Price Effects of Preferential Market Access: The Caribbean Basin Initiative and the Apparel Sector
30 Pages Posted: 20 Apr 2016
There are 2 versions of this paper
Price Effects of Preferential Market Access: The Caribbean Basin Initiative and the Apparel Sector
Price Effects of Preferential Market Access: The Caribbean Basin Initiative and the Apparel Sector
Date Written: February 2004
Abstract
Preferential trade arrangements should be evaluated by analyzing their effect on prices, rather than the total value of trade, as emphasized in the theoretical literature but rarely implemented empirically. Ozden and Sharma analyze the impact of the unilateral preferences granted by the U.S. Caribbean Basin Initiative (CBI) on the prices received by eligible apparel exporters. They use fixed effects generalized least squares (GLS) estimation to isolate the effects of various other factors (such as quality, exchange rates, and transactions costs) and identify the effects of tariff preferences. The authors find that CBI exporters only capture around two-thirds of their preference margin, despite the fairly competitive nature of the apparel market. This translates into a 9 percent increase in the relative prices they receive, but these numbers vary across countries and years. Countries specializing in higher-value items capture more of the preference margin while implementation of the North American Free Trade Agreement has a negative effect. The authors analyze the effect of Multi-Fibre Agreement (MFA) quotas imposed on third countries (such as China) and find that the benefits of CBI preferences will be significantly reduced once the quotas are fully removed in 2005.
This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to analyze regional and preferential trade agreements.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Agricultural Trade Reform and the Doha Development Agenda
By Kym Anderson and Will J. Martin
-
The Africa Growth and Opportunity Act and its Rules of Origin: Generosity Undermined?
By Aaditya Mattoo, Devesh Roy, ...
-
The Africa Growth and Opportunity Act and its Rules of Origin Generosity Undermined?
By Aaditya Mattoo, Devesh Roy, ...
-
Market Structure and Market Access
By Joseph F. Francois and Ian Wooton
-
Commercial Policy Variability, Bindings and Market Access
By Joseph F. Francois and Will J. Martin
-
Commercial Policy Variability, Bindings and Market Access
By Joseph F. Francois and Will J. Martin
-
By Bernard Hoekman, Marcelo Olarreaga, ...