The Perversity of Preferences : The Generalized System of Preferences and Developing Country Trade Policies, 1976-2000 (2023)

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Industrial countries maintain special tariff preferences, namely the Generalized System of Preferences (GSP), for imports from developing countries. Critics have highlighted the underachieving nature of such preferences, but developing countries continue to place the GSP at the heart of their agenda in multilateral negotiations. What effect do such preferences have on a recipient's own trade policies? The authors develop and test a simple theoretical model of a small country's trade policy choice, using a dataset of 154 developing countries from 1976 through 2000. They find that countries removed from the GSP adopt more liberal trade policies than those remaining eligible. The results, corrected for endogeneity and robust to numerous alternative measures of trade policy, suggest that developing countries may be best served by full integration into the reciprocity-based world trade regime rather than continued GSP-style special preferences.


Ozden, Caglar; Reinhardt, Eric. 2003. The Perversity of Preferences : The Generalized System of Preferences and Developing Country Trade Policies, 1976-2000. Policy Research Working Paper;No. 2955. © World Bank, Washington, DC. License: CC BY 3.0 IGO.

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What is the GSP generalized system of preferences? ›

GSP is the largest and oldest U.S. trade preference program. Established by the Trade Act of 1974, GSP promotes economic development by eliminating duties on thousands of products when imported from one of 119 designated beneficiary countries and territories. The GSP Guidebook provides basic information on the program.

What is the generalized system of preferences in the EU? ›

GSP is a scheme which allows products originating in certain developing countries preferential access to the markets of the European Union (EU). Preferential treatment is given in the form of reduced or zero rates of Customs Duties.

Has GSP been reinstated? ›

The program expired on December 31, 2020, before Congress passed legislation to reauthorize it. Currently, 119 developing countries and territories are GSP beneficiary developing countries (BDCs).

What is the difference between GSTP and GSP? ›

GSP or Generalized System of Preference refers to the preferential tariff system designed by UNCTAD for reducing tariffs for least developed nations. GSTP or Global System of Trade Preferences refers to the framework under UNCTAD for increasing trade among the developing countries.

What are the criticism of GSP? ›

GSP Hub: A common criticism of the GSP is that its economic impacts outweigh the human impacts, including human and labour rights, environmental protection, good governance, etc.

What is the impact on GSP? ›

Impact of GSP

Between 2014 and 2019, the 27 EU Member States' imports from current GSP beneficiaries utilising any of the existing arrangements increased by 25%, whereas overall imports from third countries increased by 16% over the same period.

What is the Generalised Scheme of preference 1971? ›

First created in 1971, the EU's GSP is a scheme that allows vulnerable developing countries to pay lower tariffs on their exports to the EU. The GSP rules were revised in 2012 under Regulation (EU) No 978/2012.

What are the 3 main governing bodies of the EU and what is the function of each? ›

These institutions collectively provide the EU with policy direction and play different roles in the law-making process: the European Parliament (Brussels/Strasbourg/Luxembourg) the European Council (Brussels) the Council of the European Union (Brussels/Luxembourg)

How many GIs are there in the EU? ›

GIs have been protected by the EU since the 1970s. Almost 3,500 GIs are currently registered in the EU which represent a sales value of €74.8 billion.

Is GSP still in effect? ›

U.S. Customs and Border Protection (CBP) enforces GSP at the border. Is GSP permanent? GSP was first authorized for 10 years, until 1985. Since then, it has been reauthorized 14 times, with authorizations generally lasting 2 to 3 years.

Why GSP left? ›

Suffering from ulcerative colitis, St-Pierre wanted to avoid holding up the middleweight division. After his win at UFC 223, UFC Lightweight Champion Khabib Nurmagomedov called out St-Pierre as his first title defense later in the year. St-Pierre declined, stating again that he was not medically fit to compete.

Did GSP get suspended? ›

Looks can be deceiving. Despite suffering a multitude of facial lacerations in his controversial win over Johny Hendricks at UFC 167 over the weekend, Georges St-Pierre has been medically suspended for just 45 days by the Nevada State Athletic Commission.

Is GSP currently active? ›

On December 31, 2020, the GSP SPIs (“A,” “A+,” and “A*”) expired and is currently pending Congressional action to pass legislation for the program's renewal.

