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India's status on Generalised System of Preferences (GSP)

01 Jan 2024 Zinkpot 190
  1. The Generalized System of Preferences (GSP) is a trade policy tool designed to promote economic development by providing preferential duty-free entry for a wide range of products from designated beneficiary countries. 
  2. The GSP is a system that allows developing countries to export goods to developed countries with reduced or zero tariffs. The idea is to support the economic growth of developing nations by giving them easier access to the markets of wealthier countries.

  3. GSP was instituted by the UNCTAD in 1971. The 13 countries that provide GSP preferences to emerging and developing countries are: Australia, Belarus, Canada, European Union, Iceland, Japan, Kazakhstan, New Zealand, Norway, Russia, Switzerland, Turkey, and USA.

  4. Tariff Preferences: GSP provides reduced or zero tariffs on imports from eligible developing countries. This helps these countries to be more competitive in the international market.

  5. Beneficiary Countries: The GSP program designates certain countries as beneficiaries based on criteria such as their level of economic development and their participation in international efforts to eliminate trade barriers.
  6. Product Coverage: GSP covers a wide range of products, including agricultural and industrial goods. However, not all products are eligible for preferential treatment, and there are often exclusions or limitations.
  7. Graduation: Some countries may "graduate" from GSP eligibility if their economic development reaches a certain level. This is intended to ensure that GSP benefits go to countries that need them the most.
  8. Review and Renewal: GSP programs are usually subject to periodic reviews and may need to be renewed by the legislating authority of the granting country. This allows for adjustments based on changing economic conditions and trade relationships.
  9. Compliance with International Standards: Beneficiary countries are often required to adhere to certain international standards and agreements to qualify for GSP benefits. This may include commitments to human rights, labor standards, and environmental protection.
  10. The Generalized System of Preferences is implemented by various developed countries, each with its own set of rules and criteria. The GSP is seen as a way to encourage economic development, reduce poverty, and promote international trade by providing developing countries with improved market access for their products.
  11. India is not a current beneficiary of the U.S. Generalized System of Preferences (GSP) program. Although India has been a member of the program since 1975, it lost its eligibility on June 5, 2019, due to "failure to provide equitable and reasonable market access" as stated by the Trump administration. Additionally, certain tariff preferences granted to India under the GSP program have been suspended for the year 2023.
  12. Several countries offer Generalized System of Preferences (GSP) to India. These countries include: EU Member States, Australia, Canada,  New Zealand, Norway, Sweden, United Kingdom, United States, and Republic of Belarus.
  13. Additionally, some countries like Kazakhstan, Lithuania, and Ukraine also provide preferential tariff treatment to a few Indian goods.
     

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