Economic Policy Responses to Preference Erosion : From Trade as Aid to Aid for Trade

Trade preferences are a central issue in ongoing efforts to negotiate further multilateral trade liberalization. "Less preferred" countries are increasingly concerned about the discrimination they confront, while "more preferred" developing countries worry that WTO-based liberali...

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Main Authors:	Hoekman, Bernard, Prowse, Susan
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	AGRICULTURE APPAREL BALANCE OF PAYMENTS BENEFITS OF TRADE BUSINESS CYCLE CAPACITY BUILDING COMPARATIVE ADVANTAGE COMPETITIVENESS COMPETITIVENESS OF FIRMS COUNTRY EXPORTERS DEBT DEBT BURDEN DEVELOPMENT ASSISTANCE DEVELOPMENT STRATEGIES DEVELOPMENT STRATEGY DISCRIMINATORY TARIFF DISCRIMINATORY TARIFF REDUCTION DISCRIMINATORY TRADE POLICIES DOMESTIC INDUSTRIES DOMESTIC PRODUCERS DYNAMIC GAINS ECONOMIC DEVELOPMENT ECONOMIC POLICY ELIMINATION OF TARIFFS EXPORT CAPACITY EXPORT DIVERSIFICATION EXPORT PRICE EXPORT PRODUCTION EXPORTERS EXPORTS EXTERNAL DEBT EXTERNAL SHOCKS FINANCIAL ASSISTANCE FINANCIAL TRANSFERS FOREIGN PRODUCTS FOREIGN SUPPLIERS FREE ACCESS FREE TRADE FREE TRADE AGREEMENTS GENERAL EQUILIBRIUM MODEL GENERALIZED SYSTEM OF PREFERENCES GLOBAL LIBERALIZATION GLOBAL TRADE GLOBAL TRADE ANALYSIS HARMONIZATION IMPORT PRICES IMPORT SUBSIDY IMPORTING COUNTRIES IMPORTING COUNTRY IMPORTS INCOME INCOME DEVELOPING COUNTRIES INCOME GROUPS INCOME SUPPORT PROGRAMS INCOME TRANSFERS INTERNATIONAL POLICY INTERNATIONAL TRADE LDCS LIBERALIZATION OF TRADE LOCAL SUPPLIERS LOW-INCOME COUNTRIES MACROECONOMIC POLICY MARKET ACCESS MARKET FAILURES MARKET POWER MFN TARIFFS MIDDLE INCOME COUNTRIES MOST-FAVORED-NATION MULTILATERAL AGENCIES MULTILATERAL APPROACH MULTILATERAL LIBERALIZATION MULTILATERAL ORGANIZATIONS MULTILATERAL REFORMS MULTILATERAL TRADE MULTILATERAL TRADE LIBERALIZATION NEGATIVE TERMS OF TRADE EFFECTS NEGOTIATING AGENDA NONDISCRIMINATORY REGIME NONDISCRIMINATORY TARIFF REDUCTIONS OPPORTUNITY COST POLITICAL ECONOMY POSITIVE EXTERNALITIES PREFERENCE EROSION PREFERENCE SCHEMES PREFERENTIAL ACCESS PREFERENTIAL ACCESS TO MARKETS PREFERENTIAL SUPPLIERS PREFERENTIAL TARIFF PREFERENTIAL TRADE PRICE CHANGES PRICE SUPPORT PRICE SUPPORTS PRIMARY FACTORS PRIVATE SECTOR PUBLIC GOOD PUBLIC SECTOR QUANTITATIVE RESTRICTIONS QUOTA RENTS RATES OF PROTECTION REAL INCOME RECIPROCAL ACCESS RECIPROCAL BASIS RECIPROCAL TRADE PREFERENCES RECIPROCITY REGIONAL TRADE REGIONAL TRADE AGREEMENTS REGIONAL TRADE LIBERALIZATION REMOVAL OF TRADE-DISTORTING POLICIES RESTRICTIVE RULES OF ORIGIN SAFETY NETS SPECIALIZATION SUB-SAHARAN AFRICA TARIFF LINE TARIFF LINES TARIFF REDUCTIONS TECHNICAL ASSISTANCE TERMS OF TRADE THIRD-COUNTRY SUPPLIERS TRADE ACTION TRADE ADJUSTMENT TRADE AGENDA TRADE AREAS TRADE ASSISTANCE TRADE BARRIERS TRADE CAPACITY TRADE CREATION TRADE DEVELOPMENT TRADE DISTORTIONS TRADE DIVERSION TRADE EFFECT TRADE GAINS TRADE INTEGRATION TRADE NEGOTIATIONS TRADE POLICIES TRADE PREFERENCES TRADE REFORM TRADE REFORMS TRADE REGIME TRADING PARTNERS TRANSACTIONS COSTS TRANSITION PERIOD TRANSITION PERIODS URUGUAY ROUND WELFARE GAINS WORLD PRICES WORLD TRADING SYSTEM WTO ZERO TARIFF
Online Access:	http://documents.worldbank.org/curated/en/2005/09/6294480/economic-policy-responses-preference-erosion-trade-aid-aid-trade http://hdl.handle.net/10986/8265

