Preference Erosion and Multilateral Trade Liberalization

Because of concern that OECD tariff reductions will translate into worsening export performance for the least developed countries, trade preferences have proven a stumbling block to developing country support for multilateral liberalization. The authors examine the actual scope for preference erosio...

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Bibliographic Details
Main Authors:	François, Joseph, Hoekman, Bernard, Manchin, Miriam
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	AD VALOREM ADMINISTRATIVE BURDEN AGRICULTURAL PRODUCTS AGRICULTURE APPAREL AVERAGE TARIFFS BENCHMARK BENCHMARK DATA BENEFICIARY COUNTRIES BENEFICIARY COUNTRY BENEFITS OF TRADE BILATERAL TRADE BILATERAL TRADE FLOWS CARTEL COMPLIANCE COSTS CONCESSIONS CONTRACTING PARTIES COOPERATION AGREEMENTS COUNTRY EXPORTERS COUNTRY TARIFF CUSTOMS CUSTOMS DUTIES DECOLONIZATION DEVELOPMENT ASSISTANCE DISCRIMINATORY TARIFF DISCRIMINATORY TARIFF REDUCTION DOMESTIC FIRMS DOMESTIC POLICIES DUTY REDUCTION DUTY-FREE ACCESS DUTY-FREE ENTRY DUTY-FREE TRADE ECONOMIC COOPERATION ECONOMIC ENVIRONMENT ECONOMIC RELATIONS EEC MEMBER STATES ELASTICITY ELIMINATION OF TARIFFS EXPORT DIVERSIFICATION EXPORT PERFORMANCE EXPORT PRICE EXPORT REVENUE EXPORTERS EXPORTING COUNTRIES EXPORTING COUNTRY EXPORTS FACTOR MARKETS FOREIGN PRODUCTS FOREIGN SUPPLIERS FREE ACCESS FREE ENTRY FREE MARKET FREE MARKET ACCESS FREE TRADE FREE TRADE AGREEMENTS FREE TRADE AREA GDP GDP PER CAPITA GENERAL AGREEMENT ON TARIFFS GENERAL EQUILIBRIUM MODEL GENERALIZED SYSTEM OF PREFERENCES GLOBAL TRADE GRAVITY MODELS HUMAN RIGHTS IMPORT DATA IMPORT DEMAND IMPORT PROTECTION IMPORT TARIFFS IMPORTS INCOME INCOME COUNTRIES INCOME LEVELS INDUSTRIAL PRODUCTS INDUSTRIALIZATION INTELLECTUAL PROPERTY INTELLECTUAL PROPERTY RIGHTS INTERNATIONAL TRADE INVESTMENT POLICIES LDCS LEGAL FRAMEWORK LIBERAL RULES LIBERALIZATION OF TRADE LOCAL SUPPLIERS LOW-INCOME COUNTRIES MANUFACTURED GOODS MARKET ACCESS MARKET POWER MARKET SHARE MFN TARIFFS MONEY LAUNDERING MOST-FAVORED-NATION MULTILATERAL LIBERALIZATION MULTILATERAL TRADE MULTILATERAL TRADE LIBERALIZATION MULTILATERAL TRADE NEGOTIATIONS NATIONAL INCOME NEGATIVE TERMS OF TRADE EFFECTS NON-RECIPROCAL BASIS NON-TRADE AREAS NONDISCRIMINATORY TARIFF REDUCTIONS ORIGIN RULES PARTNER COUNTRIES PARTNER COUNTRY PER CAPITA INCOMES PREFERENCE EROSION PREFERENCE SCHEMES PREFERENTIAL ACCESS PREFERENTIAL MARGIN PREFERENTIAL SUPPLIERS PREFERENTIAL TARIFF PREFERENTIAL TARIFFS PREFERENTIAL TRADE PREFERENTIAL TRADE ARRANGEMENTS PREFERENTIAL TREATMENT PRICE CHANGES PRODUCT CATEGORIES PRODUCT LEVEL PRODUCTION PROCESS PROPERTY RIGHTS PROTECTION DATA PROTECTIONISM RATE OF TARIFF PREFERENCE RATES OF PROTECTION RECIPROCAL BASIS RECIPROCAL TRADE PREFERENCES RECIPROCITY REGRESSION ANALYSIS RESTRICTIVE RULES RESTRICTIVE RULES OF ORIGIN REVENUE LOSS SAFEGUARD CLAUSE SPECIALIZATION SUB-SAHARAN AFRICA TARIFF LINE TARIFF LINES TARIFF PREFERENCES TARIFF QUOTAS TARIFF RATES TARIFF REDUCTION TARIFF REDUCTIONS TARIFF REVENUE TECHNICAL REQUIREMENTS TECHNOLOGICAL PROGRESS TERMS OF TRADE THIRD-COUNTRY SUPPLIERS TRADE ACT TRADE COOPERATION TRADE COSTS TRADE CREATION TRADE DEFLECTION TRADE DIVERSION TRADE FLOWS TRADE GAINS TRADE LINKS TRADE NEGOTIATIONS TRADE PARTNER TRADE PARTNERS TRADE PARTNERSHIP TRADE POLICIES TRADE POLICY TRADE PREFERENCE TRADE PREFERENCES TRADE PROMOTION TRADE PROTECTION TRADE PROTOCOLS TRADE RELATIONS TRADE RELATIONSHIP TRADE-DISTORTING POLICIES TRADING COSTS TRADING PARTNER TRADING PARTNERS TRANSACTION COSTS WORLD ECONOMY WORLD TRADE WORLD TRADE ORGANIZATION WTO ZERO TARIFFS
Online Access:	http://documents.worldbank.org/curated/en/2005/10/6312458/preference-erosion-multilateral-trade-liberalization http://hdl.handle.net/10986/8651

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Summary:	Because of concern that OECD tariff reductions will translate into worsening export performance for the least developed countries, trade preferences have proven a stumbling block to developing country support for multilateral liberalization. The authors examine the actual scope for preference erosion, including an econometric assessment of the actual utilization and the scope for erosion estimated by modeling full elimination of OECD tariffs, and hence full most-favored-nation liberalization-based preference erosion. Preferences are underutilized due to administrative burden-estimated to be at least 4 percent on average-reducing the magnitude of erosion costs significantly. For those products where preferences are used (are of value), the primary negative impact follows from erosion of EU preferences. This suggests the erosion problem is primarily bilateral rather than a WTO-based concern.

Preference Erosion and Multilateral Trade Liberalization

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