With reference to the Generalized System of Preferences GSP consider the following statements It is ...........

Economic Affairs World Trade Organsiation (WTO)

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With reference to the Generalized System of Preferences (GSP), consider the following statements.

It is a system of exemption from the most favored nation principle (MFN) of WTO.
It is a provision in UNCTAD to digitize the trading system for improved access and efficiency.

Which of the above is/are correct?

1 only

2 only

Both 1 and 2

None

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Explanation:

GSP is a preferential tariff system which provides for a formal system of exemption from the more general rules of the WTO (formerly, the General Agreement on Tariffs and Trade or GATT). Specifically, it's a system of exemption from the most favored nation principle (MFN) that obliges WTO member countries to treat the imports of all other WTO member countries no worse than they treat the imports of their "most favored" trading partner. In essence, MFN requires WTO member countries to treat imports coming from all other WTO member countries equally, that is, by imposing equal tariffs on them, etc. GSP exempts WTO member countries from MFN for the purpose of lowering tariffs for the least developed countries, without also lowering tariffs for rich countries.