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The European Union preferential trade with developing countries. Total trade restrictiveness and the case of sugar

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  • Conforti, Piero
  • Ford, Deep
  • Hallam, David
  • Rapsomanikis, George
  • Salvatici, Luca

    ()

Abstract

Preferential trade agreements are a central issue in the multilateral trade liberalization process. The extent to which such agreements are effective in improving market access for developing and developed countries is important because trade liberalization results in eroding their value to the beneficiary countries, expressed as export revenue. This paper focuses on the estimation of a theoretically founded bilateral aggregated measure of trade restrictiveness, the Mercantilistic Trade Restrictiveness Index, by means of a general equilibrium model, in order to measure the effectiveness of preferences granted by the European Union. We also develop an empirical model structure, comprising a partial equilibrium model for the sugar market and a gravity model, in order to replicate least developed countries bilateral trade with Europe, and to estimate the erosion in the value of preferences granted to African, Caribbean and Pacific countries and to least developed countries brought about by changes in the Common Market Organization for sugar and the Everything but Arms initiative. The results highlight the importance of sugar in determining the degree of trade restrictiveness faced by developing countries. Sugar sector policy reform in Europe is expected to result in a significant reduction in the African Caribbean and Pacific countries’ export revenue, whilst the initial impact on least developed countries may be limited, but increasing in the medium run.

Suggested Citation

  • Conforti, Piero & Ford, Deep & Hallam, David & Rapsomanikis, George & Salvatici, Luca, 2007. "The European Union preferential trade with developing countries. Total trade restrictiveness and the case of sugar," Economics & Statistics Discussion Papers esdp07037, University of Molise, Dept. EGSeI.
  • Handle: RePEc:mol:ecsdps:esdp07037
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    References listed on IDEAS

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    More about this item

    Keywords

    preferential trade; sugar; policy reform;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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