id	okr-10986-8265
recordtype	oai_dc
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	AGRICULTURE APPAREL BALANCE OF PAYMENTS BENEFITS OF TRADE BUSINESS CYCLE CAPACITY BUILDING COMPARATIVE ADVANTAGE COMPETITIVENESS COMPETITIVENESS OF FIRMS COUNTRY EXPORTERS DEBT DEBT BURDEN DEVELOPMENT ASSISTANCE DEVELOPMENT STRATEGIES DEVELOPMENT STRATEGY DISCRIMINATORY TARIFF DISCRIMINATORY TARIFF REDUCTION DISCRIMINATORY TRADE POLICIES DOMESTIC INDUSTRIES DOMESTIC PRODUCERS DYNAMIC GAINS ECONOMIC DEVELOPMENT ECONOMIC POLICY ELIMINATION OF TARIFFS EXPORT CAPACITY EXPORT DIVERSIFICATION EXPORT PRICE EXPORT PRODUCTION EXPORTERS EXPORTS EXTERNAL DEBT EXTERNAL SHOCKS FINANCIAL ASSISTANCE FINANCIAL TRANSFERS FOREIGN PRODUCTS FOREIGN SUPPLIERS FREE ACCESS FREE TRADE FREE TRADE AGREEMENTS GENERAL EQUILIBRIUM MODEL GENERALIZED SYSTEM OF PREFERENCES GLOBAL LIBERALIZATION GLOBAL TRADE GLOBAL TRADE ANALYSIS HARMONIZATION IMPORT PRICES IMPORT SUBSIDY IMPORTING COUNTRIES IMPORTING COUNTRY IMPORTS INCOME INCOME DEVELOPING COUNTRIES INCOME GROUPS INCOME SUPPORT PROGRAMS INCOME TRANSFERS INTERNATIONAL POLICY INTERNATIONAL TRADE LDCS LIBERALIZATION OF TRADE LOCAL SUPPLIERS LOW-INCOME COUNTRIES MACROECONOMIC POLICY MARKET ACCESS MARKET FAILURES MARKET POWER MFN TARIFFS MIDDLE INCOME COUNTRIES MOST-FAVORED-NATION MULTILATERAL AGENCIES MULTILATERAL APPROACH MULTILATERAL LIBERALIZATION MULTILATERAL ORGANIZATIONS MULTILATERAL REFORMS MULTILATERAL TRADE MULTILATERAL TRADE LIBERALIZATION NEGATIVE TERMS OF TRADE EFFECTS NEGOTIATING AGENDA NONDISCRIMINATORY REGIME NONDISCRIMINATORY TARIFF REDUCTIONS OPPORTUNITY COST POLITICAL ECONOMY POSITIVE EXTERNALITIES PREFERENCE EROSION PREFERENCE SCHEMES PREFERENTIAL ACCESS PREFERENTIAL ACCESS TO MARKETS PREFERENTIAL SUPPLIERS PREFERENTIAL TARIFF PREFERENTIAL TRADE PRICE CHANGES PRICE SUPPORT PRICE SUPPORTS PRIMARY FACTORS PRIVATE SECTOR PUBLIC GOOD PUBLIC SECTOR QUANTITATIVE RESTRICTIONS QUOTA RENTS RATES OF PROTECTION REAL INCOME RECIPROCAL ACCESS RECIPROCAL BASIS RECIPROCAL TRADE PREFERENCES RECIPROCITY REGIONAL TRADE REGIONAL TRADE AGREEMENTS REGIONAL TRADE LIBERALIZATION REMOVAL OF TRADE-DISTORTING POLICIES RESTRICTIVE RULES OF ORIGIN SAFETY NETS SPECIALIZATION SUB-SAHARAN AFRICA TARIFF LINE TARIFF LINES TARIFF REDUCTIONS TECHNICAL ASSISTANCE TERMS OF TRADE THIRD-COUNTRY SUPPLIERS TRADE ACTION TRADE ADJUSTMENT TRADE AGENDA TRADE AREAS TRADE ASSISTANCE TRADE BARRIERS TRADE CAPACITY TRADE CREATION TRADE DEVELOPMENT TRADE DISTORTIONS TRADE DIVERSION TRADE EFFECT TRADE GAINS TRADE INTEGRATION TRADE NEGOTIATIONS TRADE POLICIES TRADE PREFERENCES TRADE REFORM TRADE REFORMS TRADE REGIME TRADING PARTNERS TRANSACTIONS COSTS TRANSITION PERIOD TRANSITION PERIODS URUGUAY ROUND WELFARE GAINS WORLD PRICES WORLD TRADING SYSTEM WTO ZERO TARIFF
