What is the Generalized System of Preferences?

Generalized System of Preferences (GSP) is a trade preference program that permits duty-free or low-duty entry of products from developing countries and territories. GSP is also called generalized preferential tariff (GPT). 

The GSP exempts nations from WTO (World Trade Organization) rules and policies, such as the Most Favored Nation principle. Basically, this rule requires member countries of WTO to treat each other equally with regard tariffs. This serves to to reduce tariff rates for underdeveloped nations.