Generalized System of Preferences

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.

The GSP schemes offered by the various donor countries and their rules of origin differ fundamentally. Goods complying with the conditions of the GSP of the USA, for example, will not necessarily comply with the EU GSP.

Special arrangements have been established in order to address the special needs of the least developed countries.

The World Trade Organization (WTO) sets a global trading framework for its 153 member countries, two-thirds of which are developing countries. The WTO’s open market policies have led to changes in the EU’s main trade and aid agreement with 79 developing countries – the Cotonou Agreement. The WTO has also recognized the need to make greater provision for developing countries and also for small business.

The WTO has reached several agreements to reduce and eliminate barriers to global trade, including:

- the General Agreement on Tariffs and Trade (GATT – goods);

- the General Agreement on Trade in Services (GATS);

- the Trade-Related Aspects of Intellectual Property Rights (TRIPS) dispute resolution between member governments specific product/service and exporter/importer agreements.

The WTO also allows developing countries and ‘least developed countries’ (LDCs) to adapt more slowly to free trade.

There are 50 LDCs as defined by the UN - 32 of which are WTO members.

These include self-defined developing countries, and two of the world’s largest economies – China and India.

These developing countries have successfully agreed certain changes in WTO agreements, including:

- a programme of Technical Assistance and Capacity Building – for which the UK has pledged £45 million;

- a change in the TRIPS rules on patented medicines to allow developing countries to use cheaper medicines under certain circumstances.

There are also other changes being considered by the WTO that would benefit developing countries, such as:

- special measures for LDCs and small economies;

- changes to the relationship between trade, debt and finance;

- the possibility of technology transfers;

- the relationship between patents and development.

WTO agreements and their changes have created a vast range of new business opportunities. Rules preventing special help for small business in public procurement – including development aid contracts – have been effectively removed in the EU and other developed countries, allowing many opportunities in these markets.

Economic Partnership Agreements (EPAs) are development friendly trade agreements between the EU, its member states and African, Caribbean and Pacific countries (ACPs). EPAs are reciprocal Free Trade Agreements building on the Cotonou Agreement to enable a type of agreement that is compatible with the World Trade Organization trade agreement principles. They provide:

- duty and quota free access to EU markets;

- long transition periods for developing countries to open up their markets safeguards that allow countries to protect vital products.

EPAs also encourage regional integration by reducing trade barriers within the ACP regions.

The following countries currently benefit from duty-free, quota-free access for ACP exports into EU markets:

Caribbean Forum of Caribbean States (CARIFORUM): Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Suriname, Trinidad and Tobago.

Common Market for Eastern and Southern Africa - COMESA: Burundi, Comoros, the Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.

East African Community: Kenya, Tanzania, Uganda, Rwanda and Burundi

East and Southern Africa - ESA: Zimbabwe, Seychelles, Mauritius, Comoros, Zambia and Madagascar.

Southern African Development Community - SADC: Angola, Botswana, the Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.

Pacific Islands Forum - PIF: 14 island states, the biggest of which are Papua New Guinea and Fiji.

West Africa: All 15 members of ECOWAS - the Economic Community of West African States, Ivory Coast and Ghana.

Central Africa: All members of ECCAS - the Economic Community of Central African States as well as the Democratic Republic of Congo, Sao Tome and Principe, Cameroon.

The GSP is set by the EU and provides 176 developing countries with a reduction in EU import tariffs. These developing countries are not expected to offer the EU tariff reductions in return.

Module 3

Exercise 1. Translate the text into Russian.

Text 1