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.



Strategies for Addressing Preference Erosion

This report has shown that only a relatively small number of developing and least developed countries are exposed to significant costs from preference erosion. The majority of these countries are either African (and can benefit from some ‘preference protection’ under arrangements for ACP countries and AGOA) or island economies in the Caribbean or Pacific (which can benefit from some ‘preference protection’ under ACP arrangements). An important distinction here is that whereas the ‘terms of access’ under AGOA are decided unilaterally by the USA, the terms of EU-ACP preferences will be determined in negotiations on the detail of economic partnership agreements. Conse - quently, as discussed below, the terms of preferences under EPAs are relevant to the trade policy negotiating strategies of ACP countries, in a way that AGOA is not. There are also a number of Asian countries, mostly LDCs such as Bangladesh, Cambodia, Myanmar and Nepal, that are exposed to potentially large costs of preference erosion; while they require a strategy for negotiations in the WTO relating to preferences, they are not party to EPA negotiations, but may face some specific preference erosion as a result of EPAs, to the extent that benefits of the EBA scheme are eroded.


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