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Preference Erosion and Multilateral Trade Liberalization

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  • Joseph Francois
  • Bernard Hoekman
  • Miriam Manchin

Abstract

Because of concern that tariff reductions in Organisation for Economic Co-operation and Development ( oecd ) countries will translate into worsening export performance for the least developed countries, the erosion of trade preferences may become a stumbling block for multilateral trade liberalization. An econometric analysis of actual preference use shows that preferences are underused because of administrative burdens--estimated to be equivalent to an average of 4 percent of the value of goods traded. To quantify the maximum scope for preference erosion, the compliance cost estimates are used in a model-based assessment of the impact of full elimination of oecd tariffs. Taking into account administrative costs eliminates erosion costs in the aggregate and greatly reduces the losses for countries most affected by preference erosion. Copyright 2006, Oxford University Press.

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Bibliographic Info

Article provided by World Bank Group in its journal The World Bank Economic Review.

Volume (Year): 20 (2006)
Issue (Month): 2 ()
Pages: 197-216

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Handle: RePEc:oup:wbecrv:v:20:y:2006:i:2:p:197-216

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  1. Limão, Nuno & Olarreaga, Marcelo, 2005. "Trade Preferences to Small Developing Countries and the Welfare Costs of Lost Multilateral Liberalization," CEPR Discussion Papers 5045, C.E.P.R. Discussion Papers.
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  7. André Sapir & Rolf Langhammer, 1987. "Economic impact of generalized tariff preferences," ULB Institutional Repository 2013/8090, ULB -- Universite Libre de Bruxelles.
  8. Francois, Joseph, 1998. "Scale Economies and Imperfect Competition in the GTAP Model," GTAP Technical Papers 317, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
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  13. repec:rus:hseeco:123712 is not listed on IDEAS
  14. Hoekman, Bernard & Ozden, Caglar, 2005. "Trade preferences and differential treatment of developing countries : a selective survey," Policy Research Working Paper Series 3566, The World Bank.
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  17. Arvind Panagariya, 2000. "Preferential Trade Liberalization: The Traditional Theory and New Developments," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 287-331, June.
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