GSP programs are used by many developed countries to help developing nations improve their financial or economic condition through exports. However, because the number of trade pacts that offer preferential tariff arrangements is growing (NAFTA, for example), the value of tariff preferences under GSP will decline as beneficiary countries are increasingly participating in alternative preferential arrangements.
George Tsogas (2001) analyzed the GSPs established in the early 1970s by the European Union and the United States:
"GSP programs typically specify eligibility criteria for countries and products. The U.S. GSP excludes countries with a communist government, oil-producing members of OPEC, those that had expropriated U.S. property without compensation, and those that aid terrorism. Excluded products include those that compete with domestically produced goods or are covered by other trade agreements, such as apparel and textiles or certain agricultural products." […]
"The developmental outcomes of GSPs have not always been clear. In the United States, corporations have taken advantage of the tariff-free provisions of the GSP to relocate labour-intensive production to GSP beneficiary countries. On the other hand, most benefits of the scheme have gone to the countries that needed it less."
Tsogas is referring to the situations in Korea, Taiwan, Hong Kong, and Singapore in the 1980s. More recently, as tariffs have dramatically declined worldwide, so has the significance of GSPs as tools of economic development. (2001: 95-96)
The European GSP
"The EU has operated its GSP since 1971. It offers preferential duty […] to a list of products from developing countries. Beneficiary countries include Asian, African, Latin American, and East European countries and former Soviet Republics. "
A major reform of the scheme was carried out in 1994-1995, and led to the creation of "special incentives to countries that observe certain labour standards, and withdrawal of GSP privileges from those that do not." (Tsogas 2001: 119)
In 1997, following a submission from international trade union federations, the EU suspended the GSP benefits of Burma for an indefinite period. In the case of Pakistan, however, member states themselves were not willing to push forward the investigation, fearing retaliation and cancellation of contracts with subcontractors in that country. As a result, trade union federations in Europe have moved GSP petitions to a low-priority level.
The American GSP and Labour Rights
The GSP program was established in 1976. In 1984, "the U.S. Congress conditioned eligibility for GSP benefits on respect for internationally recognized workers' rights." But it was also "recognized that acceptable minimum labour standards may vary from country to country; however, passage of the law did not aim at bringing developing countries' standards up to the prevailing labour standards in the United States […] but rather encouraging each developing country to demonstrate respect for the internationally recognized worker rights of its workers." (Tsogas 2001: 96-97)
There is a legal obligation to examine the labour practices of all GSP beneficiary countries and any abuse of workers' rights may be disputed by way of petition. If the abuse of worker rights continues, countries may be petitioned against repeatedly, even if previous petitions have been rejected.
GSP Workers' Rights Conditionality: A Comparative Analysis
"The impact of GSP workers' rights conditionality on the European labour movement has been much different from the impact in the United States. While GSP conditionality provided an opportunity for the U.S. labour movement to engage in a new kind of labour internationalism, previously unknown […], the EU labour movement had already developed a significant level of international orientation and activity. [...]
In the U.S. GSP, the social partners do not appear at all. Unions are marginalised, the whole system is run and tightly controlled by the State apparatus, and the process is influenced only by lobbying from various interest groups.
"The United States simply exercises its economic and political power over whomever the government dislikes and whenever it deems appropriate to do so.
In the newly introduced EU legislation, there is a clear, positive element of encouragement. The scheme is not just punitive but also rewards good labour standards practice. Moreover, it embraces internationally recognized ILO Conventions and international treaties and does not put forward its own selective interpretation of labour standards, as the United States does. […] However, the set of labour standards chosen is very narrow. […] As in the U.S. GSP, the process of petition and review is a political matter [and] the system is potentially open to excessive lobbying from various interest groups." [...]
However, all in all, "labour rights conditionality under GSPs has provided substantial practical experience on the pitfalls and accomplishments of linking trade with labour standards and could contribute valuable lessons to the effort to include a social clause in a multilateral trade regime, such as the WTO."
(Tsogas, G., Labour Regulation in a Global Economy, Armonk, London: M. E. Sharpe, 2001)
