Policy Responses to Trade Preference Erosion

Options for Developing Countries

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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.



Preferences and Developing Country Experience

This chapter considers the evidence on the benefits of trade preferences and the implications of the erosion of preferential margins for developing countries and least developed countries. Appendix A3 provides further context and detail. After considering the relative importance of preferential trade schemes and the countries that are the major beneficiaries, evidence on the impact of preference erosion on specific countries and products is reviewed. The conclusion provides a summary of the literature and outlines some of the factors limiting the utilisation and effectiveness of preferences. Chapter 4 will address the major constraints that have prevented beneficiary countries from exploiting fully the preferential market access conditions offered under the schemes and the implied policy options.


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