Trade policy differentiation between developing countries under GSP schemes
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Original versionNUPI Paper 685-2005. NUPI, 2005
The paper reviews options with respect to differentiation between beneficiaries of GSP (tariff preferences for developing countries). It has for a long time been accepted that the Least Developed Countries (LDCs) may be treated better than other developing countries, but a recent WTO dispute indicates that discrimination beyond this is possible if it is based on objective criteria related to development. The paper discusses GSP differentiation in the light of this, and argues that the most generous preferences are given to a wider group of countries that the LDCs. A main reason is that LDCs constitute a small part of the developing world, and 4/5 of the world’s poor live outside the LDCs. Preferences for the poorest should not become an obstacle for improved market access for the “second poorest”. The paper discusses possible reforms in Norway’s GSP systems in this light. According to objective criteria, the special position of Botswana and Namibia in Norway’s current GSP system could be questioned, since e.g. Botswana is now an upper middle income country.