GSP AND GSTP

By shameem ET

Generalized System of Preferences

Generalized System of Preferences (GSP) is a preferential tariff system extended by developed countries (also known as preference giving countries or donor countries) to developing countries (also known as preference receiving countries or beneficiary countries). It involves reduced MFN Tariffs or duty-free entry of eligible products exported by beneficiary countries to the markets of donor countries. It involves reduced MFN Tariffs or duty-free entry of eligible products exported by beneficiary countries to the markets of donor countries.

The idea of tariff preferences for developing countries was the subject of considerable discussion within the The United Nations Conference on Trade and Development (UNCTAD) in the 1960s.• In 1971, the GATT enacted two waivers to the MFN that

permitted tariff preferences to be granted to developing country goods. Both these waivers were limited in time to ten years.• In 1979, as part of the Tokyo Round, the GATT established

a permanent exemption to the MFN obligation by way of the enabling clause.

GSP is presently extended by 29 developed countriesAustralia , Republic of Bulgaria, Canada Republic of

Hungary, Austria, Italy ,Czech Republic, Republic of Poland ,Belgium, Luxembourg , European Union Russian Federation ,Denmark ,Netherlands, Japan ,Slovakia ,Finland ,Portugal New Zealand, Switzerland ,France ,Spain ,Norway ,Republic of Belarus ,United States of America ,Germany ,Sweden    , Greece, United Kingdom

In addition, it is understood that Kazakhstan, Kyrgyzstan, Lithuania and Ukraine may also be allowing preferential tariff treatment to select Indian goods.

ELIGIBILE PRODUCTSOnly such products of a beneficiary country (like India) that fulfill the requirements of the rules of origin laid down by the importing country, are considered eligible for preferential tariff treatment on import into the markets of donor countries . For example, in the case of 15 member states of European Union, an Indian product is considered eligible only if it fulfils the requirements of Rules of Origin laid down in the Community legislation.

Objectives of Generalized System of Preferences

The main objectives of granting trade preferences to developing countries are to:

Enhance their export earnings; Promote industrialization, and Encourage the diversification of their economiesStandard of living

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, and petroleum and petroleum products.

Global System of Trade Preferences

The Agreement on Global System of Trade Preferences among developing countries (GSTP) was negotiated in the year 1988 by 48 developing countries that were member of Group of 77.

The declared objectives of the GSTP are:• To promote and sustain mutual trade, and• To develop economic cooperation among

developing countries (members of Group of 77)

Rules of Origin• The objective of these rules is to determine the origin of

products eligible for preferential concessions under GSTP. Products, which have achieved the status ‘originating in India’, are eligible for preferential tariff treatment upon imports into participant countries.• Under agreement establishing GSTP, tariff concessions are

exchanged among developing countries, who have signed agreement. Presently, 46 countries are members of GSTP and India has exchanged tariff concessions with 12 countries on a limited number of products.

following are considered as wholly obtained in India.• A)raw or mineral products extracted from its soil, its water or

its seabed;• B)agricultural products harvested there;• C)animals born and raised there;• D)products obtained from animals referred to in clause (c)

above;• E)products obtained by hunting or fishing conducted there;• F)products of sea fishing and other marine products taken

from the high seas by its vessels

Agencies authorized to issue certificates of origin

organization Commodity

Export Inspection Council through their field offices known as Export Inspection Agencies with offices all over India.

All Products

Tobacco Board, Guntur Tobacco & Tobacco products

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