Preferential Tariff Formation -- The Case of the European Union
AbstractIn this paper, we address the impact of multilateral trade liberalisation (MTL) on the preferential tariffs granted by the EU, who is one of the top traders as well as biggest contributors to MTL. We empirically address two important questions. First, if the MFN tariff for a product is higher, does it lead to a higher or lower preferential tariff? Second, the EU being a large trading partner in such agreements, does reciprocity matter for giving meaningful preferential access? For a given MFN tariff, we model the preferential tariff with a simple linear functional form. We draw three important conclusions. First, the products that are highly protected do not get high preferential access even at the regional level. Second, reciprocity plays only a limited role in granting better preferential access. Third, GSP preferences matters when the EU negotiates with the developed partners but it does not matter when it negotiates with the developing partners.
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Bibliographic InfoPaper provided by Economics Section, The Graduate Institute of International Studies in its series IHEID Working Papers with number 05-2010.
Length: 54 pages
Date of creation: Mar 2010
Date of revision:
MFN tariffs; preferential tariffs; reciprocity; GSP;
Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F15 - International Economics - - Trade - - - Economic Integration
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- J. M. C. Santos Silva & Silvana Tenreyro, 2006.
"The Log of Gravity,"
The Review of Economics and Statistics,
MIT Press, vol. 88(4), pages 641-658, November.
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