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Non-reciprocal preference erosion arising from MFN liberalitzation in agriculture: What are the risks?

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  • Low, Patrick
  • Piermartini, Roberta
  • Richtering, Jurgen

Abstract

This paper estimates the risk of preference erosion for non-reciprocal preference recipients in the agricultural sector as a consequence of MFN tariff cuts. It is based on a simulation of a single tariff-cutting scenario. The measure of preference erosion risk is the difference in preference margins enjoyed by individual suppliers to the QUAD (Canada, EU, Japan, United States) markets before and after a MFN tariff reduction, multiplied by the associated trade flow. The paper does not attempt to determine how losses in preference margins translate into trade outcomes, but it does highlight which products and which non-reciprocal preference beneficiaries are the most vulnerable to erosion effects in the major developed country markets. Overall, the paper finds that the risk of preference erosion is small, but some countries are strongly affected in particular product lines (notably sugar and bananas).

Suggested Citation

  • Low, Patrick & Piermartini, Roberta & Richtering, Jurgen, 2006. "Non-reciprocal preference erosion arising from MFN liberalitzation in agriculture: What are the risks?," WTO Staff Working Papers ERSD-2006-02, World Trade Organization (WTO), Economic Research and Statistics Division.
    • Handle: RePEc:zbw:wtowps:ersd200602
    DOI: 10.30875/54e62fd6-en
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    References listed on IDEAS

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    1. Low, Patrick & Piermartini, Roberta & Richtering, Jurgen, 2005. "Multilateral solutions to the erosion of non-reciprocal preferences in NAMA," WTO Staff Working Papers ERSD-2005-05, World Trade Organization (WTO), Economic Research and Statistics Division.
    2. André Sapir & Lars Lundberg, 1984. "The U.S. Generalized System of Preferences and Its Impacts," NBER Chapters, in: The Structure and Evolution of Recent US Trade Policy, pages 195-236, National Bureau of Economic Research, Inc.
    3. Joseph Francois & Bernard Hoekman & Miriam Manchin, 2006. "Preference Erosion and Multilateral Trade Liberalization," The World Bank Economic Review, World Bank Group, vol. 20(2), pages 197-216.
    4. Marcelo Olarreaga & Çaglar Özden, 2005. "AGOA and Apparel: Who Captures the Tariff Rent in the Presence of Preferential Market Access?," The World Economy, Wiley Blackwell, vol. 28(1), pages 63-77, January.
    5. Grossman, Gene M. & Sykes, Alan O., 2005. "A preference for development: the law and economics of GSP," World Trade Review, Cambridge University Press, vol. 4(1), pages 41-67, March.
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    Cited by:

    1. John Gilbert, 2008. "Agricultural Trade Reform and Poverty in the Asia-Pacific: A Survey and Some New Results," Working Papers 200801, Utah State University, Department of Economics and Finance.
    2. Anania, Giovanni, 2009. "How would a WTO agreement on bananas affect exporting and importing countries?," WTO Doha Round 320136, International Centre for Trade and Sustainable Development (ICTSD).
    3. Anania, Giovanni, 2010. "EU Economic Partnership Agreements and WTO negotiations. A quantitative assessment of trade preference granting and erosion in the banana market," Food Policy, Elsevier, vol. 35(2), pages 140-153, April.
    4. Sam LAIRD, 2007. "Aid for Trade: Cool Aid or Kool-Aid?," G-24 Discussion Papers 48, United Nations Conference on Trade and Development.
    5. Escaith, Hubert & Tamenu, Bekele, 2013. "Least-Developed Countries' Trade During the "Super-Cycle" and the Great Trade Collapse: Patterns and Stylized Facts," MPRA Paper 51997, University Library of Munich, Germany.
    6. Ito, Tadashi, 2013. "Did the least developed countries benefit from duty-free quota-free access to the Japanese market?," IDE Discussion Papers 434, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    7. Ito, Tadashi & Aoyagi, Takahide, 2019. "Did the least developed countries benefit from duty-free quota-free access to the Japanese market?," Japan and the World Economy, Elsevier, vol. 49(C), pages 32-39.
    8. Соколовская Е.В., 2016. "Unilateral tariff cuts: a theory," Экономический вестник университета. Сборник научных трудов ученых и аспирантов, CyberLeninka;Государственное высшее учебное заведение «Переяслав-Хмельницкий государственный педагогический университет имени Григория Сковороды», issue 29-1, pages 268-274.
    9. John Gilbert, 2008. "Agricultural trade reform and poverty in the Asia-Pacific region: a survey and some new results," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 15(1), pages 1-34, June.
    10. Bernard Hoekman, 2007. "Doha, Development And Discrimination," Pacific Economic Review, Wiley Blackwell, vol. 12(3), pages 267-292, August.

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