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The Impact of Preference Erosionon Middle-Income Developing Countries

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  • Hans P Lankes
  • Katerina Alexandraki

Abstract

Preference erosion has become an obstacle to multilateral trade liberalization, as beneficiaries of trade preferences have an incentive to resist reductions in mostfavored- nation (MFN) tariffs. This study identifies middle-income developing countries that are vulnerable to export revenue loss from preference erosion. It concludes that the problem is heavily concentrated in a sub-set of preference beneficiaries-primarily small island economies dependent on sugar, banana, and-to a lesser extent-textile exports. Accordingly, measures to help mitigate the impact of preference erosion can be closely targeted at the countries at risk.

Suggested Citation

  • Hans P Lankes & Katerina Alexandraki, 2004. "The Impact of Preference Erosionon Middle-Income Developing Countries," IMF Working Papers 04/169, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:04/169
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    References listed on IDEAS

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    1. Baldwin, Robert E., 1984. "Trade policies in developed countries," Handbook of International Economics,in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 12, pages 571-619 Elsevier.
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    Cited by:

    1. Erika Vianna Grossrieder, 2006. "Preference Erosion: The case of Bangladesh - A SUR-EC-AR Gravity Model of Trade," IHEID Working Papers 18-2007, Economics Section, The Graduate Institute of International Studies, revised Aug 2007.
    2. Nuno Limão & Marcelo Olarreaga, 2006. "Trade Preferences to Small Developing Countries and the Welfare Costs of Lost Multilateral Liberalization," World Bank Economic Review, World Bank Group, vol. 20(2), pages 217-240.
    3. Persson, Maria, 2012. "From trade preferences to trade facilitation: Taking stock of the issues," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 6, pages 1-33.
    4. Mary Amiti & John Romalis, 2007. "Will the Doha Round Lead to Preference Erosion?," IMF Staff Papers, Palgrave Macmillan, vol. 54(2), pages 338-384, June.
    5. Rui Ota & Stephanie Medina Cas, 2008. "Big Government, High Debt, and Fiscal Adjustment in Small States," IMF Working Papers 08/39, International Monetary Fund.
    6. 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.
    7. Sam LAIRD, 2007. "Aid for Trade: Cool Aid or Kool-Aid?," G-24 Discussion Papers 48, United Nations Conference on Trade and Development.
    8. Will Martin & Kym Anderson, 2006. "Agricultural Trade Reform and the Doha Development Agenda," World Bank Publications, The World Bank, number 6889.
    9. repec:eee:ecmode:v:64:y:2017:i:c:p:399-408 is not listed on IDEAS
    10. Iimi, Atsushi, 2007. "Infrastructure and trade preferences for the livestock sector : empirical evidence from the beef industry in Africa," Policy Research Working Paper Series 4201, The World Bank.
    11. Renuka Mahadevan & John Asafu-Adjaye, 2010. "The Implications Of European Union Sugar Price Cuts, Economic Partnership Agreement, And Development Aid For Fiji," Contemporary Economic Policy, Western Economic Association International, vol. 28(1), pages 52-64, January.
    12. Bernhard Herz & Marco Wagner, 2011. "The Dark Side of the Generalized System of Preferences," Review of International Economics, Wiley Blackwell, vol. 19(4), pages 763-775, September.
    13. Elbehri, Aziz & Wainio, John, 2006. "Preferential Tariffs, WTO and Developing Countries: Do the Gains from Multilateral Market Access Outweigh Preferential Access?," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25644, International Association of Agricultural Economists.
    14. Cooke, Edgar F. A., 2012. "Is the impact of AGOA heterogeneous?," MPRA Paper 43277, University Library of Munich, Germany.
    15. Dean, Judith M. & Wainio, John, 2006. "Quantifying the value of U.S. tariff preferences for developing countries," Policy Research Working Paper Series 3977, The World Bank.
    16. Countryman, Amanda M. & Narayanan, Badri G., 2017. "Price volatility, tariff structure and the special safeguard mechanism," Economic Modelling, Elsevier, vol. 64(C), pages 399-408.
    17. Walkenhorst, Peter & Cattaneo, Olivier, 2006. "Trade, Diversification and Growth in Nigeria," MPRA Paper 23735, University Library of Munich, Germany.
    18. Das, Dilip K., 2007. "Special Treatment and Policy Space for the Developing Economies in the Multilateral Trade Regime," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 8(1).
    19. Stephen Tokarick, 2008. "Dispelling Some Misconceptions about Agricultural Trade Liberalization," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 199-216, Winter.
    20. Yongzheng Yang, 2005. "Africa in the Doha Round; Dealing with Preference Erosion and Beyond," IMF Policy Discussion Papers 05/8, International Monetary Fund.
    21. Mohamed Fenira, 2015. "Trade Openness and Growth in Developing Countries: An Analysis of the Relationship after Comparing Trade Indicators," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(3), pages 468-482, March.
    22. Antoine Bouët & Lionel Fontagné & Sébastien Jean, 2005. "Is Erosion of Tariff Preferences a Serious Concern?," Working Papers 2005-14, CEPII research center.

    More about this item

    Keywords

    Trade liberalization; Trade; preferences; preference erosion; exporters; export supply; preferential access; Agriculture in International Trade;

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