Non-Tariff Measures and Industrial Nation Imports of GSP-Covered Products

Abstract

The Generalized System of Preferences (GSP) program was proposed at the first United Nations Conference on Trade and Development (UNCTAD) held in 1964.' Under the GSP, most industrial nations extend tariff preferences to certain manufactured and semi-manufactured articles exported from designated beneficiary developing countries, while retaining most-favored-nation (MFN) duties on imports from non-preferred supply sources. Tariff preference margins create static price advantages intended to enhance the competitiveness of exports from beneficiaries and encourage investment in export-related activities. Several studies have identified features of GSP schemes which limit access to preferential treatment thereby reducing the effectiveness of the schemes as trade creating instruments [9; 10; 16]. First, an initial agreement to have a non-discriminatory GSP led preference-giving countries to approve exhaustive beneficiary lists and simultaneously limit product coverage to avoid undue market disruption caused by import surges from advanced beneficiaries. Many low technology and unskilled labor intensive products of export interest to beneficiaries are statutorily excluded from eligibility under most schemes.2 A second factor limiting utilization is the GSP's stated intention to shift production emphasis from primary products to manufactured goods. Most processed and semi-processed agricultural, forestry, and fishery products of export interest to beneficiaries are treated as falling outside the GSP. Third, ceilings on preferential imports and graduation, advanced as means of restricting trade shares for the poorer beneficiaries by limiting preferential trade shares of the more advanced suppliers, basically operate as safeguards for import-sensitive activities.3 Finally, complex Rules of Origin and other administrative regulations unduly restrict preferential imports of assembled items.