The
Generalized System of Preferences, or GSP, is a formal system of
exemption from the more general rules of the World Trade Organization
(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.
