Trade Preferences to Small Developing Countries and the Welfare Costs of Lost Multilateral Liberalization
The proliferation of preferential trade liberalization over the past 20 years has raised the question of whether it slows down multilateral trade liberalization. Recent theoretical and empirical evidence indicates this is the case even for unilateral preferences that industrial countries provide to...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2005/04/5752850/trade-preferences-small-developing-countries-welfare-costs-lost-multilateral-liberalization http://hdl.handle.net/10986/9022 |
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okr-10986-90222021-04-23T14:02:42Z Trade Preferences to Small Developing Countries and the Welfare Costs of Lost Multilateral Liberalization Limão, Nuno Olarreaga, Marcelo AGRICULTURE APPAREL APPAREL PRODUCTS AVERAGE TARIFF BALANCE OF PAYMENTS BARGAINING POWER BENCHMARK CD COMPARATIVE ADVANTAGE COMPETITIVE POSITION DEMAND ELASTICITIES DEMAND ELASTICITY DEVELOPED COUNTRIES DEVELOPMENT ASSISTANCE DIRECT TRANSFERS DUTY FREE DUTY-FREE ACCESS DYNAMIC GAINS EMPIRICAL EVIDENCE ENVIRONMENTAL STANDARDS EQUILIBRIUM EQUILIBRIUM MODEL EXPORT DATA EXPORT MARKETS EXPORT PRICE EXPORT QUANTITIES EXPORT REVENUE EXPORT SUPPLY EXPORTERS EXPORTS EXTERNALITIES EXTERNALITY FREE ACCESS FREER TRADE GATT/WTO GDP GENERALIZED SYSTEM OF PREFERENCES HUMAN RIGHTS IMPORT DEMAND IMPORT QUANTITIES IMPORT SIDE IMPORT SUBSIDY IMPORT TARIFFS IMPORTS INCOME INCOME COUNTRIES INCOME EFFECT INTELLECTUAL PROPERTY INTERNATIONAL TRADE LDCS LEGISLATION MARGINAL BENEFIT MARGINAL UTILITY MARKET ACCESS MFN TARIFFS MOST-FAVORED-NATION MULTILATERAL LIBERALIZATION MULTILATERAL TARIFFS MULTILATERAL TRADE MULTILATERAL TRADE LIBERALIZATION MULTILATERAL TRADE NEGOTIATIONS NEGOTIATING PARTIES NEGOTIATION RESOURCES NET EXPORTS NON-TRADE ISSUES OPPORTUNITY COST POLITICAL ECONOMY PREFERENCE EROSION PREFERENCE SCHEMES PREFERENTIAL ACCESS PREFERENTIAL AGREEMENT PREFERENTIAL LIBERALIZATION PREFERENTIAL MARGIN PREFERENTIAL MARGINS PREFERENTIAL SCHEME PREFERENTIAL TARIFF PREFERENTIAL TARIFF MARGIN PREFERENTIAL TARIFFS PREFERENTIAL TRADE PREFERENTIAL TRADE AGREEMENTS PREFERENTIAL TRADE LIBERALIZATION PREFERENTIAL TREATMENT PRICE CHANGES PRICE EFFECTS PRICE SUPPORT PRODUCERS PRODUCTS ORIGINATING REGIONAL BLOC RULES OF ORIGIN SCALE EFFECT TARIFF CONCESSIONS TARIFF DATA TARIFF LIBERALIZATION TARIFF LINES TARIFF REDUCTION TARIFF REDUCTIONS TARIFF REVENUE TRADE BARRIERS TRADE DATA TRADE DIVERSION TRADE EFFECT TRADE EFFECTS TRADE NEGOTIATIONS TRADE PREFERENCES TRADE VOLUMES TRADING PARTNERS TRADING SYSTEM UNILATERAL PREFERENCE PROGRAMS UNILATERAL PREFERENCES UNILATERAL TRADE URUGUAY ROUND WEIGHTED TARIFF WELFARE EFFECTS WELFARE GAINS WORLD MARKET WORLD MARKETS WORLD PRICE WORLD PRICES WORLD TRADE WTO The proliferation of preferential trade liberalization over the past 20 years has raised the question of whether it slows down multilateral trade liberalization. Recent theoretical