Policy Responses to Trade Preference Erosion

Options for Developing Countries

image of Policy Responses to Trade Preference Erosion
It was hoped that trade preferences, offered to exports from developing countries by industrialised countries, would give greater economic benefits than has been the case. Now continuing multilateral tariff liberalisation threatens to further erode even those benefits that remain.

This study looks at how best developing countries should respond to this erosion of trade preferences, either through restructuring individual preference arrangements or by acting to offset the adverse effects of preference erosion.



Appendix to Chapter 2 (A2)

While a large number of preference schemes are offered by developed and developing country trade partners, the main preference-giving countries for developing and least developed countries are the QUAD+: the EU, USA, Japan, Canada and Australia. The EU and USA are discussed in Chapter 2, and we begin here with some information on the others (see relevant chapters in Hoekman et al., 2009 for more detail). Japan offers GSP preferential tariff treatment to 141 developing countries, with LDCs being eligible for duty and quota free treatment on specified products. Canada imports most of its goods from the North American Free Trade Association (NAFTA) at significant margins of preference relative to MFN rates. Developing countries accounted for just under 20 per cent of its total imports in 2003, mostly under MFN, although about a quarter were subject to the General Preferential Tariff (GPT), which is generally less than half the MFN tariff. About three-quarters of preferential imports to Australia enter under developing country preferences, although since 2003 a more generous LDC preference scheme has been in place. The remainder of this appendix provides details and tables to supplement the discussion in Chapter 2.


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