Making the Generalized System of Preferences (GSP) socially responsible

The Generalized System of Preferences (GSP)

The most-favoured-nation principle is a rule of the World Trade Organization (WTO) system, requiring each state to grant all member countries the same conditions to access its market. However, since 1968, developed countries have been able to implement a generalized system of preferences (GSP) granting commercial advantages to developing countries, thus derogating from the most-favoured-nation principle.
Since 1984, the United States have made access to their GSP conditional on the respect of internationally recognized workers’ rights. All GSP beneficiaries are subject to this condition.
In 1998, the European Union also introduced a two-tier system of preferences: tariff reductions for all developing countries (GSPs) and larger cuts (GSP +) to countries that respect, among other things, the fundamental rights of workers as defined by the ILO.


Ways to make GSP socially responsible


  • Amending the Canadian GSP in order to make it conditional on the respect of workers’ rights. This condition could be applied to all GSP beneficiary countries (US model) and be accompanied by investigative or supervisory mechanisms to ensure its application.
  • Creating a second GSP that would be conditional on the respect of workers’ rights. This incentive model would only target developing countries that are committed to ensuring compliance with the ILO’s core Conventions by offering them access to the Canadian market at a more favourable pricing than the standard GSP (European model). This model would also be accompanied by investigative or monitoring mechanisms to ensure that commitments are met.
  • Including a mechanism for civil society to file requests for review in the event of non-compliance, regardless of the applicable GSP model.

Arguments in favour

  • Access to the Canadian market must be based on fundamental and universal principles. In this regard, access to the GSP is to help offset the commercial disadvantage associated with the implementation of such principles.
  • GSPs have often acted as an incentive for many countries to change their practices and change their laws.
  • A mechanism encouraging civil society to monitor practices or to file requests for revision will allow NGOs and trade unions to present their case.
  • The GSP is a tool that can support both economic and social development of developing countries.

Arguments against

  • Non-respect of fundamental workers’ rights cannot be solved on a case-by-case basis; a multilateral response is needed.
  • Given the proliferation of bilateral agreements, GSPs cover fewer and fewer countries. A conditionality on this mechanism would therefore be limited in scope.
  • The introduction of a unilateral procedure leads to a mechanism for arbitration that encourages protectionism on behalf of a developed country, whereas a poor country would see its situation deteriorate.
  • The GSP no longer covers countries likely to be strategic levers for the overall improvement of labour standards, namely, emerging countries.

 What they said:

«Incorporation of a labor rights provision into the GSP program marks the beginning of a new era of U.S. trade with the Third World. […] The linkage of labor rights to trade preferences reflects a radically different way of thinking that carefully considers who really benefits from preferential access to the U.S. market. Through this new emphasis on labor rights, the benefits of GSP treatment will now be made available to the broadest sectors of the population within recipient countries. In the long run, this redirection of the GSP program will provide a more effective impetus to development in the Third World.»

Donald J. Pease et J. William Goold, «The New GSP : Fair Trade with the Third World?»World Policy Journal, vol. 2, n° 2 , 1985


«Such legislation has not only failed to serve its original purposes, but has onoccasion functioned as a convenient legal front for perpetrating greatpower Realpolitik in precisely those parts of the world in which the UShas long treated other members of the international community as second-class citizens.»

Scheuerman William E. «False Humanitarianism?: US Advocacy of Transnational Labour Protections», Review of International Political Economy, vol. 8, no 3, 2001


«The GSP social clause has demonstrated a capacity to target practices that demean and repress workers’ rights without being misused to undermine developing countries’ competitive advantage , except to the extent that advantage is derived from internationally unacceptable and illegal practices.»

Pharis J. Harvey, «U.S. GSP Labor Conditionality: ‘Aggressive Unilateralism’ or A forerunner to a Multilateral Social Clause», International Labor Rights Fund, 1998


«The major [GSP] procedural problem, however, stems from the lack of predictability of the outcome in any given case and the element of discretion that is vested in the President. […] The existence of such unfettered discretion vested in the decisionmaker is far from being ideal in a situation in which one state’s human rights practices are being judged by another.»

Alston Philip. «Labor Rights Provisions in US Trade Law: “Aggressive Unilateralism”?», Human Rights Quarterly , vol. 15, no 1, 1993


«[…] the GSP workers’ rights clause has been an important instrument in international labor affairs that has yielded concrete positive results for workers in many instances. Flaws in the law and its application should inspire further efforts to improve it, not to abandon it.»

Compa, Lance A., et Jeffrey S. Vogt. «Labor Rights in the Generalized System of Preferences: A 20-Year Review», Comparative Labor Law and Policy Journal, n° 22, 2001


«While the general GSP arrangement (“Standard GSP”) generally grants tariff reductions or suspensions to developing countries on about 66% of EU tariff lines, the GSP+ offers additional advantages through complete duty suspensions for essentially the same goods. In return, beneficiary countries must commit to ratify and effectively implement core international conventions on human and labour rights, environmental protection, and good governance. Beneficiaries must also commit to cooperate with both the monitoring procedures imposed by those conventions, and the EU’s monitoring procedure on the GSP+.»

European Commission, «Report on the Generalised Scheme of Preferences during the period 2014-2015», 28 January 2016


«[The GSP regulation should] introduce a public submission process which can lead to the initiation of an investigation, public hearings and a final decision on initial eligibility (as regards GSP+) and continuing eligibility.»

European Trade Union Confederation (ETUC) et International Trade Union Confederation (ITUC). «A trade union response to the “proposal for a regulation of the european parliament and of the council applying a scheme of generalised tariff preferences”», October 2011


«The system has been successful in ensuring the full ratification of the eight fundamental labour standards among the beneficiary countries […]. However, several countries have received GSP+ trade preferences despite being seriously criticized by the authoritative ILO committees for their implementation of the relevant conventions.»

Jan Orbie et Lisa Tortell. «The New GSP+ Beneficiaries: Ticking the Box or Truly Consistent with ILO Findings?», European Foreign Affairs Review, 2009