Agricultural Trade Preferences and the Developing Countries

Abstract

Nonreciprocal trade preference programs originated in the 1970s under the Generalized System of Preferences (GSP) as an effort by high-income developed countries to provide tariff concessions for low-income countries. The goal of the programs was to increase export earnings, promote industrialization, and stimulate economic growth in the lower income countries. This study analyzes detailed trade and tariff data for the United States and the European Union (the two largest nonreciprocal preference donors) to determine the extent to which the programs have increased exports from beneficiary countries. For those products where the margins of preference are large and where beneficiaries have a comparative advantage and the capacity to expand prodution, these programs can create adequate incentives leading to a growing export market. The analysis finds that the programs offer significant benefits for some countries, mostly the higher income developing countries. Economic benefits in the least developed countries have been modest. An unanswered question is whether these gains will continue after the incentives are reduced.

The consequences of agricultural trade liberalization for developing countries: distinguishing between genuine benefits and false hopes

“…Recent studies by OECD (2005a) and Wainio et al (2005) show that, contrary to a widespread belief, commercial preferences granted to developing countries by the European Union and the United States are rather well utilized for agricultural products. Among exports from developing countries, those eligible are essentially exported under these preferences.…”

Preferential Trading Arrangements in Agricultural and Food Markets

“…x Significant differences with the USDA ERS studies (Gibson and Wainio 2003) are due to the fact that the values considered here are CIF values. The ERS bases its calculations on the customs value, which differs from the CIF value because of the importance of transport costs.…”

“…For example, on five occasions US GSP has expired without being immediately renewed, subsequently being reopened for short periods (one to two years). For example, GSP expired on 30 September 2001 and was not renewed for almost a year (Wainio and Gibson, 2003).…”

Quantifying The Value Of U.S. Tariff Preferences For Developing Countries

“…recipient's ability to utilize these preferences. RoOs are most often cited as the primary limiting factor restricting beneficiary countries' ability to fully utilize tariff preferences (Wainio et al, 2005). Table 3 shows the share of eligible imports that actually received preferences under each program in 2003 (utilization, %).…”