GENERALISED SYSTEM OF PREFERENCES (GSP)

GENERALISED SYSTEM OF PREFERENCES (GSP)

 

The GSP is a non-reciprocal, non-discriminatory grant of preferences offered by developed countries to developing countries.  It is a concept developed within the United Nations Conference on Trade and Development (UNCTAD) to encourage the expansion of manufactured and semi-manufactured exports from developing countries, by making goods more competitive in developed country markets through the grant of tariff preferences.

The countries currently offering GSP privileges are:-  Australia, Austria, Bulgaria, Canada, Czechoslovakia,  European Economic Community, Finland, Hungary, Japan, New Zealand, Norway, Poland, Sweden, Switzerland and Russia.

Products exported from a preference-receiving country may be divided into two groups:

  1. Products which have been entirely grown, extracted from the soil or harvested within the exporting country, or manufactured there exclusively from any of these products.Such products which are termed “Wholly-obtained” products, qualify as being of GSP origin by virtue of the total absence of the use of any imported components or materials, or such of unknown origin; or,

  2. Products which are made from imported materials, parts or components, i.e. products which are manufactured wholly or in part from materials, parts or components imported into the preference-receiving exporting country or which are of unknown origin.These products which are termed “products with import content” qualify only if they have undergone “sufficient working or processing” in the preference-receiving exporting country as defined under the individual rules of origin of preference-giving countries.

Following these basic definitions, each preference-giving country has laid down in its separate scheme, detailed rules or definitions of “sufficient working or processing” which have to be satisfied if goods are to be granted GSP tariff treatment.