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This report aims to answer two major questions: (1) How beneficial are the trade preferences provided to developing countries; and (2) what are the implications of possible erosion of these benefits under multilateral trade liberalisation? The report focuses on trade preferences provided by the so-called Quad countries (Canada, the European Union, Japan and the United States) because they have some of the world’s highest tariffs on agricultural commodities. Findings from this study suggest that although preferential margins will be eroded with multilateral liberalisation, this may be a problem only for certain countries and within specific sectors, and that factors not related to preferential trade schemes may be limiting the exports of the least-developed countries (LDC).

Developing countries -- Commerce. --- Free trade. --- Tariff preferences. --- Trade blocs. --- Tariff preferences --- Trade blocs --- Free trade --- Commerce --- Business & Economics --- International Commerce --- Free trade and protection --- Trade, Free --- Trade liberalization --- Regional economic blocs --- Regional trading blocs --- Trading blocs --- Differential duty --- Discriminating duty --- Generalized system of preferences (Tariff) --- GSP (Tariff) --- Preferences, Tariff --- Preferential duty --- Preferential tariff --- Trade preferences --- International trade --- Tariff --- Canada --- European Union --- Japan --- United States

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Trade theories covering Preferential Trade Agreements (PTAs) are as diverse as the literature in search of their empirical support. To account for the model uncertainty that surrounds the validity of the competing PTA theories, we introduce Bayesian Model Averaging (BMA) to the PTA literature. BMA minimizes the sum of Type I and Type II error, the mean squared error, and generates predictive distributions with optimal predictive performance. Once model uncertainty is addressed as part of the empirical strategy, we report clear evidence of Trade Creation, Trade Diversion, and Open Bloc effects. After controlling for natural trading partner effects, Trade Creation is weaker - except for the EU. To calculate the actual effects of PTAs on trade flows we show that the analysis must be comprehensive: it must control for Trade Creation and Diversion as well as all possible PTAs. Several prominent control variables are also shown to be robustly related to Trade Creation; they relate to factor endowments and economic policy.

International trade --- Commercial treaties --- Tariff preferences --- Differential duty --- Discriminating duty --- Generalized system of preferences (Tariff) --- GSP (Tariff) --- Preferences, Tariff --- Preferential duty --- Preferential tariff --- Trade preferences --- Tariff --- Trade agreements (Commerce) --- Competition, International --- Foreign trade regulation --- Treaties --- Reciprocity (Commerce) --- Econometric models. --- Exports and Imports --- Econometrics --- Trade Policy --- International Trade Organizations --- Empirical Studies of Trade --- Bayesian Analysis: General --- International economics --- Bayesian inference --- Trade balance --- Trade agreements --- Plurilateral trade --- North American Free Trade Agreement --- Customs unions --- Bayesian models --- Econometric analysis --- Balance of trade --- Protectionism --- Econometric models --- Chile

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Developing countries are concerned that multilateral tariff reductions will harm their agricultural sectors because of preference erosion. The findings in this report suggest that although this may indeed be a problem for some countries in some sectors, factors other than preferential schemes may be limiting developing country exports. The report provides information on the extent to which developing countries have used selected, non-reciprocal preferential trading schemes provided by the EU and the US. Secondary data are complemented by interviews with market operators further clarifying the empirical findings. A special section has been devoted to the preferences granted to African countries highlighting the conditions for this set of developing countries.--Publisher's description.

Farm produce -- Marketing. --- Food industry and trade. --- Tariff preferences -- Economic aspects. --- Tariff preferences -- European Union. --- Tariff preferences -- United States. --- Tariff preferences --- Farm produce --- Food industry and trade --- Commerce --- Business & Economics --- International Commerce --- Economic aspects --- Marketing --- Economic aspects. --- Marketing. --- Food preparation industry --- Food processing industry --- Food trade --- Agricultural marketing --- Marketing of farm produce --- Differential duty --- Discriminating duty --- Generalized system of preferences (Tariff) --- GSP (Tariff) --- Preferences, Tariff --- Preferential duty --- Preferential tariff --- Trade preferences --- Agricultural processing industries --- Processed foods --- Agriculture --- Tariff --- Food --- Food processing --- Food technology --- Processing --- European Union --- United States

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This paper estimates the impact of the tariff liberalization in four largest CARICOM countries (Barbados, Guyana, Jamaica, and Trinidad and Tobago) on their trade flows. I trace changes in the product-line imports from CARICOM and non-CARICOM countries against time and commodity-level variation in external tariffs. I find that in each country the reduction of the external tariff, which eroded preferences enjoyed by member imports, increased the ratio of imports from non-member countries to imports from member countries. In Trinidad and Tobago, the higher ratio was largely the result of non-member imports crowding out member imports. In the three other countries, the ratio increased mainly because of higher non-member imports; there is little evidence that tariff reductions had an impact on member imports. Findings suggest that in Trinidad and Tobago liberalization of the external tariff reversed some of the trade diversion effects of CARICOM.

Tariff --- Tariff preferences --- Imports --- International trade --- Ad valorem tariff --- Border taxes --- Customs (Tariff) --- Customs duties --- Duties --- Fees, Import --- Import controls --- Import fees --- Tariff on raw materials --- Commercial policy --- Indirect taxation --- Revenue --- Customs administration --- Favored nation clause --- Non-tariff trade barriers --- Reciprocity (Commerce) --- Differential duty --- Discriminating duty --- Generalized system of preferences (Tariff) --- GSP (Tariff) --- Preferences, Tariff --- Preferential duty --- Preferential tariff --- Trade preferences --- Econometric models. --- Investments: Commodities --- Exports and Imports --- Public Finance --- Taxation --- Trade: General --- Trade Policy --- International Trade Organizations --- Commodity Markets --- International economics --- Public finance & taxation --- Investment & securities --- Tariffs --- Commodities --- Valuation, origin and classification --- Trade liberalization --- Commercial products --- Customs appraisal --- Trinidad and Tobago

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Foreign trade policy --- European Union --- Developing countries --- 266 Europese externe betrekkingen --- ontwikkelingssamenwerking --- EEC / European Union - EU -Europese Unie - Union Européenne - UE --- 382.0 --- 338.340 --- 334.153.0 --- Algemeenheden. Techniek en praktijk van de internationale handel. Internationale economische betrekkingen. --- Algemene ontwikkeling in de Derde Wereld. --- Betrekkingen tussen de Europese Gemeenschappen en de geassocieerde of derde landen: algemeenheden. --- Free trade --- Tariff preferences --- Law and legislation --- Economic conditions. --- Differential duty --- Discriminating duty --- Generalized system of preferences (Tariff) --- GSP (Tariff) --- Preferences, Tariff --- Preferential duty --- Preferential tariff --- Trade preferences --- Tariff --- Betrekkingen tussen de Europese Gemeenschappen en de geassocieerde of derde landen: algemeenheden --- Algemene ontwikkeling in de Derde Wereld --- Algemeenheden. Techniek en praktijk van de internationale handel. Internationale economische betrekkingen