GENERALISED SYSTEM OF PREFERENCE

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Generalised system of Preference

What is GSP ?

A developed country provide some benefit to developing country, in terms of custom duty or tariff. It is us. Trade program designed to promote economic growth in the developing world by providing preferential-duty –free entry for up to 48,000 products from 129 designated beneficiary countries and territories.

It instituted on Jan. 1,1974,by trade act of 1974. Ultimately by this the export will increase of developed country, and promote competitive-ness of product.

Developed                            Developing

 

Doner                                      Beneficiaries

 

UNCTAD:- GSP discussed in UNCTAD. 1968-New delhi – 2 Round and taken concrete measures to implement GSP.

They do have sealing period 10 years. During Tokyo round of multilateral negotiations-1979, 10 years of sealing period is with drawn.

How the product identified ?

The base of particular product identified is

Rules of origin (ROO)

Origin  criteria:- Whenever the developing country exports the product to developed country, that should be product in beneficiary economy.

Transport Condition:- Modi, or transport that is level.

Documentary evidence:-

 

Advantages:- 2 Perspective

Done Country :- 1. Cheaper import/ cost effective import.

Final good that are manufactured by doner country it can be export to other country.

Beneficiary Country:- 1. Promotion of export

2.Lead to increase forex reserve

3 .Employment generation

  1. Industrialization
  2. Skill enhancement

Relation between USA or India under ambit of GSP

2015                              2017

17.54b$                        20.77b$:- Total GSP import

4.58 b$                         5.58b$:- Export form India under GSP

Data shows that certain export is doubling after passing two years 13 sector which are under GSP certain engineering product , chemical, textile etc.

why is it being withdawn?

  • Trade deficit- more than 20b$ of deficit negotiation taken to purchase oil.
  • Lobby groups that imposes certain certification on the dairy product 9 where INDIA asked certification about the fodder , and feed provide to the animal due to culture aspect of india) , stent issue ( regulating the medical devices), local data storage( visa master etc.) , e- commerce rules etc.
  • INDIA is tariff king

; HARLEY DEVIDSON CASE

 

100% tariff

USA                                       INDIA

Later reduced to 50%

It is reciprocal tax.

 

Product 100%

USA                                    INDIA

LATER 100%

If that is true india is a tariff king

  • GOI trying to protect domestic market .
  • India is not only countries who imposes high tarrif like.

USA- 350%

JAPAN -736%

INDIA-150% AVG. tariff 13.8% on goods 10.7%

SOUTH KOREA- 807%

They are protecting their domestic market.

  • Inward looking policies.