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AGOA and Apparel: Who Captures the Tariff Rent in the Presence of Preferential Market Access?

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Author Info
Marcelo Olarreaga
Çaglar Özden

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Abstract

The United States grants preferential (tariff- and quota-free) market access to a list of products from eligible countries in sub-Saharan Africa through the African Growth and Opportunity Act (AGOA). We analyse the increase in prices received by apparel exporters who benefited from AGOA preferences. In the presence of competitive markets, export prices should increase as much as the tariff which was previously collected by the US government. We refer to this price increase as the 'tariff preference rent' since exporters receive this income as the rent for their preferential status. The results show that exporters receive only one-third of this rent and smaller exporters receive less than larger and established ones. We then provide evidence that suggests this may be due to the degree of market power enjoyed by US importers when facing African exporters. Copyright Blackwell Publishing Ltd 2005.

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Publisher Info
Article provided by Blackwell Publishing in its journal The World Economy.

Volume (Year): 28 (2005)
Issue (Month): 1 (01)
Pages: 63-77
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Handle: RePEc:bla:worlde:v:28:y:2005:i:1:p:63-77

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  1. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2005. "Doha Merchandise Trade Reform: What’s at Stake for Developing Countries?," CEPR Discussion Papers 5156, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. DECREUX, Yvan & RAMOS, Maria Priscila, 2007. "How does tariff-rate quota modelling affect CGE results? An application for MIRAGE," Working Papers 7206, TRADEAG - Agricultural Trade Agreements. [Downloadable!]
  3. Aaditya Mattoo & Arvind Subramanian, 2004. "The WTO and the Poorest Countries: The Stark Reality," IMF Working Papers 04/81, International Monetary Fund. [Downloadable!]
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  4. J. Francois & B. Hoekman & M. Manchin, 2005. "Preference Erosion and Multilateral Trade Liberalization," Tinbergen Institute Discussion Papers 05-073/2, Tinbergen Institute. [Downloadable!]
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  5. Cadot, Olivier & de Melo, Jaime & Portugal-Perez, Alberto, 2006. "Rules of origin for preferential trading arrangements : implications for the ASEAN Free Trade Area of EU and U.S. experience," Policy Research Working Paper Series 4016, The World Bank. [Downloadable!]
  6. Cadot, Olivier & Carrère, Céline & de Melo, Jaime & Portugal-Pérez, Alberto, 2005. "How Much Market Access in FTAs? Textiles Under NAFTA," CEPR Discussion Papers 5264, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  7. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2005. "Would multilateral trade reform benefit Sub-Saharan Africans?," Policy Research Working Paper Series 3616, The World Bank. [Downloadable!]
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  8. Joseph Francois & Ian Wooton, 2005. "Market Structure in Services and Market Access in Goods," The Institute for International Integration Studies Discussion Paper Series iiisdp80, IIIS. [Downloadable!]
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  9. Ramos, Maria Priscila, 2007. "Politique Commerciale, Qualité et Environnement: une Application aux Négociations Commerciales entre l’Union Européenne et le Mercosur
    [Trade Policy, Quality and the Environment: an applicatio    ," MPRA Paper 12640, University Library of Munich, Germany. [Downloadable!]
  10. Ramos, Maria Priscila & Bureau, Jean Christophe & Salvatici, Luca, 2007. "Shipping the good beef out: EU trade liberalization to Mercosur exports," Working Papers 7215, TRADEAG - Agricultural Trade Agreements. [Downloadable!]
  11. Hoekman. Bernard & Prowse, Susan, 2005. "Economic policy responses to preference erosion : from trade as aid toaid for trade," Policy Research Working Paper Series 3721, The World Bank. [Downloadable!]
  12. Cadot, Olivier & de Melo, Jaime & Portugal-Pérez, Alberto, 2006. "Rules of Origin for Preferential Trading Arrangements: Implications for AFTA of EU and US Regimes," CEPR Discussion Papers 5783, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  13. Hart, Chad E. & Beghin, John C., 2006. "Rethinking Agricultural Domestic Support under the World Trade Organization," Staff General Research Papers 12510, Iowa State University, Department of Economics.
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  14. Aksoy, M. Ataman & Beghin, John C., 2005. "Global Agricultural Trade and Developing Countries," Staff General Research Papers 12228, Iowa State University, Department of Economics. [Downloadable!]
  15. Yongzheng Yang, 2005. "Africa in the Doha Round: Dealing with Preference Erosion and Beyond," IMF Policy Discussion Papers 05/8, International Monetary Fund. [Downloadable!]
  16. Ben Hammouda, Hakim & Karingi, Stephen & Njuguna, Angelica & Sadni Jallab, Mustapha, 2006. "Diversification: towards a new paradigm for Africa’s development," MPRA Paper 13359, University Library of Munich, Germany. [Downloadable!]
  17. Joseph Francois & Ian Wooton, 2008. "Market Structure and Market Access," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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