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Tariff Preferences, WTO Negotiations and the LDCs: The Case of the ‘Everything But Arms’ Initiative

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  • Wusheng Yu
  • Trine Vig Jensen

Abstract

By assessing the impact of the recently adopted ‘Everything But Arms’ (EBA) initiative of the EU on the Least Developed Countries (LDCs) and by showing how further multilateral trade liberalisations erode the EBA preferences and impact the LDCs, this paper attempts to uncover the LDCs’ difficult positions in the WTO trade negotiations. Due to its limited product coverage and previous preferences granted by the EU, welfare impacts of the EBA on the LDCs are shown to be small and the bulk of these gains are associated with the ‘sensitive’ products that are subject to gradual liberalisations. Moreover, these small gains are likely to disappear if the EU conducts trade policy reforms in fulfilling its WTO obligations, resulting in an actually worse‐off situation for the LDCs. Extending the analysis to a multilateral trade liberalisation scenario reinforces the above results that the LDCs may well lose due to preference erosion and higher world market prices. It concludes that other development assistance measures from developed countries should be made available to the LDCs to ease their dependency on trade preferences and to foster their supply capacities. The LDCs themselves should attempt to integrate the duty and quota‐free market access status contained in the EBA into a binding WTO agreement to secure a stable trading environment. But more importantly, in order to solve the difficulties at the root these countries should actively engage in reforming their own trade policies.

Suggested Citation

  • Wusheng Yu & Trine Vig Jensen, 2005. "Tariff Preferences, WTO Negotiations and the LDCs: The Case of the ‘Everything But Arms’ Initiative," The World Economy, Wiley Blackwell, vol. 28(3), pages 375-405, March.
  • Handle: RePEc:bla:worlde:v:28:y:2005:i:3:p:375-405
    DOI: 10.1111/j.1467-9701.2005.00682.x
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    References listed on IDEAS

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    1. Elena Ianchovichina & Aaditya Mattoo & Marcelo Olarreaga, 2001. "Unrestricted Market Access for Sub‐Saharan Africa: How Much Is It Worth and Who Pays?," Journal of African Economies, Centre for the Study of African Economies, vol. 10(4), pages 410-432.
    2. Brenton, Paul, 2003. "Integrating the least developed countries into the world trading system : the current impact of EU preferences under everything but arms," Policy Research Working Paper Series 3018, The World Bank.
    3. Malcolm, Gerard, 1998. "Adjusting Tax Rates in the GTAP Data Base," GTAP Technical Papers 315, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    4. Arvind Panagariya, 2002. "EU Preferential Trade Arrangements and Developing Countries," The World Economy, Wiley Blackwell, vol. 25(10), pages 1415-1432, November.
    5. Malcolm, Gerard, 1998. "Adjusting Tax Rates In The Gtap Data Base," Technical Papers 28721, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
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    Cited by:

    1. John Asafu‐Adjaye & Renuka Mahadevan, 2009. "Regional Trade Agreements versus Global Trade Liberalisation: Implications for a Small Island Developing State," The World Economy, Wiley Blackwell, vol. 32(3), pages 509-529, March.
    2. Yongzheng Yang, 2005. "Africa in the Doha Round: Dealing with Preference Erosion and Beyond," IMF Policy Discussion Papers 2005/008, International Monetary Fund.
    3. Katerina Gradeva & Inmaculada Martínez-Zarzoso, 2016. "Are Trade Preferences more Effective than Aid in Supporting Exports? Evidence from the ‘Everything But Arms’ Preference Scheme," The World Economy, Wiley Blackwell, vol. 39(8), pages 1146-1171, August.
    4. Anania, Giovanni, 2010. "EU Economic Partnership Agreements and WTO negotiations. A quantitative assessment of trade preference granting and erosion in the banana market," Food Policy, Elsevier, vol. 35(2), pages 140-153, April.
    5. Kohnert, Dirk, 2008. "EU-African Economic Relations: Continuing Dominance, Traded for Aid?," GIGA Working Papers 82, GIGA German Institute of Global and Area Studies.
    6. Strutt, Anna & Walmsley, Terrie, 2010. "Trade and Sectoral Impacts of the Global Financial Crisis: A Dynamic CGE Analysis," Conference papers 331920, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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