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The biggest losers (and winners) from US trade liberalization

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  • Kara Reynolds

Abstract

Many development experts worry that continuing reductions of tariff levels in high-income countries will limit trade flows from developing countries that benefit from preferential trade programs because of 'preference erosion.' Using a panel of US import data between the years of 1997 and 2005, I find that reductions in preference margins will significantly diminish imports of some products, particularly from lower-middle and low income countries; for example, a 1% reduction in the US tariff on a product that is currently imported duty-free from developing countries will decrease imports of that product from lower-middle income countries by an average of 2.6%. However, many products produced by developing countries fail to qualify for preferential tariffs, thus a gradual reduction in all US tariff rates is expected to have only a modest impact on trade flows from developing countries.

Suggested Citation

  • Kara Reynolds, 2009. "The biggest losers (and winners) from US trade liberalization," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 18(3), pages 421-442.
  • Handle: RePEc:taf:jitecd:v:18:y:2009:i:3:p:421-442 DOI: 10.1080/09638190902986553
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    More about this item

    Keywords

    Generalized System of Preferences; trade diversion; preferential tariffs;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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