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Preference Erosion and Multilateral Trade Liberalization

Author

Listed:
  • J. Francois

    (Faculty of Economics, Erasmus Universiteit Rotterdam, and CEPR)

  • B. Hoekman

    (World Bank, Institut d'Etudes Politiques, Paris, and CEPR)

  • M. Manchin

    (Faculty of Economics, Erasmus Universiteit Rotterdam)

Abstract

Because of concern that OECD tariff reductions will translate intoworsening export performance for the least developed countries, trade preferences haveproven a stumbling block to developing country support for multilateral liberalization.We examine the actual scope for preference erosion, including an econometricassessment of the actual utilization, and also the scope for erosion estimated by modelingfull elimination of OECD tariffs and hence full MFN liberalization-based preferenceerosion. Preferences are underutilized due to administrative burden -estimated to be atleast 4 percent on average- reducing the magnitude of erosion costs significantly. Forthose products where preferences are used (are of value), the primary negative impactfollows from erosion of EU preferences. This suggests the erosion problem is primarilybilateral rather than a WTO-based concern.

Suggested Citation

  • J. Francois & B. Hoekman & M. Manchin, 2005. "Preference Erosion and Multilateral Trade Liberalization," Tinbergen Institute Discussion Papers 05-073/2, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20050073
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    More about this item

    Keywords

    preference erosion; GSP; WTO; Doha Round; trade and development;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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