Invezz is an independent platform with the goal of helping users achieve financial freedom. In order to fund our work, we partner with advertisers who may pay to be displayed in certain positions on certain pages, or may compensate us for referring users to their services. While our reviews and assessments of each product are independent and unbiased, the order in which brands are presented and the placement of offers may be impacted and some of the links on this page may be affiliate links from which we earn a commission. The order in which products and services appear on Invezz does not represent an endorsement from us, and please be aware that there may be other platforms available to you than the products and services that appear on our website. Read more about how we make money >
Generalized System of Preferences (GSP)
In this guide
- 1. Generalized System of Preferences (GSP)
- 2. 3 key takeaways:
- 3. What is the Generalized System of Preferences (GSP)?
- 4. Pros of the GSP Copy link to section Economic growth: Helps developing countries expand their export base and grow their economies. Job creation: Promotes job creation in developing countries, contributing to poverty reduction. Market access: Provides developing countries with access to developed markets, increasing trade opportunities.Cons of the GSP Copy link to section Dependence: Some argue that GSP can create dependency on preferential treatment, hindering long-term economic self-sufficiency. Standards compliance: Developing countries must meet certain standards to qualify, which can be challenging and costly.Examples of GSP in action
- 5. Related topics
3 key takeaways:
Copy link to section- Promotes economic growth: GSP helps developing countries grow by providing access to markets in developed countries.
- Duty-free entry: Thousands of products can enter the GSP-participating countries without tariffs.
- Mutual benefits: While it aids developing countries, it also benefits consumers and businesses in developed countries by providing access to a wider range of products at lower costs.
What is the Generalized System of Preferences (GSP)?
Copy link to sectionThe Generalized System of Preferences (GSP) is a trade initiative established by developed countries to support economic development in developing countries. It allows eligible products from these countries to enter the markets of developed nations duty-free or at reduced tariff rates. The primary goal is to enhance export opportunities for developing countries, helping them to grow their economies and reduce poverty.
GSP programs typically cover a wide array of products, including agricultural goods, raw materials, and manufactured items. By lowering tariffs, GSP makes it easier and more cost-effective for businesses in developing countries to export their goods, thereby increasing their competitiveness in global markets.
How does the GSP work?
Copy link to section- Eligibility: Not all countries qualify for GSP benefits. Eligibility is determined based on various criteria, including the level of economic development, adherence to international labor standards, and respect for intellectual property rights. Countries that meet these criteria can apply for GSP status.
- Product coverage: GSP programs specify which products are eligible for duty-free or reduced-tariff entry. These products can range from agricultural produce and textiles to machinery and electronics. The list of eligible products is periodically reviewed and updated.
- Benefits for developing countries: By reducing or eliminating tariffs on their exports, GSP allows developing countries to increase their trade volumes. This helps create jobs, diversify economies, and reduce poverty. It also encourages these countries to adhere to international standards and practices, which can further promote sustainable development.
- Benefits for developed countries: Importers in developed countries benefit from access to a wider range of products at lower prices. Consumers enjoy more choices, while businesses can lower their production costs by sourcing materials and goods more cheaply from GSP countries.
Pros of the GSP
Copy link to section- Economic growth: Helps developing countries expand their export base and grow their economies.
- Job creation: Promotes job creation in developing countries, contributing to poverty reduction.
- Market access: Provides developing countries with access to developed markets, increasing trade opportunities.
Cons of the GSP
Copy link to section- Dependence: Some argue that GSP can create dependency on preferential treatment, hindering long-term economic self-sufficiency.
- Standards compliance: Developing countries must meet certain standards to qualify, which can be challenging and costly.
Examples of GSP in action
Copy link to section- United States GSP: The U.S. GSP program allows duty-free entry for up to 5,000 products from over 120 designated beneficiary countries and territories.
- European Union GSP: The EU’s GSP offers preferential access to the EU market for over 6,000 products from developing countries.
Related topics
Copy link to section- Trade agreements: Understanding bilateral and multilateral trade agreements and their impacts on global trade.
- Tariffs and trade barriers: An overview of how tariffs and trade barriers affect international trade.
- Export subsidies: How government support for exports can influence global trade dynamics.
- Developing economies: Exploring the challenges and opportunities for economic growth in developing countries.
- International trade organizations: The role of organizations like the World Trade Organization (WTO) in regulating and promoting international trade.
By learning about these related topics, you can gain a deeper understanding of the complexities of global trade and the various mechanisms used to support economic development.
More definitions
Sources & references

Arti
AI Financial Assistant