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The impact of trade preferences removal: Evidence from the Belarus Generalized System of Preferences withdrawal

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  • Hinnerk Gnutzmann
  • Arevik Gnutzmann‐Mkrtchyan

Abstract

Under the Generalized System of Preferences (GSP), high‐income countries grant unilateral trade preferences to developing countries. These preferences are subject to political conditionality, but little is known about the trade impact of loss of preferential access. We study the EU's complete withdrawal of GSP preferences from Belarus in 2007 in response to labour rights violations to fill this void. The withdrawal caused a significant drop in trade for affected products (25%–27% trade decline) and some trade reduction at the extensive margin. For products where trade was affected at the intensive margin, there is some evidence of adjustment through falls in quantities but also through prices for larger export sectors. The impact was uneven across sectors, with textiles and plastics particularly strongly affected by the withdrawal.

Suggested Citation

  • Hinnerk Gnutzmann & Arevik Gnutzmann‐Mkrtchyan, 2022. "The impact of trade preferences removal: Evidence from the Belarus Generalized System of Preferences withdrawal," The World Economy, Wiley Blackwell, vol. 45(9), pages 2977-3000, September.
    • Handle: RePEc:bla:worlde:v:45:y:2022:i:9:p:2977-3000
    DOI: 10.1111/twec.13265
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    Cited by:

    1. Marius Fossum & Inga Heiland & Viktor Moulin, 2024. "Analyzing the Expiration of the United States Generalized System of Preferences and Its Impact on Imports from Developing Countries," CESifo Working Paper Series 11509, CESifo.
    2. Ingo Borchert & Mattia Di Ubaldo, 2024. "The Trade Impact of Surprise Graduations from the EU’s GSP scheme," Working Paper Series 1224, Department of Economics, University of Sussex Business School.
    3. Suttner, Stefan, 2023. "Issue linkage and trade policy uncertainty: Evidence from trade preferences for developing countries," FAU Discussion Papers in Economics 07/2023, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    4. Gnutzmann-Mkrtchyan, Arevik & Volmer, Maximilian, 2022. "EU trade policy reform: towards reciprocal concessions with developing countries," Hannover Economic Papers (HEP) dp-697, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.

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