What are the criteria for country eligibility under GSP? ›

To qualify for GSP benefits, a beneficiary country must meet the eligibility criteria established by Congress, including, but not limited to: enforcing arbitral awards; a beneficiary may not have nationalized, expropriated or otherwise seized property of U.S. citizens or corporations without providing, or taking steps ...

What does GSTP do? ›

Negotiated within UNCTAD's framework, the Global System of Trade Preferences (GSTP) among Developing Countries, signed on 13 April 1988, aims at increasing South-South trade primarily through preferential tariff reductions.

What is the disadvantage of GSP? ›

Disadvantages or limitations of GSP

The scope of GSP scheme is limited. Only dutiable products are covered under this scheme. So, the developing countries cannot take advantage of the GSP in respect of duty free products. Export of duty free products by developing countries suffers.

Are GSP sensitive? ›

German Shorthaired Pointers are very sensitive dogs. They do not like to be left alone and want love at all times. They return the love they get and are very friendly and affectionate with your family, children, and other dogs. They are moderately friendly with strangers.

Do GSP have sensitive stomachs? ›

Because GSPs are a large, deep-chested dog breed, they can be susceptible to Gastric Dilatation and Volvulus or bloat, an emergency gastrointestinal syndrome requiring immediate vet care.

What is GSP facilities? ›

The principle of GSP was agreed at the United Nations Conference on Trade and Development (UNCTAD), and is a facility granted to developing countries ("beneficiary countries") by certain developed countries ("donor countries"). It is not negotiated with them: the preferential treatment is non-reciprocal.

What is the impact of US revocation of GSP benefit to India? ›

Soon after the US revoked India's GSP status, India put retaliatory tariffs on 29 US products, which created tensions between the two countries and affected their trade.

What is GSP economics? ›

GSP: Gross State Product is a measurement of a state's output; it is the sum of value added from all industries in the state. GSP is the state counterpart to the Nation's gross domestic product (GDP).

What is standard preference theory? ›

According to the standard theory, consumers choose a bundle within their budget such that no other feasible bundle is preferred over it, thus maximizing their utility.

What is the US Trade Preference program? ›

Trade Preference Programs are unilateral preference programs that are legislated by Congress. With respect to textiles and apparel, these preference programs provide duty-free treatment to certain textile and apparel products from designated beneficiary countries that meet the program's rules of origin.

Who are the members of generalized system of preferences? ›

The following 15 countries grant GSP preferences: Armenia, Australia, Belarus, Canada, the European Union, Iceland, Japan, Kazakhstan, New Zealand, Norway, the Russian Federation, Switzerland, Turkey, United Kingdom and the United States of America.

What are the 4 bodies of the European Union? ›

The main European Institutions are: the European Council, the European Commission, the Council of the European Union and the European Parliament.

Which are the 3 main institutions involved in EU decision making? ›

There are 3 main institutions involved in EU decision-making:
  • the European Parliament, representing EU citizens.
  • the Council of the European Union, representing EU governments.
  • the European Commission, representing the EU's overall interests.

What are the three core principles of the EU? ›

The common principles and values that underlie life in the EU: freedom, democracy, equality and the rule of law, promoting peace and stability.

Who uses GIS the most? ›

Engineers use GIS technology to support the design, implementation, and management of communication networks for the phones we use, as well as the infrastructure necessary for internet connectivity. Other engineers may use GIS to develop road networks and transportation infrastructure.

Which countries have the most GIS? ›

Germany had the largest number of GIs in force (15,566) in 2018, followed by China (7,247), Hungary (6,683), Czech Republic (6,285), Bulgaria (6,038), Italy (6,015) and Portugal (5,998).

Which are the top five states with the greatest number of GIS? ›

Top 5 states in India which holds maximum number of GI tags includes Uttar Pradesh, Tamil Nadu, Karnataka, Maharashtra, and Kerala.

Why is GSP not fighting? ›

St-Pierre stressed, however, that he will not return to MMA. “I might compete, because I'm in an entertainment business, in boxing or in grappling – something that is safer than MMA. “Not MMA. Something that is safer, that has less risks, because I have a lot more to lose and it's not my priority anymore [...]

Who took GSP down? ›

Hughes on GSP Win Against Hendricks: 'Worst Decision in UFC History' UFC 167 produced one of the most controversial title fights in company history, as longtime champion Georges St-Pierre got bruised and bloodied up by challenger Johny Hendricks in the main event of the evening.

Did GSP test positive? ›

Both fighters passed all the tests they were given, and neither ever has tested positive for performance-enhancing drugs. St-Pierre announced his hiatus one month later, citing a growing level of stress as the primary reason.

