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Will the Doha Round Lead to Preference Erosion?

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  • John Romalis
  • Mary Amiti

Abstract

This paper assesses the effects of reducing tariffs under the Doha Round on market access for developing countries. It shows that for many developing countries, actual preferential access is less generous than it appears because of low product coverage or complex rules of origin. Thus lowering tariffs under the multilateral system is likely to lead to a net increase in market access for many developing countries, with gains in market access offsetting losses from preference erosion. Furthermore, comparing various tariff-cutting proposals, the research shows that the largest gains in market access are generated by higher tariff cuts in agriculture.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/10.

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Length: 41
Date of creation: 01 Jan 2006
Date of revision:
Handle: RePEc:imf:imfwpa:06/10

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Keywords: Access to foreign markets; Developing countries; Trade; Multilateral trade negotiations; market access; comparative advantage; tariff cuts; preference erosion; average tariff; average tariffs; tariff lines; import demand; tariff cut; preferential access; elasticity of substitution; tariff rates; tariff reductions; domestic production; rules of origin; preferential trade; preference schemes; preferential arrangements; world trade; developing country exports; trade preferences; trade arrangements; world trade organization; improved market access; preferential trade arrangements; tariff rate; domestic producers; international trade; tariff revenue; trade liberalization; value of imports; tariff preferences; mfn tariffs; elasticity assumption; tariff reduction; export shares; multilateral trade; trade effects; multilateral system; terms of trade; exporting countries; multilateral trade liberalization; zero tariff; tariff changes; free trade; terms of trade effects; reducing tariffs; trade agreements; most-favored-nation; competitive position; trade volume; duty-free treatment; preferential treatment; tariff barriers; aggregate exports; free trade agreement; economic integration; transport costs; commodity trade; multilateral tariff reduction; export prices; free trade agreements; trade barriers; commodity composition; world economy; reciprocal basis; liberalization commitments; trade data; elimination of tariffs; preferential tariffs; imported inputs; trade negotiations; trade promotion; export subsidies; doha development agenda; trade agreement; world exports; trade reform; tariff-free access; import quantity; agricultural trade; preferential trade agreements; foreign markets; agricultural trade reform; non-tariff barriers; tariff concessions; zero tariffs; restrictive rules of origin; duty-free access; average tariff rates; effects of trade liberalization; trade costs; trade policies; trade integration; balance of payments;

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References

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  1. Huiwen Lai & Daniel Trefler, 2002. "The Gains from Trade with Monopolistic Competition: Specification, Estimation, and Mis-Specification," NBER Working Papers 9169, National Bureau of Economic Research, Inc.
  2. Mary Amiti & Jozef Konings, 2005. "Trade Liberalization, Intermediate Inputs, and Productivity," IMF Working Papers 05/146, International Monetary Fund.
  3. Carolyn Evans & James Harrigan, 2005. "Tight Clothing. How the MFA Affects Asian Apparel Exports," NBER Chapters, National Bureau of Economic Research, Inc, in: International Trade in East Asia, NBER-East Asia Seminar on Economics, Volume 14, pages 367-390 National Bureau of Economic Research, Inc.
  4. Hans P. Lankes & Katerina Alexandraki, 2004. "The Impact of Preference Erosionon Middle-Income Developing Countries," IMF Working Papers 04/169, International Monetary Fund.
  5. repec:dgr:uvatin:2005073 is not listed on IDEAS
  6. Yongzheng Yang, 2005. "Africa in the Doha Round," IMF Policy Discussion Papers 05/8, International Monetary Fund.
  7. John Romalis, 2005. "NAFTA's and CUSFTA's Impact on International Trade," NBER Working Papers 11059, National Bureau of Economic Research, Inc.
  8. Arvind Subramanian & Aaditya Mattoo & Devesh Roy, 2002. "The Africa Growth and Opportunity Act and its Rules of Origin," IMF Working Papers 02/158, International Monetary Fund.
  9. J. Francois & B. Hoekman & M. Manchin, 2005. "Preference Erosion and Multilateral Trade Liberalization," Tinbergen Institute Discussion Papers 05-073/2, Tinbergen Institute.
  10. Baldwin, R E & Murray, Tracy, 1977. "MFN Tariff Reductions and Developing Country Trade Benefits under the GSP," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 87(345), pages 30-46, March.
  11. Joseph Francois & Will Martin, 2003. "Formula Approaches for Market Access Negotiations," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 26(1), pages 1-28, January.
  12. Aaditya Mattoo & Devesh Roy & Arvind Subramanian, 2003. "The Africa Growth and Opportunity Act and its Rules of Origin: Generosity Undermined?," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 26(6), pages 829-851, 06.
  13. Amiti, Mary & Konings, Jozef, 2005. "Trade Liberalization, Intermediate Inputs and Productivity: Evidence from Indonesia," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5104, C.E.P.R. Discussion Papers.
  14. Brenton, Paul & Ikezuki, Takako, 2004. "The initial and potential impact of preferential access to the U.S. market under the African Growth and Opportunity Act," Policy Research Working Paper Series 3262, The World Bank.
  15. S├ębastien Jean & David Laborde & Will Martin, 2005. "Consequences of Alternative Formulas for Agricultural Tariff Cuts," Working Papers 2005-15, CEPII research center.
  16. Kimberly A. Clausing, 2001. "Trade creation and trade diversion in the Canada - United States Free Trade Agreement," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 34(3), pages 677-696, August.
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Citations

