What is a preferential agreement?

When there are preferential agreements, we can intuit that there is a mutual reduction pact of duty between two or more countries. This means that, thanks to the reduction of tariffs from one country to another, countries will reduce or modify their tariffs objectively among themselves.

However, the existence of preferential agreements does not have to mean that it will affect all the products of both countries, but rather a group of them. Moreover, the objective is to base bilateral trade between those who have signed the treaty.

EYE! This concept cannot be confused with that of regional integration agreements, since they do not imply the elimination of all trade barriers, nor do they imply the adoption of a single trade policy that approves it.

The only problem with this type of agreement is that it favors, to a large extent, one of the countries, since it materializes in privileges that cannot be extended to third countries.

Generalized System of Preferences

The Generalized System of Preferences is included in Resolution 21 II (1968), approved by the United Nations Conference on Trade and Development (UNCTAD), and where it is explained that: “the objectives of the generalized system of preferences without reciprocity or discrimination In favor of developing countries, including special measures for the benefit of the least developed among them, it should be: increase the export earnings of these countries; promote its industrialization; and speed up your pace economic growth”.

Thanks to the GSP, some developing or resource-poor countries may benefit from these lower tariff rates, which may even be zero (depending on the agreement they have reached).

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