Preference Erosion and Multilateral Trade Liberalization

40 Pages Posted: 8 Aug 2006

See all articles by Joseph F. Francois

Joseph F. Francois

University of Bern - Department of Economics; Centre for Economic Policy Research (CEPR); Vienna Institute of International Economic Studies (WIIW); University of Adelaide - School of Economics

Bernard Hoekman

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); Centre for Economic Policy Research (CEPR); Economic Research Forum (ERF)

Miriam Manchin

Centro Studi Luca d'Agliano; University College London

Multiple version iconThere are 4 versions of this paper

Date Written: August 2005

Abstract

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. We examine the actual scope for preference erosion, including an econometric assessment of the actual utilization, and also the scope for erosion estimated by modeling full elimination of OECD tariffs and hence full MFN 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.

Keywords: preference erosion, GSP, WTO, Doha Round, trade and development

JEL Classification: F13

Suggested Citation

Francois, Joseph F and Hoekman, Bernard and Manchin, Miriam and Manchin, Miriam, Preference Erosion and Multilateral Trade Liberalization (August 2005). IIIS Discussion Paper No. 87, Available at SSRN: https://ssrn.com/abstract=922038 or http://dx.doi.org/10.2139/ssrn.922038

Joseph F Francois (Contact Author)

University of Bern - Department of Economics ( email )

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Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Vienna Institute of International Economic Studies (WIIW) ( email )

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Austria

University of Adelaide - School of Economics ( email )

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Australia
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Bernard Hoekman

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

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Italy

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Economic Research Forum (ERF) ( email )

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(P.O. Box: 12311)
Dokki, Cairo
Egypt

Miriam Manchin

Centro Studi Luca d'Agliano ( email )

Via Conservatorio 7
Milan, 20122
Italy

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

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