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Consider the following statements:
1. The World Trade Organisation (WTO) gives the status of developing and developed country to its members on the basis of Gross National Income (GNI) per capita in current USD of the previous year.
2. The developing countries get automatic benefit from the Generalized System of Preferences (GSP) scheme.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'D'. Can you explain this answer?
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Verified Answer
Consider the following statements:1. The World Trade Organisation (WTO...
- There are no World Trade Organisation (WTO) definitions of “developed” and “developing” countries. Members announce for themselves whether they are “developed” or “developing” countries.
- The World Bank assigns the world’s economies to four income groups—low, lower-middle, upper-middle, and high-income countries.
- The classifications are updated each year on 1st July and are based on Gross National Income (GNI) per capita in current USD of the previous year. Hence, statement 1 is not correct.
- Developing country status in the WTO brings certain rights.
- There are some WTO Agreements which provide developing countries with longer transition periods before they are required to fully implement the agreement and developing countries can receive technical assistance.
- That a WTO member announces itself as a developing country does not automatically mean that it will benefit from the unilateral preference schemes of some of the developed country members such as the Generalized System of Preferences (GSP).
- In practice, it is the preference giving country which decides the list of developing countries that will benefit from the preferences
- Hence, statement 2 is not correct.
Most Upvoted Answer
Consider the following statements:1. The World Trade Organisation (WTO...
Explanation:
WTO classification of developing and developed countries
- The World Trade Organisation (WTO) does not have a formal classification of developing and developed countries.
- However, for the purpose of negotiations and agreements, WTO members are allowed to self-designate themselves as developing countries.
- There is no fixed criteria for designating a country as developed or developing, but GNI per capita is one of the indicators used by the International Monetary Fund (IMF) and World Bank to classify countries according to income levels.
Generalized System of Preferences (GSP) scheme
- The Generalized System of Preferences (GSP) is a preferential trade arrangement under which developed countries grant trade concessions to developing countries.
- The GSP scheme is not automatic, and each developed country decides which products and countries to include in its GSP scheme.
- The GSP scheme is subject to periodic reviews and can be withdrawn if a country is deemed no longer eligible.
Conclusion
Both the statements given in the question are incorrect. The WTO does not have a formal classification of developing and developed countries, and the GSP scheme is not automatic.
WTO classification of developing and developed countries
- The World Trade Organisation (WTO) does not have a formal classification of developing and developed countries.
- However, for the purpose of negotiations and agreements, WTO members are allowed to self-designate themselves as developing countries.
- There is no fixed criteria for designating a country as developed or developing, but GNI per capita is one of the indicators used by the International Monetary Fund (IMF) and World Bank to classify countries according to income levels.
Generalized System of Preferences (GSP) scheme
- The Generalized System of Preferences (GSP) is a preferential trade arrangement under which developed countries grant trade concessions to developing countries.
- The GSP scheme is not automatic, and each developed country decides which products and countries to include in its GSP scheme.
- The GSP scheme is subject to periodic reviews and can be withdrawn if a country is deemed no longer eligible.
Conclusion
Both the statements given in the question are incorrect. The WTO does not have a formal classification of developing and developed countries, and the GSP scheme is not automatic.
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Consider the following statements:1. The World Trade Organisation (WTO) gives the status of developing and developed country to its members on the basis of Gross National Income (GNI) per capita in current USD of the previous year.2. The developing countries get automatic benefit from the Generalized System of Preferences (GSP) scheme.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer?
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