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Preference Erosion and Multilateral Trade Liberalization

Listed author(s):
  • J. Francois

    ()

    (Faculty of Economics, Erasmus Universiteit Rotterdam, and CEPR)

  • B. Hoekman

    (World Bank, Institut d'Etudes Politiques, Paris, and CEPR)

  • M. Manchin

    ()

    (Faculty of Economics, Erasmus Universiteit Rotterdam)

Because of concern that OECD tariff reductions will translate intoworsening export performance for the least developed countries, trade preferences haveproven a stumbling block to developing country support for multilateral liberalization.We examine the actual scope for preference erosion, including an econometricassessment of the actual utilization, and also the scope for erosion estimated by modelingfull elimination of OECD tariffs and hence full MFN liberalization-based preferenceerosion. Preferences are underutilized due to administrative burden -estimated to be atleast 4 percent on average- reducing the magnitude of erosion costs significantly. Forthose products where preferences are used (are of value), the primary negative impactfollows from erosion of EU preferences. This suggests the erosion problem is primarilybilateral rather than a WTO-based concern.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 05-073/2.

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Date of creation: 07 Jul 2005
Handle: RePEc:tin:wpaper:20050073
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  1. Paul Brenton & Miriam Manchin, 2003. "Making EU Trade Agreements Work: The Role of Rules of Origin," The World Economy, Wiley Blackwell, vol. 26(5), pages 755-769, May.
  2. Werner Antweiler & Daniel Trefler, 2002. "Increasing Returns and All That: A View from Trade," American Economic Review, American Economic Association, vol. 92(1), pages 93-119, March.
  3. Elena Ianchovichina & Aaditya Mattoo & Marcelo Olarreaga, 2001. "Unrestricted Market Access for Sub‐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.
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  6. 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.
  7. Francois, Joseph, 1998. "Scale Economies and Imperfect Competition in the GTAP Model," GTAP Technical Papers 317, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  8. Hoekman, Bernard, 2004. "Dismantling Discrimination Against Developing Countries: Access, Rules and Differential Treatment," CEPR Discussion Papers 4694, C.E.P.R. Discussion Papers.
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  10. 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..
  11. Arvind Panagariya, 2000. "Preferential Trade Liberalization: The Traditional Theory and New Developments," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 287-331, June.
  12. Joseph Francois & Ian Wooton, 2004. "Market Structure in Services and Market Access in Goods," Tinbergen Institute Discussion Papers 04-050/2, Tinbergen Institute.
  13. 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.
  14. Marcelo Olarreaga & Çaglar Özden, 2005. "AGOA and Apparel: Who Captures the Tariff Rent in the Presence of Preferential Market Access?," The World Economy, Wiley Blackwell, vol. 28(1), pages 63-77, January.
  15. Hoekman, Bernard, 1993. "Rules of Origin for Goods and Services: Conceptual Issues and Economic Considerations," CEPR Discussion Papers 821, C.E.P.R. Discussion Papers.
  16. Kee, Hiau Looi & Olarreaga, Marcelo & Silva, Peri, 2007. "Market access for sale," Journal of Development Economics, Elsevier, vol. 82(1), pages 79-94, January.
  17. André Sapir & Sam Laird, 1987. "Tariff preference," ULB Institutional Repository 2013/8248, ULB -- Universite Libre de Bruxelles.
  18. Antoine Bouët & Yvan Decreux & Lionel Fontagné & Sébastien Jean & David Laborde, 2004. "A Consistent, Ad-Valorem Equivalent Measure of Applied Protection Across the World: The MAcMap-HS6 Database," Working Papers 2004-22, CEPII research center.
  19. André Sapir & Rolf Langhammer, 1987. "Economic impact of generalized tariff preferences," ULB Institutional Repository 2013/8090, ULB -- Universite Libre de Bruxelles.
  20. repec:rus:hseeco:123712 is not listed on IDEAS
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