Global System of Trade Preferences (GSTP)
The Global System of Trade Preferences among Developing Countries (GSTP) establishes tariff concessions to promote trade among African, Asian and Latin American countries.
Created in 1988 within the framework of the United Nations Conference on Trade and Development (UNCTAD), the GSTP came into effect in 1989 and was promulgated in Brazil by means of Decree n. 194, of August 21, 1991.
GSTP and MERCOSUR
MERCOSUR adhered to the GSTP Agreement as a sub-regional grouping by means of an accession protocol concluded on November 28, 1997 (Common Market Council Decision n. 51/00), and signed in Geneva on October 10, 2001. The decision was promulgated in Brazil by means of Decree n. 5106, of June 15, 2004. This document contains MERCOSUR's list of tariff concessions, which, replacing Brazil's individual list, was added to Annex IV of the GSTP Agreement, annexed to Decree n. 194, of August 21, 1991.
GSTP participants
Currently, the GSTP members are: Algeria, Argentina, Bangladesh, Benin, Bolivia, Brazil, Cameroon, Chile, Cuba, Ecuador, Egypt, Ghana, Guinea (Republic of Guinea), Guyana, India, Indonesia, Iran, Iraq, Libya, Malaysia, MERCOSUR, Mexico, Morocco, Mozambique, Myanmar, Nicaragua, Nigeria, North Korea (the Democratic People’s Republic of Korea), Pakistan, Peru, Philippines, Singapore, South Korea (Republic of Korea), Sri Lanka, Sudan, Thailand, Tanzania, Trinidad and Tobago, Tunisia, Venezuela, Viet Nam, and Zimbabwe.
According to UNCTAD, the 42 GSTP economies collectively represented a market of $ 14 trillion and generated an import demand of some $ 4 trillion in 2018, or 20 per cent of total world imports.
GSTP benefits
To enjoy GSTP's tariff preferences, Brazilian exporters must make sure that the country of destination is a participant in the System. In addition, one must check Decree n. 194, of August 21, 1991, to ensure that the product: (i) is in the list of concessions of the country of destination (Annex IV), and (ii) may be qualified as originating from Brazil (Annex II). Finally, they shall receive a Certificate of Origin in a specific format, which is usually issued by the states’ federations of industries.
The São Paulo Round of the GSTP
During UNCTAD XI, held in Brazil in 2004, the Third Round of GSTP Negotiations, known as the ‘São Paulo Round’, was launched with the aim of expanding the scope and enhancing tariff preferences of the scheme. The Third Round, concluded at the Foz do Iguaçu ministerial meeting in December 2010, reached the most ambitious GSTP results, including significant margins of preference on a wide range of products.
Participants in the São Paulo Round included MERCOSUR parties and seven other developing countries – Cuba, Egypt, India, Indonesia, Malaysia, Morocco, and the Republic of Korea. The São Paulo Round Protocol is also open to all other GSTP participants. The Protocol establishes a 20 percent margin of preference on applied tariffs to goods contained in the list of concessions submitted by each participant. In total, the Protocol establishes trade preferences on more than 47,000 products in 11 countries, including some of the most dynamic Asian economies, such as India, South Korea, Malaysia and Indonesia.
The Protocol will enter into force for its ratifying countries when at least 4 signatories have deposited their instruments of ratification. So far, Cuba, India and Malaysia, in addition to Argentina and Uruguay, in MERCOSUR, have already done so. In Brazil, the ratification of the protocol is still proceeding, with the analysis, by the National Congress, of the Draft Legislative Decree n. 923/2021.