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Updated: 16 September 2024
Navigating the global trade landscape can be intricate, especially when it comes to understanding the benefits and regulations surrounding international imports. One key element that can significantly impact your business’s import strategy is the Generalized System of Preferences (GSP). But what exactly is the GSP, and how does it affect your tech imports?
Whether you’re a seasoned global trader or new to international importing, grasping the nuances of the GSP can help you optimize your supply chain and reduce costs.
What is the Generalized System of Preferences (GSP)?
The Generalized System of Preferences (GSP) is a trade program that allows developing countries to export their goods to developed countries at reduced tariffs. This program aims to promote economic growth and development in these less-developed countries.
How Does the Generalized System of Preferences Work?
- Eligibility: Developing countries that meet certain criteria, such as low per capita income, are eligible to participate in the program.
- Product Coverage: The program typically covers a wide range of products, including agricultural goods, manufactured products, and textiles.
- Preferential Treatment: Eligible products from GSP countries are granted preferential treatment in the form of reduced tariffs or duty-free access to the developed country’s market.
- Conditions: To maintain GSP benefits, developing countries must comply with certain conditions, such as respecting human rights, protecting labor rights, and combating corruption.
The Different Generalized System of Preferences Programs
Standard GSP
The standard Generalized System of Preferences is designed for low and low/mid-income countries. It includes partial or full removal of customs duties on two-thirds of tariff lines.
Generalized System of Preferences Plus (GSP+)
The Generalized System of Preferences Plus (GSP+) scheme is designed for vulnerable low and low/mid-income countries. It sees tariffs cut to 0% if countries implement international conventions related to good governance and sustainable economic growth. It looks to incentivize improving human rights, labor rights, environmental protection, and more.
EBA (Everything But Arms)
This is a special Generalized System of Preferences scheme offered by the EU to the least developed countries (LDCs), allowing them to export all products except arms and ammunition duty-free to the EU market.
African Growth and Opportunity Act (AGAO)
The African Growth and Opportunity Act is part of the US Generalized System of Preferences and is open to eligible sub-Saharan African countries. It offers duty-free access to the US for 1800 products, on top of the 5000 GSP products.