Global System of Trade Preferences (GSTP)
The Agreement establishing the Global System of Trade Preferences (GSTP)
among Developing countries was signed on 13th April, 1988 at Belgrade following
conclusion of the First Round of Negotiations. The GSTP came into being after a
long process of negotiations during the Ministerial Meeting of the Group of 77,
notably at Mexico City in 1976, Arusha in 1979 and Caracas in 1981. The
Ministers of Foreign Affairs of the Group of 77 in New York set up the GSTP
Negotiating Committee in 1982. The New Delhi Ministerial meetings, held in July
1985, gave further impetus to the GSTP negotiation process. The Brasilia
Ministerial Meeting held in May 1986 launched the First Round of GSTP
Negotiations. At the conclusion of the First Round in April 1988 in Belgrade,
the GSTP Agreement was signed on 13 April 1988. The Agreement entered into force
on 19th April 1989. Forty-four countries have ratified the Agreement and have
become participants. The GSTP establishes a framework for the exchange of trade
concessions among the members of the Group of 77. It lays down rules, principles
and procedures for conduct of negotiations and for implementation of the results
of the negotiations. The coverage of the GSTP extends to arrangements in the
area of tariffs, para-tariff, non-tariff measures, direct trade measures
including medium and long-term contracts and sectoral agreements. One of the
basic principles of the Agreement is that it is to be negotiated step by step
improved upon and extended in successive stages
- The current round of GSTP negotiations, also known as “São Paulo Round” was
launched in 2004 with 22 participating countries, on the occasion of the UNCTAD
XI Quadrennial Conference in Sao Paulo in Brazil. At the end of the
negotiations, Ministerial Modalities were adopted on 2 December, 2009 wherein
Ministers agreed to modalities based on a tariff reduction of at least 20% on at
least 70% of all dutiable tariff-lines. Members who were in the process of their
WTO accession namely, Algeria and Iran were to be given specific flexibilities.
The modalities on market access adopted by the Ministers are as under:
- Across-the-board, line-by-line, linear cut of at least 20% on dutiable tariff
lines;
- Product coverage to be at least 70% of dutiable tariff lines;
- Product coverage shall be 60% for participants having more than 50% of their
national tariff lines at zero duty level;
- Tariff cuts shall be made on the MFN tariffs applicable on the date of
importation. Alternatively, participants may choose to apply the cuts on the MFN
tariffs applicable on the date of conclusion of the Third Round;
- The Negotiating Committee shall also consider proposal for revision of the
GSTP rules of origin.
- Based on these modalities, intensive negotiations were held in 2010 for finalisation of the schedules of Members. During this period, Cuba, Egypt,
India, Indonesia, Korea, Malaysia, Mercosur and Morocco submitted their
schedules and bilateral negotiations were held to finalise the schedule. It is
significant to note that India unilaterally offered a tariff reduction of 25% on
77% of its tariff lines for Least Developed Countries (LDCs).
- A Ministerial Meeting of the GSTP Negotiating Committee was held on 15
December, 2010 in Foz do Iguacu, Brazil for signing of the "Final Act Embodying
the Results of the Sao Paulo Round" and the "Sao Paulo Round Protocol on the
Agreement on GSTP". The Ministers or Head of the Delegations of Members who have
submitted their final schedules namely Cuba, Egypt, India, Indonesia, Korea,
Malaysia, Mercosur and Morocco would be signing the two documents. India was
represented by H.E. Mr. B.S. Prakash, Ambassador of India to Brazil.