What is GSP?
Generalized system of preferences (GSP), provides preferences on international trade to developing and poor countries. In GSP developed countries provide a non-reciprocal advantage to developing countries on international trade.
GSP and MFN (Most Favored Nation) are interlinked with one another. GSP derived from MFN of WTO (World Trade Organization). One of the crucial rules of WTO is one nation can’t provide special facilities to another nation.
But to provide special facilities to Friend countries, poor and developing countries; they ease this law; the MFN system arises from there. For a special reason, providing custom free facilities to a developing country by easing WTO rules is called GSP.
The advantages of GSP are improving the present condition of developing countries, expansion of export, expansion of industry, accelerating GDP growth rate, reduce unemployment etc.
History of GSP
In 1964, on the first summit of UNCTAD, all countries discussed providing special facilities to developing countries on international trade.
In the 2nd summit, in 1968, this topic got huge support. At first, the EU started the GSP system in 1971 while the USA started law about GSP in 1974 and implement it in 1976.
GSP provider countries to BD
European Union
Since 1971, after the EU started the GSP system; it becomes the largest export destination of Bangladesh. First, BD can export only industrial and agro-based products and from 2001 it achieves access to an export of all products except arms and intoxicating products.
Sometimes EU renews or suspense GSP to some countries and products. Although there was a case filed against BD over violating labor rights in June 2018 by International Trade Union Confederation, the Clean Clothes Campaign and HEC-NYU EU Public Interest Clinic.
The EU ombudsman found Bangladesh no guilty. Bangladesh exports its 63 percent of the total RMG sector to EU and 58 percent of total export. Export Promotion Bureau of Bangladesh told that BD export to EU worth $21.13 billion in the 2018-19 fiscal year.
United States of America
From 1972 USA is providing GSP facilities to different countries and products. Bangladesh got GSP facilities from the USA on 1st January 1976.
According to the DOHA summit, the least developed countries will get GSP facilities of 97% of products.
Bangladesh is also getting those facilities but the main exporting product of Bangladesh Ready-Made Garments (RMG) was not included there.
USA gave GSP facilities on more than 5000 products but most of those were not produced in Bangladesh. BD exports only tobacco, plastic, sports ware and some less valuable products.
In 1990, the American Federation of Labor and Congress of industrial organization made a writ petition against Bangladesh for suspension of GSP facilities.
They withdraw their writ when Bangladeshi Govt told that they will fulfill their demand.
But Bangladeshi govt fails to fulfill those requirements and they made a petition again.
In June 2013, the USA suspends GSP benefits of Bangladesh in connection with workplace safety, worker’s rights, incidents etc.
The Rana Plaza tragedy which occurred in 2013 promotes those suspensions earlier. According to the US department of commerce, by 2019 Bangladesh exports to the USA were worth $6687 million.