Q. With reference to Generalized System of Preferences (GSP) seen in the news recently consider the following statements:
1.It is a preferential tariff system which provides tariff reduction on various products.
2.GSP provides for the equal treatment amongst the member countries of WTO in the case of tariff being imposed.
3.GSP provides tariff reduction for least developed countries.
Which of the statements given above are correct?
Statement 1 and 3 are correct. GSP is a preferential tariff system which provides tariff reduction on various products. It provides tariff reduction for least developed countries.
Statement 2 is incorrect. GSP and Most Favoured Nation (MFN) both comes under the purview of WTO. MFN status provides equal treatment in the case of tariff being imposed by a nation but in case of GSP differential tariff could be imposed by a nation on various countries depending upon factors such as whether it is a developed country or a developing country.