Note: Expanding the Role of Trade Preference Programs

By Monica Patel. Full text here.

Trade preference programs lower trade barriers for developing countries and open opportunities in consumer-driven markets which, in turn, increases their trade and economic growth. One example of a trade preference program in the United States is the Generalized System of Preferences (GSP) program that provides duty-free treatment for about 4800 products from 131 countries. Though trade preference programs do assist developing countries, the overall consensus is that they do not accomplish enough. Amidst the many problems that plague these programs, the key problems seem to be mismatched product coverage, the unreliability of the program’s existence, and the developed countries’ unawareness of the barriers facing developing countries that want to use the trade preference programs.

The Note proposes that the success of the GSP program depends on the interrelationship between the GSP office and the developing country. Only when the GSP office assumes responsibility as an agent for the developing country will this program truly aid these countries and, in turn, the global economy. These programs need more personnel so they can focus more attention on the beneficiaries to make the program more efficient and to increase its utilization. If developed countries enact the proposed solution, international trade will be closer to reaching levels of efficiency that benefit all nations through cheaper products, higher GDPs, and less economic disparity.