Trade Preferences for Developing Countries and the WTO [Updated September 25, 2006] [open pdf - 42KB]
"World Trade Organization (WTO) Members must grant immediate and unconditional most-favored-nation (MFN) treatment to the products of other Members with respect to tariffs and other trade-related measures. Programs such as the Generalized System of Preferences (GSP), under which developed countries grant preferential tariff rates to developing country products, are facially inconsistent with this obligation because they accord goods of some countries more favorable tariff treatment than that accorded to goods of other WTO Members. Because such programs have been viewed as trade-expanding, however, Contracting Parties to the General Agreement on Tariffs and Trade (GATT) provided a legal basis for one-way tariff preferences and certain other preferential arrangements in a 1979 decision known as the Enabling Clause. In 2004, the WTO Appellate Body ruled that the Clause allows developed countries to offer different treatment to developing countries, but only if identical treatment is available to all similarly situated GSP beneficiaries. Where WTO Members' preference programs have provided expanded benefits, the WTO has on occasion waived Members' WTO obligations. A number of trade preference bills have been introduced in the 109th Congress, including proposed extensions of the GSP and Andean preference programs, each of which is set to expire in 2006. Among these are H.R. 5070, which would extend the GSP and Andean preferences for one year and expand and extend textile benefits under the African Growth and Opportunity Act (AGOA); H.R. 6076 and S. 3904, which would extend until 2008 the GSP, Andean preferences, and a third-country fabric provision for lesser-developed beneficiaries expiring in 2007; and H.R. 6142, which would extend the GSP and the AGOA third-country fabric provision until 2008 and expand textile and apparel benefits for Haiti. This report will be updated."
CRS Report for Congress, RS22183
U.S. Department of State: http://fpc.state.gov/