spellingShingle	AGRICULTURE APPAREL BALANCE OF PAYMENTS BENEFITS OF TRADE BUSINESS CYCLE CAPACITY BUILDING COMPARATIVE ADVANTAGE COMPETITIVENESS COMPETITIVENESS OF FIRMS COUNTRY EXPORTERS DEBT DEBT BURDEN DEVELOPMENT ASSISTANCE DEVELOPMENT STRATEGIES DEVELOPMENT STRATEGY DISCRIMINATORY TARIFF DISCRIMINATORY TARIFF REDUCTION DISCRIMINATORY TRADE POLICIES DOMESTIC INDUSTRIES DOMESTIC PRODUCERS DYNAMIC GAINS ECONOMIC DEVELOPMENT ECONOMIC POLICY ELIMINATION OF TARIFFS EXPORT CAPACITY EXPORT DIVERSIFICATION EXPORT PRICE EXPORT PRODUCTION EXPORTERS EXPORTS EXTERNAL DEBT EXTERNAL SHOCKS FINANCIAL ASSISTANCE FINANCIAL TRANSFERS FOREIGN PRODUCTS FOREIGN SUPPLIERS FREE ACCESS FREE TRADE FREE TRADE AGREEMENTS GENERAL EQUILIBRIUM MODEL GENERALIZED SYSTEM OF PREFERENCES GLOBAL LIBERALIZATION GLOBAL TRADE GLOBAL TRADE ANALYSIS HARMONIZATION IMPORT PRICES IMPORT SUBSIDY IMPORTING COUNTRIES IMPORTING COUNTRY IMPORTS INCOME INCOME DEVELOPING COUNTRIES INCOME GROUPS INCOME SUPPORT PROGRAMS INCOME TRANSFERS INTERNATIONAL POLICY INTERNATIONAL TRADE LDCS LIBERALIZATION OF TRADE LOCAL SUPPLIERS LOW-INCOME COUNTRIES MACROECONOMIC POLICY MARKET ACCESS MARKET FAILURES MARKET POWER MFN TARIFFS MIDDLE INCOME COUNTRIES MOST-FAVORED-NATION MULTILATERAL AGENCIES MULTILATERAL APPROACH MULTILATERAL LIBERALIZATION MULTILATERAL ORGANIZATIONS MULTILATERAL REFORMS MULTILATERAL TRADE MULTILATERAL TRADE LIBERALIZATION NEGATIVE TERMS OF TRADE EFFECTS NEGOTIATING AGENDA NONDISCRIMINATORY REGIME NONDISCRIMINATORY TARIFF REDUCTIONS OPPORTUNITY COST POLITICAL ECONOMY POSITIVE EXTERNALITIES PREFERENCE EROSION PREFERENCE SCHEMES PREFERENTIAL ACCESS PREFERENTIAL ACCESS TO MARKETS PREFERENTIAL SUPPLIERS PREFERENTIAL TARIFF PREFERENTIAL TRADE PRICE CHANGES PRICE SUPPORT PRICE SUPPORTS PRIMARY FACTORS PRIVATE SECTOR PUBLIC GOOD PUBLIC SECTOR QUANTITATIVE RESTRICTIONS QUOTA RENTS RATES OF PROTECTION REAL INCOME RECIPROCAL ACCESS RECIPROCAL BASIS RECIPROCAL TRADE PREFERENCES RECIPROCITY REGIONAL TRADE REGIONAL TRADE AGREEMENTS REGIONAL TRADE LIBERALIZATION REMOVAL OF TRADE-DISTORTING POLICIES RESTRICTIVE RULES OF ORIGIN SAFETY NETS SPECIALIZATION SUB-SAHARAN AFRICA TARIFF LINE TARIFF LINES TARIFF REDUCTIONS TECHNICAL ASSISTANCE TERMS OF TRADE THIRD-COUNTRY SUPPLIERS TRADE ACTION TRADE ADJUSTMENT TRADE AGENDA TRADE AREAS TRADE ASSISTANCE TRADE BARRIERS TRADE CAPACITY TRADE CREATION TRADE DEVELOPMENT TRADE DISTORTIONS TRADE DIVERSION TRADE EFFECT TRADE GAINS TRADE INTEGRATION TRADE NEGOTIATIONS TRADE POLICIES TRADE PREFERENCES TRADE REFORM TRADE REFORMS TRADE REGIME TRADING PARTNERS TRANSACTIONS COSTS TRANSITION PERIOD TRANSITION PERIODS URUGUAY ROUND WELFARE GAINS WORLD PRICES WORLD TRADING SYSTEM WTO ZERO TARIFF Hoekman, Bernard Prowse, Susan Economic Policy Responses to Preference Erosion : From Trade as Aid to Aid for Trade
relation	Policy Research Working Paper; No. 3721
description	Trade preferences are a central issue in ongoing efforts to negotiate further multilateral trade liberalization. "Less preferred" countries are increasingly concerned about the discrimination they confront, while "more preferred" developing countries worry that WTO-based liberalization of trade will erode the value of current preferential access regimes. This tension suggests there is a political economy case for preference-granting countries to explicitly address erosion fears. The authors argue that the appropriate instrument for this is development assistance. The alternative of addressing erosion concerns through the trading system will generate additional discrimination and trade distortions, rather than moving the WTO toward a more liberal, non-discriminatory regime. They further argue that prospective losses generated by most-favored-nation liberalization should