Global System of Trade Preferences (GSTP)

A declaration on the establishment of the Global System of Trade Preferences Among Developing Countries (GSTP) was issued in October 1982. In 1986, a Brazilian declaration on the start of the First Round of GSTP Negotiations was issued. This First Round concluded in Belgrade in 1988; during this round, tariff preferences were exchanged and parties were invited to sign the Agreement, provided that ratification procedures are expeditiously completed for the Agreement to enter into force.

The GSTP is a multi-party treaty to which only Group of 77 member countries may be party. It provides a comprehensive framework that defines rules governing trade relations among member countries on the basis of exchanged tariff preferences as follows:

Preferential Tariff Treatment

Under the system, every country shallspecify for the other member countries a number of goods enjoying preferential treatment in compliance with the principle ofMostFavored Nation treatment(MFN). In other words, if a country grants preferential treatment to another member country in accordance with the GSTP, this preference shall be generalized to cover the other member countries as well.

Rules of Origin

Concerning goods not wholly obtained, the value added in GSTP member countries shall not be less than 50% of the FOB value.

Concerning cumulative rules of origin, the value added in GSTP member countries must not be less than 60% of the FOB value.

Current Status of the GSTP

Transactions are now conducted according to the lists agreed at the First Round in 1988.

In early 1990s, a new round of negotiations was proposed with a view to increasing exchanged goods under the said system; however, it faltered as the members failed to ratify their agreement.

During the Sao Paulo-based UNCTAD meetings held in June 2004, the Argentine proposal on initiating a third round of negotiations was agreed and the negotiation period was set to start in November 2004 and end in November 2006.

Current Negotiating Stance

Countries willing to join this round are currently negotiating the expansion of their commitments under the GSTP. Countries which are not participating in the negotiations shall be dealt with on the basis of the first round lists.

GSTP Member Countries

AlgeriaEgyptMoroccoSouth Korea

ArgentinaGhanaMozambiqueSri Lanka

BangladeshGuineaMyanmarSudan

BeninGuyanaNicaraguaTanzania

BoliviaIndiaNigeriaThailand

BrazilIndonesiaNorth KoreaTrinidad and Tobago

CameroonIranPakistanTunisia

ChileIraqPeruVenezuela

ColombiaLibyaPhilippinesVietnam

CubaMalaysiaRomaniaZimbabwe

EcuadorMexicoSingapore

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