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A Comparative Analysis of Generalised Systems of Preferences

Challenges, Constraints, and Opportunities for Improvement

Clinic: Graduate Institute, Spring 2011
Beneficiary: The European Parliament, Committee on International Trade

Executive Summary

Read the full report here

To address this challenge, donors first divide their GSP schemes into various beneficiary categories. The EU, like the other major donors studied (the United States, Canada, Australia and Japan), grants greater market access to Least Developed Countries (LDCs) through a separate category in its preferential system, Everything But Arms (EBA). However, the EU additionally administers an intermediate tariff preference category (GSP Plus) that ventures further than EBA into conditionality. Like the U.S., the EU uses conditionality to induce strategic improvements in developing states, though the EU uniquely ties elevated preferences to sustainable development. Since its inception in 1964, the Generalised System of Preferences (GSP) has served developed countries to foster trade with poorer countries. In both the design and implementation of GSP programs, the EU—like other major GSP donors—must balance the development needs of poorer countries with domestic political pressures. Further, donors must tailor their GSPs to address diversity among developing countries, which now include states with significantly different levels of economic development.

The effectiveness of these mechanisms is currently under review because the EU GSP requires reauthorization every three years. Compared to the 10-year GSP duration of donors such as Canada, this marks a high frequency of legislative reaction. Canada also simplifies another aspect of domestic GSP review by maintaining no graduation mechanism for stripping newly developed countries of preferences, whereas the EU annually performs such review for each beneficiary, including unique calculations of product-based competitiveness.

However, such focus on individual articles is common to all donors that limit GSP product coverage for