be quantified on a bilateral basis, using methods that estimate what the associated transfer should have been and ignoring the various factors that reduce their value in practice (such as compliance costs or the fact that part of the rents created by preference programs accrue to importers in OECD countries). Given that many poor countries have not been able to benefit much from preference programs, a case is also made that preference erosion should be considered as part of a broader response by OECD countries to calls to make the trading system more supportive of economic development. The focus should be on identifying actions and policy measures that will improve the ability of developing countries to use trade for development.
format	Publications & Research :: Policy Research Working Paper
author	Hoekman, Bernard Prowse, Susan
author_facet	Hoekman, Bernard Prowse, Susan
author_sort	Hoekman, Bernard
title	Economic Policy Responses to Preference Erosion : From Trade as Aid to Aid for Trade
title_short	Economic Policy Responses to Preference Erosion : From Trade as Aid to Aid for Trade
title_full	Economic Policy Responses to Preference Erosion : From Trade as Aid to Aid for Trade
title_fullStr	Economic Policy Responses to Preference Erosion : From Trade as Aid to Aid for Trade
title_full_unstemmed	Economic Policy Responses to Preference Erosion : From Trade as Aid to Aid for Trade
title_sort	economic policy responses to preference erosion : from trade as aid to aid for trade
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2005/09/6294480/economic-policy-responses-preference-erosion-trade-aid-aid-trade http://hdl.handle.net/10986/8265
_version_	1764407819731206144
spelling	okr-10986-82652021-04-23T14:02:43Z Economic Policy Responses to Preference Erosion : From Trade as Aid to Aid for Trade Hoekman, Bernard Prowse, Susan AGRICULTURE APPAREL BALANCE OF PAYMENTS BENEFITS OF TRADE BUSINESS CYCLE CAPACITY BUILDING COMPARATIVE ADVANTAGE COMPETITIVENESS COMPETITIVENESS OF FIRMS COUNTRY EXPORTERS DEBT DEBT BURDEN DEVELOPMENT ASSISTANCE DEVELOPMENT STRATEGIES DEVELOPMENT STRATEGY DISCRIMINATORY TARIFF DISCRIMINATORY TARIFF REDUCTION DISCRIMINATORY TRADE POLICIES DOMESTIC INDUSTRIES DOMESTIC PRODUCERS DYNAMIC GAINS ECONOMIC DEVELOPMENT ECONOMIC POLICY ELIMINATION OF TARIFFS EXPORT CAPACITY EXPORT DIVERSIFICATION EXPORT PRICE EXPORT PRODUCTION EXPORTERS EXPORTS EXTERNAL DEBT EXTERNAL SHOCKS FINANCIAL ASSISTANCE FINANCIAL TRANSFERS FOREIGN PRODUCTS FOREIGN SUPPLIERS FREE ACCESS FREE TRADE FREE TRADE AGREEMENTS GENERAL EQUILIBRIUM MODEL GENERALIZED SYSTEM OF PREFERENCES GLOBAL LIBERALIZATION GLOBAL TRADE GLOBAL TRADE ANALYSIS HARMONIZATION IMPORT PRICES IMPORT SUBSIDY IMPORTING COUNTRIES IMPORTING COUNTRY IMPORTS INCOME INCOME DEVELOPING COUNTRIES INCOME GROUPS INCOME SUPPORT PROGRAMS INCOME TRANSFERS INTERNATIONAL POLICY INTERNATIONAL TRADE LDCS LIBERALIZATION OF TRADE LOCAL SUPPLIERS LOW-INCOME COUNTRIES MACROECONOMIC POLICY MARKET ACCESS MARKET FAILURES MARKET POWER MFN TARIFFS MIDDLE INCOME COUNTRIES MOST-FAVORED-NATION MULTILATERAL AGENCIES MULTILATERAL APPROACH MULTILATERAL LIBERALIZATION MULTILATERAL ORGANIZATIONS MULTILATERAL REFORMS MULTILATERAL TRADE MULTILATERAL TRADE LIBERALIZATION NEGATIVE TERMS OF TRADE EFFECTS NEGOTIATING AGENDA NONDISCRIMINATORY