What is Generalized System of Preferences?

The Generalized System of Preferences (GSP) is a generalized, non-reciprocal and nondiscriminatory preference scheme beneficial to developing countries (also known as preference receiving countries or beneficiary countries) extended by developed countries

(also known as preference giving countries or 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 basic principle behind the GSP program 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 main 

objectives of granting trade preferences to developing countries are to:

• Enhance their export earnings;

• Promote industrialization, and

• Encourage the diversification of their economies.

Countries that extend GSP benefits:

Presently, 29 preference giving countries are extending GSP concession through their respective Schemes. These are Australia, Canada, Czech Republic, European Union, Japan, New Zealand, Norway, Bulgaria, Hungary, Poland, the Russian Federation, Slovakia, Switzerland, and the USA.

It is to be noted that the GSP schemes offered by the various donor countries and their rules of origin differ fundamentally.

Goods complying with the conditions of the GSP of the USA, for example, will not necessarily comply with the EU GSP. Bangladesh as a Least Developed Country (LDC) is enjoying duty free market access or reduced tariff rate facilities to export to various developed and developing countries in the world. This facility is enhanced and privileged by the membership of the World Trade Organization (WTO).

Besides, Bangladesh is a member of different regional trade blocs. Thus the country enjoys duty-free or reduced tariff rate access to other member countries. WTO members always recognize the necessity of providing Duty-Free Quota Free (DFQF) market access to LDCs. It was decided in the 6th WTO Ministerial Conference held in Hong Kong in 2005.

All developed countries will provide DFQF market access to LDCs for at least 97% tariff lines. Bangladesh is getting DFQF market access to different markets. This is the first legally binding decision on DFQF for LDCs.

Bangladesh is getting GSP facilities from 38 countries; European Union – 28 countries. Others - Australia, Belarus, Canada, Liechtenstein, Japan, New Zealand, Norway, Russian Federation, Switzerland, and Turkey – 10 countries.