- The GSP, is a preferential tariff system which provides tariff reduction on various products.
- The GSP provides nonreciprocal, duty-free tariff treatment to certain products imported into developed countries from designated beneficiary developing countries (BDCs).
- The basic principle behind GSP trade programs worldwide is to provide developing countries with unilateral preferential market access to developed-country markets in order to spur economic growth in poorer countries.
- The preferential access is in the form of lower tariff rates for certain products that are determined not to be “import sensitive” in the receiving country market.
- The GSP concept and programs were established based on the premise that preferential tariff rates in developed country markets could promote export-driven industry growth in developing countries.
- It was believed that this, in turn, would help to free beneficiaries from heavy dependence on trade in primary products, and help diversify their economies to promote stable growth.