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Cited by:
  1. Richard Pomfret & Uwe Kaufmann & Christopher Findlay, 2010. "Are Preferential Tariffs Utilized? Evidence from Australian Imports, 2000-9," School of Economics Working Papers, University of Adelaide, School of Economics 2010-13, University of Adelaide, School of Economics.
  2. Persson, Maria, 2011. "From trade preferences to trade facilitation: Taking stock of the issues," Economics Discussion Papers 2011-23, Kiel Institute for the World Economy.
  3. Olga Pindyuk & Leon Podkaminer & Sandor Richter, 2008. "Monthly Report No. 1/2008," wiiw Monthly Reports, The Vienna Institute for International Economic Studies, wiiw 2008-01, The Vienna Institute for International Economic Studies, wiiw.
  4. Djankov, Simeon & Freund, Caroline & Pham, Cong S., 2006. "Trading on time," Policy Research Working Paper Series 3909, The World Bank.
  5. Raimondi, Valentina & Scoppola, Margherita & Olper, Alessandro, 2011. "Preference erosion and the developing countries exports to the EU: a dynamic panel gravity approach," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania, Agricultural and Applied Economics Association 103391, Agricultural and Applied Economics Association.
  6. Persson, Maria, 2013. "Trade Preferences from a Policy Perspective," Working Papers, Lund University, Department of Economics 2013:3, Lund University, Department of Economics.
  7. Pedro J. Martinez Edo, 2011. "Reciprocal liberalization: Bilateral, plurilateral or multilateral?," STUDIES IN TRADE AND INVESTMENT, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  8. John Romalis, 2007. "Market Access, Openness and Growth," NBER Working Papers 13048, National Bureau of Economic Research, Inc.
  9. Bernard Hoekman & Will Martin & Carlos A. Primo Braga, 2009. "Trade Preference Erosion : Measurement and Policy Response," World Bank Publications, The World Bank, number 9437, August.
  10. Hamanaka, Shintaro, 2013. "A note on detecting biases in assessing the use of FTAs," Journal of Asian Economics, Elsevier, Elsevier, vol. 29(C), pages 24-32.
  11. Erika Vianna Grossrieder, 2006. "Preference Erosion: The case of Bangladesh - A SUR-EC-AR Gravity Model of Trade," IHEID Working Papers, Economics Section, The Graduate Institute of International Studies 18-2007, Economics Section, The Graduate Institute of International Studies, revised Aug 2007.

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