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Preference Utilisation and Tariff Reduction in EU Imports from ACP Countries

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  • Miriam Manchin

Abstract

Despite the long relationship between the European Union and the African, Caribbean and Pacific (ACP) countries aimed at encouraging their exports while stimulating growth and investment, the ACP states still face difficulties in integrating into the world economy. This paper examines the non-least developed ACP countries preferential trade with the EU using data on EU member states' imports eligible for preferences under the Cotonou agreement for the period 2001 at the 8-digit level. Using data on tariffs and preferential quota applicable on each 8-digit product for the year 2001 ad-valorem tariff rates were calculated. The paper also investigates the existence of a threshold in the offered duty reduction under which traders have no incentives to ask for preferences since the costs of obtaining these exceeds their benefits. Our results showed that the higher the value of preferences offered, the higher the probability that preferences are requested. Using endogenous threshold estimation techniques we also provided evidence that there exists a minimum value of preferences needed for traders to request preferences. More specifically, if the difference between preferential and third country tariff rates are lower than 4 per cent, there are no incentives for traders to request preferences since the costs of obtaining the preferences are expected to be higher than the benefits from obtaining the preferences. Our results additionally indicate that country specificities also play an important role in the decision whether requesting preferences or not and how much to import. Copyright 2006 The Author Journal compilation 2006 Blackwell Publishing Ltd .

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  • Miriam Manchin, 2006. "Preference Utilisation and Tariff Reduction in EU Imports from ACP Countries," The World Economy, Wiley Blackwell, vol. 29(9), pages 1243-1266, September.
  • Handle: RePEc:bla:worlde:v:29:y:2006:i:9:p:1243-1266
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    References listed on IDEAS

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    1. José Anson & Olivier Cadot & Antoni Estevadeordal & Jaime de Melo & Akiko Suwa-Eisenmann & Bolormaa Tumurchudur, 2005. "Rules of Origin in North-South Preferential Trading Arrangements with an Application to NAFTA," Review of International Economics, Wiley Blackwell, vol. 13(3), pages 501-517, August.
    2. Brenton, Paul, 2003. "Integrating the least developed countries into the world trading system : the current impact of EU preferences under everything but arms," Policy Research Working Paper Series 3018, The World Bank.
    3. Kala Krishna & Anne Krueger, 1995. "Implementing Free Trade Areas: Rules of Origin and Hidden Protection," NBER Working Papers 4983, National Bureau of Economic Research, Inc.
    4. James M. DeVault, 1996. "Political Pressure and the U.S. Generalized System of Preferences," Eastern Economic Journal, Eastern Economic Association, vol. 22(1), pages 35-46, Winter.
    5. Alan Deardorff, 1998. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Chapters,in: The Regionalization of the World Economy, pages 7-32 National Bureau of Economic Research, Inc.
    6. Ozden, Caglar & Reinhardt, Eric, 2005. "The perversity of preferences: GSP and developing country trade policies, 1976-2000," Journal of Development Economics, Elsevier, vol. 78(1), pages 1-21, October.
    7. Céline Carrère & Jaime de Melo, 2015. "Are Different Rules of Origin Equally Costly? Estimates from NAFTA," World Scientific Book Chapters,in: Developing Countries in the World Economy, chapter 12, pages 277-298 World Scientific Publishing Co. Pte. Ltd..
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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