REGIME NONDISCRIMINATORY TARIFF REDUCTIONS OPPORTUNITY COST POLITICAL ECONOMY POSITIVE EXTERNALITIES PREFERENCE EROSION PREFERENCE SCHEMES PREFERENTIAL ACCESS PREFERENTIAL ACCESS TO MARKETS PREFERENTIAL SUPPLIERS PREFERENTIAL TARIFF PREFERENTIAL TRADE PRICE CHANGES PRICE SUPPORT PRICE SUPPORTS PRIMARY FACTORS PRIVATE SECTOR PUBLIC GOOD PUBLIC SECTOR QUANTITATIVE RESTRICTIONS QUOTA RENTS RATES OF PROTECTION REAL INCOME RECIPROCAL ACCESS RECIPROCAL BASIS RECIPROCAL TRADE PREFERENCES RECIPROCITY REGIONAL TRADE REGIONAL TRADE AGREEMENTS REGIONAL TRADE LIBERALIZATION REMOVAL OF TRADE-DISTORTING POLICIES RESTRICTIVE RULES OF ORIGIN SAFETY NETS SPECIALIZATION SUB-SAHARAN AFRICA TARIFF LINE TARIFF LINES TARIFF REDUCTIONS TECHNICAL ASSISTANCE TERMS OF TRADE THIRD-COUNTRY SUPPLIERS TRADE ACTION TRADE ADJUSTMENT TRADE AGENDA TRADE AREAS TRADE ASSISTANCE TRADE BARRIERS TRADE CAPACITY TRADE CREATION TRADE DEVELOPMENT TRADE DISTORTIONS TRADE DIVERSION TRADE EFFECT TRADE GAINS TRADE INTEGRATION TRADE NEGOTIATIONS TRADE POLICIES TRADE PREFERENCES TRADE REFORM TRADE REFORMS TRADE REGIME TRADING PARTNERS TRANSACTIONS COSTS TRANSITION PERIOD TRANSITION PERIODS URUGUAY ROUND WELFARE GAINS WORLD PRICES WORLD TRADING SYSTEM WTO ZERO TARIFF Trade preferences are a central issue in ongoing efforts to negotiate further multilateral trade liberalization. "Less preferred" countries are increasingly concerned about the discrimination they confront, while "more preferred" developing countries worry that WTO-based liberalization of trade will erode the value of current preferential access regimes. This tension suggests there is a political economy case for preference-granting countries to explicitly address erosion fears. The authors argue that the appropriate instrument for this is development assistance. The alternative of addressing erosion concerns through the trading system will generate additional discrimination and trade distortions, rather than moving the WTO toward a more liberal, non-discriminatory regime. They further argue that prospective losses generated by most-favored-nation liberalization should be quantified on a bilateral basis, using methods that estimate what the associated transfer should have been and ignoring the various factors that reduce their value in practice (such as compliance costs or the fact that part of the rents created by preference programs accrue to importers in OECD countries). Given that many poor countries have not been able to benefit much from preference programs, a case is also made that preference erosion should be considered as part of a broader response by OECD countries to calls to make the trading system more supportive of economic development. The focus should be on identifying actions and policy measures that will improve the ability of developing countries to use trade for development. 2012-06-18T15:36:04Z 2012-06-18T15:36:04Z 2005-09 http://documents.worldbank.org/curated/en/2005/09/6294480/economic-policy-responses-preference-erosion-trade-aid-aid-trade http://hdl.handle.net/10986/8265 English Policy Research Working Paper; No. 3721 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research

Economic Policy Responses to Preference Erosion : From Trade as Aid to Aid for Trade

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