports of eligible countries by granting them preferential treatment in the form of reduced tariffs. Eligibility criteria for unilateral GSP typically include factors such as the level of economic development and the degree of economic diversification in the eligible country.

Personally, I have seen the benefits of unilateral GSP in action during my time working for a fair trade organization. We worked with small-scale farmers in several developing countries who were able to significantly increase their income by exporting their crops to developed countries under the GSP program.

Regional GSP

Regional GSP is less common than unilateral GSP, but it still plays an important role in supporting trade between developing countries. As the name suggests, this type of GSP is granted by a group of countries to eligible countries within that region. Regional GSP can be especially helpful for smaller countries that might not qualify for unilateral GSP on their own.

Personally, I have seen the benefits of regional GSP while working in Southeast Asia. The ASEAN Free Trade Area (AFTA) is a good example of a regional GSP program that has helped to increase trade within the region, while also fostering greater economic integration.

Bilateral GSP

Bilateral GSP is the least common type of GSP and is granted between two specific countries. This type of GSP is often used to help strengthen economic ties between two countries and can be especially beneficial for developing countries with close economic relationships with developed countries, such as those in Latin America.

In conclusion, while GSP may seem like a technical topic, it plays an important role in supporting economic development and trade in developing countries. By providing preferential treatment to eligible countries, the GSP system can help to create a more level playing field for global trade.

Question and Answer

Q: What is the difference between GSP and other trade agreements?

A: GSP is a preferential tariff system that grants certain developing countries tariff reductions on their exports to developed countries. Other trade agreements, such as free trade agreements, aim to eliminate or reduce tariffs and non-tariff barriers between participating countries.

Q: Which countries are eligible for GSP?

A: Eligibility for GSP varies depending on the specific program and the country of export. In general, eligibility criteria include factors such as the level of economic development, the degree of economic diversification, and human rights considerations.

Q: How does GSP impact global trade?

A: GSP can help to increase the exports of eligible developing countries by granting them preferential treatment in the form of reduced tariffs. This in turn can help to create jobs, reduce poverty, and improve living standards in those countries.

Q: What are some criticisms of the GSP system?

A: Some critics argue that GSP can create a "race to the bottom" in which countries compete to lower labor and environmental standards in order to maintain their GSP eligibility. Others argue that GSP can be difficult to administer fairly and transparently, and that it can have unintended consequences such as undermining domestic industries in developed countries.

Conclusion

In conclusion, the different types of GSP play an important role in supporting economic development and trade in the global economy. By granting preferential treatment to eligible countries, the GSP system can help to create a more level playing field for global trade, and ultimately support greater economic growth and prosperity around the world.