Trade Preferences for Developing Countries and the WTO [Updated August 8, 2007]   [open pdf - 78KB]

"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 in a GSP program, but only if identical treatment is available to all similarly situated GSP beneficiaries. Where WTO Members' preference programs have provided expanded benefits, Members, including the United States, have generally obtained WTO waivers. In December 2006, Congress extended the GSP program until December 31, 2008, and Andean preferences until June 30, 2007, allowing conditional extension of Andean benefits for six months thereafter (P.L. 109-432). The 2006 statute also extends a third-country fabric provision in the African Growth and Opportunity Act and expands textile benefits for Haiti."

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CRS Report for Congress, RS22183
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