GSP Meaning and Definition

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Offline Abu Saleh

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GSP Meaning and Definition
« on: November 15, 2018, 05:54:29 PM »
                                                                            GSP Meaning and Definition
GSP is a mechanism for according Special and Differential (S&D) treatment to developing and LDCs, and which was integrated under part IV of GATT and finally under Enabling Clause of 1979.  The concept of S&D and preferential treatment came into existence to address the role of developed countries in the economic progress of developing and LDCs.  The incorporation of GSP under WTO multilateral Agreements went back to a long history where the origin lies in the United Nations Conference on Trade and Development (UNCTAD), which resolved at its first conference in 1964 and provided non bonding obligations on developed Contracting Parties that they should grant concessions to all developing countries and should not require any concessions in return from developing countries.  The second session of UNCTAD agreed on the early establishment of a GSP program according to which non discriminatory tariff preferences would be granted to products from developing countries without requiring reciprocity.  It recognized three main goals and which includes the increase of export earnings of developing countries, the promotion of their industrialization and finally the economic growth of developing countries.  Due to the differences among prospective beneficiaries and counterparts states did not able to maintain any uniform practice of GSP.  In 1971 the GATT Contracting Parties adopted the Waiver Decision on the Generalized System of Preferences which had temporary application of ten years.  This waiver is known as ‘GSP Decision’ which was adopted at the request of the developed states to enable developed countries to grant preferences to developing countries. The Contracting Parties reached an agreement in fovour of the early establishment of a mutually acceptable system of generalized, non reciprocal and non discriminatory preferences beneficial to the developing countries in order to increase export earnings, to promote the industrialization and to accelerate the rates of economic growth of these countries.  It is important to mention that the purpose of the adaptation of GSP Decision was to facilitate trade from developing countries and not to raise barriers or impediment to the international trade.
During the Tokyo Round of negotiation (1973-79), developing and developed countries engaged themselves in tremendous bargaining about the possible characteristics of GSP schemes.  The proposal of Brazil suggested that the GATT should provide a standing legal basis for GSP by integrating it into GAAT on a permanent basis backing by sanctions to ensure its effectiveness.  Finally to confirm a secure legal basis for the developing and LDCs the Contracting Parties adopted The Enabling Clause in 1979.  The previously granted temporary waivers became permanent by the adoption of this clause.  The clause has created a strong basis for S&D treatment and Edwinki Kessi argued that it has placed the concept of S&D treatment at the heart of the GATT legal system.  Some authors argued that it has broadened and deepened the scope of S&D treatment;   on the converse some others stated that it was simply a summation rather than extension of those efforts since 1954 onwards.  The Enabling Clause has had the effects of converting what was merely an aspiration in the GSP Decision into a bonding condition, in other words now it protects the preferential tariff treatment that is generalized, no reciprocal and nondiscriminatory.  The Enabling Clause raises some questions relating to the practice of WTO member states when they condition PTAs with non trade measures and impose trade sanctions for non fulfillment of that conditionality, which would be discussed in the later part of the paper.