Trade diversion under selective preferential market access
Through its diverse trade preference schemes, the European Union provides different groups of developing countries with different degrees of market access. This paper is the first to demonstrate empirically that such staggered market access induces sizable trade diversion to the detriment of relatively less preferred beneficiary countries. In particular, preferences granted to African, Caribbean and Pacific economies are shown to impair the export performance of seven developing countries whose products only qualify for basic preferences under the Generalized System of Preferences. Exports to the European Union decline by about 30 percent if the African, Caribbean and Pacific tariff falls by 10 percentage points. In terms of forgone trade volume, losses for these relatively disadvantaged countries amount on average to 9 percent of their total trade with the European Union, depending on the country and its main exports. These intra-developing country distortions are driven by highly substitutable, often labor-intensive commodities.
|Date of creation:||01 Sep 2008|
|Date of revision:|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lorand Bartels, 2003. "The WTO Enabling Clause and Positive Conditionality in the European Community's GSP Program," Journal of International Economic Law, Oxford University Press, vol. 6(2), pages 507-532, June.
- Keith Head & John Ries, 2001. "Increasing Returns versus National Product Differentiation as an Explanation for the Pattern of U.S.-Canada Trade," American Economic Review, American Economic Association, vol. 91(4), pages 858-876, September.
- David Hummels & Alexandre Skiba, 2004.
"Shipping the Good Apples Out? An Empirical Confirmation of the Alchian-Allen Conjecture,"
Journal of Political Economy,
University of Chicago Press, vol. 112(6), pages 1384-1402, December.
- David Hummels & Alexandre Skiba, 2002. "Shipping the Good Apples Out? An Empirical Confirmation of the Alchian-Allen Conjecture," NBER Working Papers 9023, National Bureau of Economic Research, Inc.
- John Romalis, 2007.
"NAFTA's and CUSFTA's Impact on International Trade,"
The Review of Economics and Statistics,
MIT Press, vol. 89(3), pages 416-435, August.
- John Romalis, 2005. "NAFTA's and CUSFTA's Impact on International Trade," NBER Working Papers 11059, National Bureau of Economic Research, Inc.
- Karacaovali, Baybars & Limão, Nuno, 2005.
"The Clash of Liberalizations: Preferential vs. Multilateral Trade Liberalization in the European Union,"
CEPR Discussion Papers
4973, C.E.P.R. Discussion Papers.
- Karacaovali, Baybars & Limão, Nuno, 2008. "The clash of liberalizations: Preferential vs. multilateral trade liberalization in the European Union," Journal of International Economics, Elsevier, vol. 74(2), pages 299-327, March.
- Baybars Karacaovali & Nuno Limao, 2005. "The Clash Of Liberalizations: Preferential Vs. Multilateral Trade Liberalization In The European Union," International Trade and Finance Association Conference Papers 1037, International Trade and Finance Association.
- David Weinstein & Christian Broda, 2004.
"Globalization and the Gains from Variety,"
Econometric Society 2004 North American Summer Meetings
508, Econometric Society.
- Christian Broda & David E. Weinstein, 2004. "Globalization and the Gains from Variety," NBER Working Papers 10314, National Bureau of Economic Research, Inc.
- David E. Weinstein & Christian Broda, 2004. "Globalization And The Gains From Variety," Econometric Society 2004 Latin American Meetings 327, Econometric Society.
- Christian Broda & David E. Weinstein, 2004. "Globalization and the gains from variety," Staff Reports 180, Federal Reserve Bank of New York.
- David Weinstein & Christian Broda, 2004. "Globalization and the Gains from Variety," 2004 Meeting Papers 530, Society for Economic Dynamics.
- Amelia Santos-Paulino & A. P. Thirlwall, 2004. "The impact of trade liberalisation on exports, imports and the balance of payments of developing countries," Economic Journal, Royal Economic Society, vol. 114(493), pages F50-F72, 02.
- Fukao, Kyoji & Okubo, Toshihiro & Stern, Robert M., 2003.
"An econometric analysis of trade diversion under NAFTA,"
The North American Journal of Economics and Finance,
Elsevier, vol. 14(1), pages 3-24, March.
- Kyoji Fukao & Toshihiro Okubo & Robert M. Stern, 2002. "An Econometric Analysis of Trade Diversion under NAFTA," Discussion papers 02011, Research Institute of Economy, Trade and Industry (RIETI).
- Kyoji Fukao & Toshihiro Okubo & Robert M Stern, 2002. "An Econometric Analysis of Trade Diversion under NAFTA," Working Papers 491, Research Seminar in International Economics, University of Michigan.
- Fukao, Kyoji & Okubo, Toshihiro & Stern, Robert M., 2002. "An Econometric Analysis of Trade Diversion under NAFTA," Discussion Paper Series a431, Institute of Economic Research, Hitotsubashi University.
- Grossman, Gene M. & Sykes, Alan O., 2005. "A preference for development: the law and economics of GSP," World Trade Review, Cambridge University Press, vol. 4(01), pages 41-67, March.
- Hoekman, Bernard & Ozden, Caglar, 2005. "Trade preferences and differential treatment of developing countries : a selective survey," Policy Research Working Paper Series 3566, The World Bank.
- André Sapir, 1981. "Trade benefits under the EEC generalized system of preferences," ULB Institutional Repository 2013/8290, ULB -- Universite Libre de Bruxelles.
- Jon D. Haveman & Usha Nair-Reichert & Jerry G. Thursby, 2003. "How Effective are Trade Barriers? An Empirical Analysis of Trade Reduction, Diversion, and Compression," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 480-485, May.
- Arvind Panagariya, 2003. "EU Preferential Trade Policies and Developing Countries," International Trade 0308014, EconWPA.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:4710. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.