Publication: Trade Diversion under Selective Preferential Market Access
Date
2008-09
ISSN
Published
2008-09
Author(s)
Borchert, Ingo
Abstract
Through its diverse trade preference
schemes, the European Union provides different groups of
developing countries with different degrees of market
access. This paper is the first to demonstrate empirically
that such staggered market access induces sizable trade
diversion to the detriment of relatively less preferred
beneficiary countries. In particular, preferences granted to
African, Caribbean and Pacific economies are shown to impair
the export performance of seven developing countries whose
products only qualify for basic preferences under the
Generalized System of Preferences. Exports to the European
Union decline by about 30 percent if the African, Caribbean
and Pacific tariff falls by 10 percentage points. In terms
of forgone trade volume, losses for these relatively
disadvantaged countries amount on average to 9 percent of
their total trade with the European Union, depending on the
country and its main exports. These intra-developing country
distortions are driven by highly substitutable, often
labor-intensive commodities.
Citation
“Borchert, Ingo. 2008. Trade Diversion under Selective Preferential Market Access. Policy Research Working Paper No. 4710. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/3e5114eb-8339-5917-b77b-78723c7e0dd7 License: CC BY 3.0 IGO.”
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