The Agreement establishing the Global System of Trade Preferences (GSTP) among the developing countries was signed on 13th April 1988 at Belgrade, following conclusion of the first round of negotiations.
The Agreement was signed by 48 countries which exchanged concessions in the course of that round. The Agreement came into force on 19th April 1989 and 40 countries including India have ratified it so for.
The GSTP establishes a framework for the exchange of trade concessions among the members of the group of 77. It provides a mechanism for negotiations in successive stages for establishing, trade preferences with a view to promoting trade and economic cooperation among developing countries.
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It lays down rules, principles and procedures for conduct of negotiations and for implementation of the results of the negotiations. The coverage of the GSTP extends to arrangements in the area of tariffs, para-tariff, non-tariff measures, direct trade measures including medium and long-term contracts and sectoral agreements.
The negotiations in the first round were confined almost exclusively to the exchange of tariff concessions on products, covering a small share of the foreign trade of participating countries.
Agreed preferences covered a small number of tariff lines and in many instances, modest tariff reductions and bindings. It was, however, not entirely unexpected, considering that this was the first round.
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More importantly, the focus was on the adoption of the GSTP agreement so that an instrument was available to developing countries to undertake measures to deepen and extend trade relations among themselves.
During the first round, India exchanged tariff concessions with 14 countries. The concessions were offered on 31 products, by establishing Tariff margins ranging between 10% to 50% over the basic duty components. In return, India received direct tariff concessions from these 14 countries.
Concessions offered by the participants covered products of export interest to India which include traditional products like tea, shellac, jute and cashew nuts and non-traditional products like pharmaceuticals, engineering goods and rubber tyres. In addition, India benefited from the multilaterahsation of concessions exchanged amongst other participants.
One of the basic principles of the agreement on the GSTP is that, it is to be negotiated step-by-step, improved and extended in successive stages.
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Accordingly, the Ministerial Meeting on GSTP held in Tehran on 21st November, 1991, adopted the Tehran Declaration on the launching of the second round of GSTP negotiations.
The aim of the second round is to facilitate the process of accession to the GSTP agreement and to carry forward the exchange of trade concessions.
In the second round of GSTP negotiations, a number of sessions of bilateral consultations for exchange of concessions on a product-by-product basis have been held.
During the first two sessions of bilateral negotiations held in Geneva during 15-26 May, 1995 and 25-29 September, 1995, there were consultations with 16 participating countries and during these sessions participating countries could identify items of mutual interest for the exchange of tariff concessions.
During the third and fourth session of bilateral negotiations which were held from 4-8 March, 1996 and 24-28 June, 1996, India held consultations/ negotiations with 20 and 17 GSTP participating countries respectively.
During these sessions of bilateral negotiations, we have agreed to exchange concessions with 12 countries viz., Cuba, Indonesia, DPR Korea, Republic of Korea, Egypt, Libya, Iran, Nigeria, Romania, Columbia, Thailand, and Morocco.
In all, India has offered tariff concessions on 27 tariff lines at the six digit level, in consultation with the administrative ministries/departments with preference margins ranging between 10% to 100%. In return, India will receive concessions on 43 tariff lines from these 12 countries, with preference margins ranging between 5% to 70%.
The second round of GSTP negotiations were formally concluded in the 12th session of the Committee of Participants held in Geneva on 8-10th December, 1998.
The draft of the 1998 protocol to the agreement of GSTP was adopted in this session. The protocol will be open for signature until 31st December, 2000. The schedule of concessions annexed to the protocol will be finalised, after carrying out technical verification of the schedules by the participants.