What is GSP is information that any marketer needs to know when implementing business development policy. In essence, this is a term related to macroeconomics, the birth of this regime has important implications for international trade. So, if your business is in the import and export business, learn about this term.
What is GSP?
GSP is a term, a policy born after extremely important intergovernmental negotiations. The sponsor for this system is the United Nations, through the Conference on Trade and Development. So what is GSP? Precisely, this is a universal preference system, whereby developed countries will grant favorable treatment by reducing/exempting taxes. The two parties to this relationship will be referred to as the grantor and beneficiary.
Under the GSP system, developed countries will provide favorable treatment to developing or least developed countries in terms of tariffs. This relationship is based on a non-reciprocal and discriminatory basis, with any beneficiary country receiving favorable treatment. Thereby, avoid division and contradiction in the process of policy application.
|The system of universal preferences affects international trade|
Each developed country will have to build a GSP regime based on its conditions and “habit”. There is no single standard that applies to all countries that is based on voluntariness and friendship. However, these countries still have to strictly comply with the principles and objectives set forth by the system of universal preferences.
What is the goal of GSP?
Surely through the above sharing, you have partly understood what GSP is and the good meaning that this System was born. So do you know what the goal of GSP is and how it works for the beneficiary countries?
The goal of GSP is extremely great, is the basis for countries to cooperate and develop, bringing a better and more perfect world. specifically, GSP creates conditions for less developed countries to become stronger, developing countries to see their potential. Incentives that developed countries offer to assist beneficiaries countries in achieving their goals include:
- Promote the industrialization of the preferred countries.
- Support the establishment of a focus to increase the use of GSP and thereby develop the economy.
- Increasing export turnover for developing/underdeveloped countries based on helping relationship.
- Commonly conduct research on anti-counterfeiting tax, anti-dumping tax and related customs regulations, import and export procedures. This is the basis for building a better and more just world.
- The ultimate goal is to boost the economic growth of the beneficiary countries.
|The biggest goal is to boost the economy</td >|
It should be noted that GSP mode has no limit for preferences, depending on the granting countries. The quotas are eliminated but are implemented according to the type specified in the GSP.
Main content in GSP
In addition to learning what the GSP concept is and its goals, you also need to know its main content. This is extremely important information for every Vietnamese business, because we are developing countries – the beneficiaries of valuable preferential policies. Specifically, the content of the GSP will include the following items:
GSP stipulates, beneficiary countries are less developed or developing countries. Less developed countries will enjoy a special regime to stimulate the economy, somewhat better than developing countries. However, this does not cause contradiction because all are built on voluntary basis and towards equal development. The list of countries entitled to this regime has been specifically listed and promulgated together.
GSP preferential treatment
These are the developed countries on the list attached under the GSP regime. According to current statistics, there are 28 developed countries on this list, of which 15 are in the EU and are implementing 16 preferential regimes. These countries can be mentioned as Belgium, Austria, Portugal, France, Great Britain, Spain, Japan, New Zealand, Canada, Norway, Poland, Russia,…
|The country for preferential treatment is developed countries</td >|
Goods enjoy universal preferences
Not all items are on the list of universal discounts. As a business, you need to know what GSP product classification is to have a reasonable development policy.
Accordingly, these products will be divided into two categories: agricultural products and industrial products. The list of each item will be periodically revised and based on the import and export tariff of the preferential country.
|Goods enjoy more favorable export preferences|
It is important to note that items on the universal preferential list cannot stay for too long. Based on the production situation of the exporting country to consider removing or keeping, besides adding other products.
Regarding the level of incentives, as VSM shared above, this incentive will have no limit, depending on the will of the donor countries. However, it will all be based on the most-favored nation (MFN) tax rate.
GSP meaning to international trade
What is the purpose of GSP’s birth, you must have understood through the content shared above. It has been several decades since the universal preferential regime was born and widely implemented, bringing many benefits. The meaning that GSP brings is also great, not only for developing countries but also for countries that do not have the right path to rise from poor to developing.
|GSP benefits both sides|
GSP helps to enhance trade exchange between countries without tax as a barrier causing difficulties in importing and exporting goods. This barrier can be reduced by a few percent or even tax-free if the beneficiary countries accept it. As a result, the profit from exports of developing/underdeveloped countries increases, which is a stimulating factor for the development of the economy.
There have been many statistics on how GSP promotes trade exchanges and increases FDI in potential countries. The economic growth of these countries has increased from 10 to 30%, which is extremely high and is a number that has never been lost before. On the side of the granting countries, they have more opportunities to perform noble deeds, promote import activities that are necessary and beneficial to the economy. Domestic goods become more diversified, increasing choices for consumers.
The situation of enjoying GSP in Vietnam
Vietnam is a developing country, and therefore, we are still enjoying the extremely meaningful GSP regime. We have received a lot of support from “close friends” such as Russia, Poland, Germany, France. However, up to now, our country has not received preferential treatment from the US, and behind this refusal is a political reason.
Over the years, the GSP regime has greatly helped Vietnam’s economy. But more and more, it becomes a barrier to our country’s efforts to transform, and many opportunities are lost. Quitting this list and trying to find a relationship independently is something many people think about.
Above are detailed information about what GSP is and its content and meaning to the economy. Hopefully with these shares, you will understand more about the above regime and have an appropriate business development policy.