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Eliminating Excessive Tariffs on Exports of Least Developed Countries

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  • Bernard Hoekman
  • Francis Ng
  • Marcelo Olarreaga

Abstract

Although average oecd tariffs on imports from the least developed countries are very low; tariffs above 15 percent (peaks) have a disproportional effect on their exports. Products subject to tariff peaks tend to be heavily concentrated in agriculture and food products and labor-intensive sectors, such as apparel and footwear. Although the least developed countries benefit from preferential access, preferences tend to be smallest for tariff peak products. A major exception is the European Union, so that the recent European initiative to grant full duty-free and quota-free access for the least developed countries (the so-called Everything But Arms initiative) will result in only a small increase in their exports of tariff peak items (less than 1 percent of total exports). However, as preferences are less significant in other major oecd countries, a more general emulation of the European Union initiative would increase the least developed countries' total exports of peak products by US$2.5 billion (11 percent of total exports). Although almost half of this increase is at the expense of other developing country exports, this represents less than 0.05 percent of their total exports. This trade diversion can be avoided by reducing tariff peaks to a uniform 5 percent applied on a nondiscriminatory basis. However, such a reform would imply no gains for the least developed countries, suggesting that the globally welfare-superior policy of nondiscriminatory elimination of tariff peaks should be complemented by greater direct assistance to poor countries. Copyright 2002, Oxford University Press.

Suggested Citation

  • Bernard Hoekman & Francis Ng & Marcelo Olarreaga, 2002. "Eliminating Excessive Tariffs on Exports of Least Developed Countries," World Bank Economic Review, World Bank Group, vol. 16(1), pages 1-21, June.
  • Handle: RePEc:oup:wbecrv:v:16:y:2002:i:1:p:1-21
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    1. Ng, Francis & Yeats, Alexander, 1997. "Open economies work better! did Africa's protectionist policies cause its marginalization in world trade?," World Development, Elsevier, vol. 25(6), pages 889-904, June.
    2. Elena Ianchovichina & Aaditya Mattoo & Marcelo Olarreaga, 2001. "Unrestricted Market Access for Subā€Saharan Africa: How Much Is It Worth and Who Pays?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 10(4), pages 410-432.
    3. Michalopoulos,Constantine, 1999. "Trade policy and market access issues for developing countries : implications for the Millennium Round," Policy Research Working Paper Series 2214, The World Bank.
    4. Finger, J. Michael & Schuknecht, Ludger, 1999. "Market access advances and retreats : the Uruguay Round and beyond," Policy Research Working Paper Series 2232, The World Bank.
    5. Mattoo, Aaditya & Olarreaga, Marcelo, 2000. "Reciprocity Across Modes of Supply in the WTO: A Negotiating Formula," CEPR Discussion Papers 2481, C.E.P.R. Discussion Papers.
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