Prowse, SusanHoekman, Bernard2012-06-182012-06-182005-09https://hdl.handle.net/10986/8265Trade preferences are a central issue in ongoing efforts to negotiate further multilateral trade liberalization. "Less preferred" countries are increasingly concerned about the discrimination they confront, while "more preferred" developing countries worry that WTO-based liberalization of trade will erode the value of current preferential access regimes. This tension suggests there is a political economy case for preference-granting countries to explicitly address erosion fears. The authors argue that the appropriate instrument for this is development assistance. The alternative of addressing erosion concerns through the trading system will generate additional discrimination and trade distortions, rather than moving the WTO toward a more liberal, non-discriminatory regime. They further argue that prospective losses generated by most-favored-nation liberalization should be quantified on a bilateral basis, using methods that estimate what the associated transfer should have been and ignoring the various factors that reduce their value in practice (such as compliance costs or the fact that part of the rents created by preference programs accrue to importers in OECD countries). Given that many poor countries have not been able to benefit much from preference programs, a case is also made that preference erosion should be considered as part of a broader response by OECD countries to calls to make the trading system more supportive of economic development. The focus should be on identifying actions and policy measures that will improve the ability of developing countries to use trade for development.CC BY 3.0 IGOAGRICULTUREAPPARELBALANCE OF PAYMENTSBENEFITS OF TRADEBUSINESS CYCLECAPACITY BUILDINGCOMPARATIVE ADVANTAGECOMPETITIVENESSCOMPETITIVENESS OF FIRMSCOUNTRY EXPORTERSDEBTDEBT BURDENDEVELOPMENT ASSISTANCEDEVELOPMENT STRATEGIESDEVELOPMENT STRATEGYDISCRIMINATORY TARIFFDISCRIMINATORY TARIFF REDUCTIONDISCRIMINATORY TRADE POLICIESDOMESTIC INDUSTRIESDOMESTIC PRODUCERSDYNAMIC GAINSECONOMIC DEVELOPMENTECONOMIC POLICYELIMINATION OF TARIFFSEXPORT CAPACITYEXPORT DIVERSIFICATIONEXPORT PRICEEXPORT PRODUCTIONEXPORTERSEXPORTSEXTERNAL DEBTEXTERNAL SHOCKSFINANCIAL ASSISTANCEFINANCIAL TRANSFERSFOREIGN PRODUCTSFOREIGN SUPPLIERSFREE ACCESSFREE TRADEFREE TRADE AGREEMENTSGENERAL EQUILIBRIUM MODELGENERALIZED SYSTEM OF PREFERENCESGLOBAL LIBERALIZATIONGLOBAL TRADEGLOBAL TRADE ANALYSISHARMONIZATIONIMPORT PRICESIMPORT SUBSIDYIMPORTING COUNTRIESIMPORTING COUNTRYIMPORTSINCOMEINCOME DEVELOPING COUNTRIESINCOME GROUPSINCOME SUPPORT PROGRAMSINCOME TRANSFERSINTERNATIONAL POLICYINTERNATIONAL TRADELDCSLIBERALIZATION OF TRADELOCAL SUPPLIERSLOW-INCOME COUNTRIESMACROECONOMIC POLICYMARKET ACCESSMARKET FAILURESMARKET POWERMFN TARIFFSMIDDLE INCOME COUNTRIESMOST-FAVORED-NATIONMULTILATERAL AGENCIESMULTILATERAL APPROACHMULTILATERAL LIBERALIZATIONMULTILATERAL ORGANIZATIONSMULTILATERAL REFORMSMULTILATERAL TRADEMULTILATERAL TRADE LIBERALIZATIONNEGATIVE TERMS OF TRADE EFFECTSNEGOTIATING AGENDANONDISCRIMINATORY REGIMENONDISCRIMINATORY TARIFF REDUCTIONSOPPORTUNITY COSTPOLITICAL ECONOMYPOSITIVE EXTERNALITIESPREFERENCE EROSIONPREFERENCE SCHEMESPREFERENTIAL ACCESSPREFERENTIAL ACCESS TO MARKETSPREFERENTIAL SUPPLIERSPREFERENTIAL TARIFFPREFERENTIAL TRADEPRICE CHANGESPRICE SUPPORTPRICE SUPPORTSPRIMARY FACTORSPRIVATE SECTORPUBLIC GOODPUBLIC SECTORQUANTITATIVE RESTRICTIONSQUOTA RENTSRATES OF PROTECTIONREAL INCOMERECIPROCAL ACCESSRECIPROCAL BASISRECIPROCAL TRADE PREFERENCESRECIPROCITYREGIONAL TRADEREGIONAL TRADE AGREEMENTSREGIONAL TRADE LIBERALIZATIONREMOVAL OF TRADE-DISTORTING POLICIESRESTRICTIVE RULES OF ORIGINSAFETY NETSSPECIALIZATIONSUB-SAHARAN AFRICATARIFF LINETARIFF LINESTARIFF REDUCTIONSTECHNICAL ASSISTANCETERMS OF TRADETHIRD-COUNTRY SUPPLIERSTRADE ACTIONTRADE ADJUSTMENTTRADE AGENDATRADE AREASTRADE ASSISTANCETRADE BARRIERSTRADE CAPACITYTRADE CREATIONTRADE DEVELOPMENTTRADE DISTORTIONSTRADE DIVERSIONTRADE EFFECTTRADE GAINSTRADE INTEGRATIONTRADE NEGOTIATIONSTRADE POLICIESTRADE PREFERENCESTRADE REFORMTRADE REFORMSTRADE REGIMETRADING PARTNERSTRANSACTIONS COSTSTRANSITION PERIODTRANSITION PERIODSURUGUAY ROUNDWELFARE GAINSWORLD PRICESWORLD TRADING SYSTEMWTOZERO TARIFFWorld Bank10.1596/1813-9450-3721