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Multilateral solutions to the erosion of non-reciprocal preferences in NAMA

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  • Low, Patrick
  • Piermartini, Roberta
  • Richtering, Jurgen

Abstract

This paper analyzes the risks of preference erosion arising from MFN trade liberalization in manufactured products. It focuses on developing countries that receive non-reciprocal preferences in the markets of United States, EU, Japan, Canada and Australia. The paper estimates preference margins as the difference between non-reciprocal preferential rates received by individual countries and the best available (MFN or better-than-MFN) treatment received on average by all other suppliers. Most previous work on this subject has compared the preferential rates for individual countries with MFN rates alone, which the paper found to have the effect of over-stating the margin at risk from erosion following MFN reductions. The paper also considers the effect of less than full utilization of preference margins by beneficiaries, but a lack of data prevented the inclusion of this additional moderating factor relating to erosion risk.The paper finds that developing countries as a whole do not loose from preference erosion following MFN liberalization, although significant gains and losses underlie the estimate of the average. Almost all least-developed countries either lose from preference erosion or are unaffected by it because their exports are already largely MFN duty-free. A large number of LDCs are in the latter group. The main sectors where preference erosion occurs are textiles, fish and fish products, leather and leather products, electrical machinery and wood and wood products. As regards trade solutions to preference erosion, options are somewhat limited. Improved utilization rates may help certain countries but certainly do not offer a generalized solution. Limited scope exists for expanding the coverage of preference schemes within the destination markets considered in the paper. Other destination markets might offer some prospect, but these are limited by the fact that the markets studied dominate the trade flows of the beneficiary countries.

Suggested Citation

  • Low, Patrick & Piermartini, Roberta & Richtering, Jurgen, 2005. "Multilateral solutions to the erosion of non-reciprocal preferences in NAMA," WTO Staff Working Papers ERSD-2005-05, World Trade Organization (WTO), Economic Research and Statistics Division.
    • Handle: RePEc:zbw:wtowps:ersd200505
    DOI: 10.30875/4ead70b5-en
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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. Paul Collier & Anthony J. Venables, 2007. "Rethinking Trade Preferences: How Africa Can Diversify its Exports," The World Economy, Wiley Blackwell, vol. 30(8), pages 1326-1345, August.
    3. repec:hal:spmain:info:hdl:2441/45eb019724sn6sg9melpggksl is not listed on IDEAS
    4. Fugazza, Marco, 2007. "A new geography of preferences for Sub-Saharan African countries in a globalizing trading system," MPRA Paper 11575, University Library of Munich, Germany.
    5. Fabienne Femenia & Alexandre Gohin, 2007. "Estimating censored and non homothetic demand systems : the generalized maximum entropy appoach," Post-Print hal-02814735, HAL.
    6. Douillet, Mathilde, 2011. "Which trade integration scheme can best help Sub-Saharan Africa develop and export more processed agricultural goods?:," IFPRI discussion papers 1119, International Food Policy Research Institute (IFPRI).
    7. repec:spo:wpmain:info:hdl:2441/45eb019724sn6sg9melpggksl is not listed on IDEAS
    8. Douillet, Mathilde, 2012. "Trade and agricultural policies in Malawi: Not all policy reform is equally good for the poor," MPRA Paper 40948, University Library of Munich, Germany.
    9. repec:spo:wpecon:info:hdl:2441/45eb019724sn6sg9melpggksl is not listed on IDEAS
    10. Mustafizur Rahman & Wasel Bin Shadat, 2006. "NAMA Negotiations in the WTO and Preference Erosion," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 7(2), pages 179-203, September.
    11. Douillet, Mathilde, 2012. "Trade policy reforms in the new agricultural context: Is regional integration a priority for Sub-Saharan African countries agricultural-led industrialization? Insights from a global computable general," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126546, International Association of Agricultural Economists.
    12. Gnangnon, Sèna Kimm & Priyadarshi, Shishir, 2016. "Has the multilateral Hong Kong Ministerial decision on duty free quota free market access provided a breakthrough in the Least developed countries' export performance?," WTO Staff Working Papers ERSD-2016-06, World Trade Organization (WTO), Economic Research and Statistics Division.
    13. Sharma, Anupa & Grant, Jason & Boys, Kathryn, 2015. "Truly Preferential Treatment? Reconsidering the Generalized System of (Trade) Preferences," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205890, Agricultural and Applied Economics Association.
    14. Raihan, Selim & Razzaque, Mohammad A, 2007. "WTO and regional trade negotiation outcomes: quantitative assessments of potential implications on Bangladesh," MPRA Paper 38475, University Library of Munich, Germany.
    15. Sam LAIRD, 2007. "Aid for Trade: Cool Aid or Kool-Aid?," G-24 Discussion Papers 48, United Nations Conference on Trade and Development.
    16. Escaith, Hubert & Tamenu, Bekele, 2013. "Least-Developed Countries' Trade During the "Super-Cycle" and the Great Trade Collapse: Patterns and Stylized Facts," MPRA Paper 51997, University Library of Munich, Germany.
    17. Douillet, Mathilde, 2012. "Trade and agricultural policies in Malawi: Not all policy reform is equally good for the poor," Conference papers 332277, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    18. Mathilde Douillet, 2012. "Trade policies and agriculture in Sub-Saharan Africa Comparative analysis in a Computable General Equilibrium framework [Politiques commerciales et agriculture en Afrique Sub-Saharienne : analyse c," SciencePo Working papers Main tel-03676037, HAL.
    19. Low, Patrick & Piermartini, Roberta & Richtering, Jurgen, 2006. "Non-reciprocal preference erosion arising from MFN liberalitzation in agriculture: What are the risks?," WTO Staff Working Papers ERSD-2006-02, World Trade Organization (WTO), Economic Research and Statistics Division.
    20. Lawrence, Robert Z. & Rosito, Tatiana, 2006. "A New Compensation Mechanism for Preference Erosion in the Doha Round," Working Paper Series rwp06-044, Harvard University, John F. Kennedy School of Government.
    21. Rafael E. De Hoyos & Maurizio Bussolo & Oscar Nú�ez, 2012. "Exports, Gender Wage Gaps, and Poverty in Honduras," Oxford Development Studies, Taylor & Francis Journals, vol. 40(4), pages 533-551, December.
    22. Frederik Stender, 2018. "MERCOSUR in gravity: an accounting approach to analyzing its trade effects," International Economics and Economic Policy, Springer, vol. 15(2), pages 501-522, April.
    23. Lawrence, Robert Z. & Rosito, Tatiana, 2006. "A New Compensation Mechanism for Preference Erosion in the Doha Round," Working Paper Series rwp06-044, Harvard University, John F. Kennedy School of Government.
    24. repec:hal:wpspec:info:hdl:2441/45eb019724sn6sg9melpggksl is not listed on IDEAS
    25. Bernard Hoekman, 2007. "Doha, Development And Discrimination," Pacific Economic Review, Wiley Blackwell, vol. 12(3), pages 267-292, August.

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