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GSP expiration and declining exports from developing countries

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  • Shushanik Hakobyan

Abstract

This paper investigates whether the 2011 expiration of the most comprehensive trade preference program (Generalized System of Preferences or GSP) offered by the US had a detrimental impact on the exports from developing countries. The effect of GSP expiration is examined with a triple difference‐in‐differences estimation that controls for both country‐ and product‐level export changes. Even though the duties collected during the period of expiration are ultimately refunded after GSP is reauthorized, the findings of this paper suggest that the expiration of GSP had a considerable impact on the level of exports to the US. On average exports dropped by 3% in 2011, with exports of agricultural products and textiles and clothing declining as much as 5% and 9%, respectively. The decline is increasing in the tariff rates and rates of utilization. The effect appears to be persistent over time as exports do not fully recover by 2012. The 2011 expiration is also found to be similar in magnitude to the 1995–1996 and 2013–2015 expirations, the longest episodes of expiration in the history of the GSP. Résumé. Suspension du SGP et baisse des exportations en provenance des pays en voie de développement. Cet article cherche à déterminer si la suspension en 2011 du Système Généralisé de Préférences (SGP) proposé par les États‐Unis eut des conséquences négatives sur les exportations en provenance des pays en voie de développement. Nous étudions l’effet de la suspension du SGP grâce à une estimation basée sur la méthode des triples différences tenant compte des changements en matière d’exportation, à la fois au niveau des produits mais aussi des pays. Même si les droits perçus au cours de la période d’interruption du SGP furent finalement restitués au moment de sa réintroduction, les conclusions de cet article suggèrent que la suspension du SGP engendra des répercussions considérables quant au niveau des exportations vers les États‐Unis. En moyenne, les exportations chutèrent de 3% en 2011; les exportations de produits agricoles et les exportations de textiles et de vêtements chutèrent quant à elles de 5% et 9% respectivement. Cette baisse entraîna une hausse des droits de douane et des taux d’utilisation. Ces effets semblent persister dans le temps puisque les exportations en 2012 ne retrouvèrent pas totalement les niveaux antérieurs. Il apparaît que la suspension du SGP en 2011 fut de même ampleur que les interruptions de 1995–1996 et de 2013–2015, les plus longues de l’histoire du SGP.

Suggested Citation

  • Shushanik Hakobyan, 2020. "GSP expiration and declining exports from developing countries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(3), pages 1132-1161, August.
    • Handle: RePEc:wly:canjec:v:53:y:2020:i:3:p:1132-1161
    DOI: 10.1111/caje.12454
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    References listed on IDEAS

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    1. 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.
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    3. Sèna Kimm Gnangnon, 2023. "Do unilateral trade preferences help reduce poverty in beneficiary countries?," International Journal of Economic Policy Studies, Springer, vol. 17(1), pages 249-288, February.
    4. Emanuel Ornelas & Marcos Ritel, 2020. "The not‐so‐generalised effects of the Generalized System of Preferences," The World Economy, Wiley Blackwell, vol. 43(7), pages 1809-1840, July.
    5. Gnangnon, Sèna Kimm, 2021. "Effect of the Utilization of Non-Reciprocal Trade Preferences offered by the QUAD on Economic Growth in Beneficiary Countries," EconStor Preprints 242848, ZBW - Leibniz Information Centre for Economics.
    6. Gnangnon, Sèna Kimm, 2021. "WTO membership, the membership duration and the utilization of non-reciprocal trade preferences offered by the QUAD Countries," EconStor Preprints 247265, ZBW - Leibniz Information Centre for Economics.
    7. Gnangnon, Sèna Kimm, 2021. "Do Unilateral Trade Preferences Help Reduce Poverty in Beneficiary Countries?," EconStor Preprints 247346, ZBW - Leibniz Information Centre for Economics.
    8. Fernandes, Ana M. & Forero, Alejandro & Maemir, Hibret & Mattoo, Aaditya, 2023. "Are trade preferences a Panacea? The export impact of the African growth and Opportunity Act," World Development, Elsevier, vol. 162(C).
    9. Lourenço S. Paz & Magnus Reis & André Filipe Zago Azevedo, 2024. "New Evidence on WTO Membership After the Uruguay Round: An Analysis at the Sectoral Level," Open Economies Review, Springer, vol. 35(1), pages 1-39, February.
    10. Besedes, Tibor & Kohl, Tristan & Lake, James, 2020. "Phase out tariffs, phase in trade?," Journal of International Economics, Elsevier, vol. 127(C).
    11. Bekkers, Eddy & Cariola, Gianmarco, 2022. "The impact of LDC graduation on trade: A quantitative assessment," WTO Staff Working Papers ERSD-2022-5, World Trade Organization (WTO), Economic Research and Statistics Division.
    12. Facundo Albornoz & Irene Brambilla & Emanuel Ornelas, 2021. "Firm export responses to tariff hikes," CEP Discussion Papers dp1783, Centre for Economic Performance, LSE.
    13. Kiyoyasu Tanaka, 2022. "The European Union's withdrawal of trade preferences for Cambodia," The World Economy, Wiley Blackwell, vol. 45(11), pages 3398-3419, November.
    14. Gnangnon, Sèna Kimm, 2023. "Effects of the Utilization of Non-Reciprocal Trade Preferences Offered by QUAD Countries on Economic Growth in Beneficiary Countries," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 45(1), pages 33-68.
    15. Gnangnon, Sèna Kimm, 2022. "Effect of the utilization of non-reciprocal trade preferences offered by the QUAD countries on beneficiary countries' economic complexity," Journal of the Japanese and International Economies, Elsevier, vol. 65(C).
    16. Tobias Sytsma, 2021. "Rules of origin and trade preference utilization among least developed countries," Contemporary Economic Policy, Western Economic Association International, vol. 39(4), pages 701-718, October.
    17. Fabien Forge & Jason Garred & Kyae Lim Kwon, 2021. "When are Tariff Cuts Not Enough? Heterogeneous Effects of Trade Preferences for the Least Developed Countries," Working Papers 2106E, University of Ottawa, Department of Economics.
    18. 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.
    19. 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.
    20. Gnangnon, Sèna Kimm, 2022. "Effect of the Duty-Free Quota-Free Market access Schemes in favour of Least developed countries' Products on the Volatility of the Utilization Rate of these Schemes," EconStor Preprints 260567, ZBW - Leibniz Information Centre for Economics.
    21. Gnangnon, Sèna Kimm & Iyer, Harish, 2021. "Effect of Aid for Trade and Foreign Direct Investment Inflows on the Utilization of Unilateral Trade Preferences offered by the QUAD countries," EconStor Preprints 238211, ZBW - Leibniz Information Centre for Economics.

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