Who was GSP biggest rivalry? ›

GSP put on an incredible performance that night. He knocked out Hughes in the 2nd round to become the new Welterweight Champion. Georges St-Pierre refers to Matt Hughes as the biggest rival of his career. These are the two greatest Welterweights of all time.

When did GSP get knocked out? ›

It doesn't seem like it was thirteen years ago, but it was, and on April 7, 2007, Matt Serra shocked the world when he knocked out Georges St-Pierre to win the UFC welterweight title.

When did GSP stop fighting? ›

Georges St-Pierre shocked the masses when he decided to walk away from MMA in 2013, but he had his reasons. One of the most dominant champions in UFC history, St-Pierre (26-2 MMA, 20-2 UFC) vacated his welterweight belt after he edged out Johny Hendricks for his ninth consecutive title defense at UFC 167.

How did GSP lose his belt? ›

Serra, who earned the title shot by winning The Ultimate Fighter 4 reality TV show tournament, was a sizable underdog heading into the fight against St-Pierre, but caught GSP with a hard shot in the first round to win by TKO. It was the last time St-Pierre would lose in the UFC.

Why did GSP vacate the belt? ›

St-Pierre, 36, attributed the decision to health. He's said he's suffering from colitis (an inflammation of the colon), and didn't want to hold up the 185-pound division as he recovers.

Who did GSP defend his title against? ›

Georges St-Pierre – 9 title defenses

The greatest Canadian MMA athlete of all time retained his championship nine times. He defeated the likes of Jon Fitch, BJ Penn, Thiago Alves, Dan Hardy, Josh Koscheck, Jake Shields, Carlos Condit, Nick Diaz and Johnny Hendricks during his time as the middleweight champion.

What are the benefits of GSP? ›

GSP promotes economic growth and development in the developing world. GSP promotes sustainable development in beneficiary countries by helping these countries to increase and diversify their trade with the United States.

Will GSP be reinstated? ›

Historically the program has been renewed 14 times in the last half-century, so the odds are good GSP will be renewed again. However, over a year later, importers and companies overseas are getting anxious as there is still no timeframe for renewal.

What is the GSP refund bill? ›

The GSP 'Refund-Only' Bill (HR 8906) would refund more than US$700m in tariffs paid by US companies on products including luggage, handbags, backpacks, cases, wallets, and more due to the expiration of the popular Generalized System of Preferences (GSP) programme on 31 December 2020.

What makes a country eligible? ›

You must have a defined territory. You must have a permanent population. You must have a government. Your government must be capable of interacting with other states.

What is the definition of GSP economics? ›

GSP: Gross State Product is a measurement of a state's output; it is the sum of value added from all industries in the state. GSP is the state counterpart to the Nation's gross domestic product (GDP).

What is the GSP in international law? ›

First created in 1971, the EU's GSP is a scheme that allows vulnerable developing countries to pay lower tariffs on their exports to the EU. The GSP rules were revised in 2012 under Regulation (EU) No 978/2012.

What is counted in GSP? ›

Gross State Product (GSP)

GSP includes all final products and services during a specific time period which has been produced by the state's inhabitants. It is the sum of all value added by industries within the state.

Who are the beneficiaries of the Generalized System of Preferences? ›

The following 15 countries grant GSP preferences: Armenia, Australia, Belarus, Canada, the European Union, Iceland, Japan, Kazakhstan, New Zealand, Norway, the Russian Federation, Switzerland, Turkey, United Kingdom and the United States of America.

What is GSP vs GDP? ›

Gross domestic product (GDP) is an aggregate measure of the value of goods and services produced in a country. Gross state product (GSP) is the analogous measure for U.S. states. Gross product is a measure of a country's or state's productive capacity or wealth.

What is the GDP per capita? ›

GDP per capita measures the economic output of a nation per person. It seeks to determine the prosperity of a nation by economic growth per person in that nation. Per capita income measures the amount of money earned per person in a nation.

Why is real GDP not a perfect measure of well being? ›

GDP is an indicator of a society's standard of living, but it is only a rough indicator because it does not directly account for leisure, environmental quality, levels of health and education, activities conducted outside the market, changes in inequality of income, increases in variety, increases in technology, or the ...

Is income included in GDP? ›

The value of output produced (GDP) is equal to the value of ALL the income earned by everyone who had anything to do with producing the output.


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