and empirical evidence indicates this is the case even for unilateral preferences that industrial countries provide to small and poor countries but there is no estimate of the resulting welfare costs. To avoid this stumbling block effect the authors suggest replacing unilateral preferences by a fixed import subsidy. They argue that this scheme would reduce the drag of preferences on multilateral liberalization and generate a Pareto improvement. More important, the authors provide the first estimates of the welfare cost of preferential liberalization as a stumbling block to multilateral liberalization. By combining recent estimates of the stumbling block effect of preferences with data for 170 countries and over 5,000 products they calculate the welfare effects of the United States, European Union, and Japan switching from unilateral preferences to the developing countries to the import subsidy scheme. Even in a model with no dynamic gains to trade the authors find that the switch produces an annual net welfare gain for the 170 countries ($4,354 million) and for each group: the United States, European Union, and Japan ($2,934 million), the developing countries ($520 million), and the rest of the world ($900 million). 2012-06-26T14:42:33Z 2012-06-26T14:42:33Z 2005-04 http://documents.worldbank.org/curated/en/2005/04/5752850/trade-preferences-small-developing-countries-welfare-costs-lost-multilateral-liberalization http://hdl.handle.net/10986/9022 English Policy Research Working Paper; No. 3565 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
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Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
AGRICULTURE APPAREL APPAREL PRODUCTS AVERAGE TARIFF BALANCE OF PAYMENTS BARGAINING POWER BENCHMARK CD COMPARATIVE ADVANTAGE COMPETITIVE POSITION DEMAND ELASTICITIES DEMAND ELASTICITY DEVELOPED COUNTRIES DEVELOPMENT ASSISTANCE DIRECT TRANSFERS DUTY FREE DUTY-FREE ACCESS DYNAMIC GAINS EMPIRICAL EVIDENCE ENVIRONMENTAL STANDARDS EQUILIBRIUM EQUILIBRIUM MODEL EXPORT DATA EXPORT MARKETS EXPORT PRICE EXPORT QUANTITIES EXPORT REVENUE EXPORT SUPPLY EXPORTERS EXPORTS EXTERNALITIES EXTERNALITY FREE ACCESS FREER TRADE GATT/WTO GDP GENERALIZED SYSTEM OF PREFERENCES HUMAN RIGHTS IMPORT DEMAND IMPORT QUANTITIES IMPORT SIDE IMPORT SUBSIDY IMPORT TARIFFS IMPORTS INCOME INCOME COUNTRIES INCOME EFFECT INTELLECTUAL PROPERTY INTERNATIONAL TRADE LDCS LEGISLATION MARGINAL BENEFIT MARGINAL UTILITY MARKET ACCESS MFN TARIFFS MOST-FAVORED-NATION MULTILATERAL LIBERALIZATION MULTILATERAL TARIFFS MULTILATERAL TRADE MULTILATERAL TRADE LIBERALIZATION MULTILATERAL TRADE NEGOTIATIONS NEGOTIATING PARTIES NEGOTIATION RESOURCES NET EXPORTS NON-TRADE ISSUES OPPORTUNITY COST POLITICAL ECONOMY PREFERENCE EROSION PREFERENCE SCHEMES PREFERENTIAL ACCESS PREFERENTIAL AGREEMENT PREFERENTIAL LIBERALIZATION PREFERENTIAL MARGIN PREFERENTIAL MARGINS PREFERENTIAL SCHEME PREFERENTIAL TARIFF PREFERENTIAL TARIFF MARGIN PREFERENTIAL TARIFFS PREFERENTIAL TRADE PREFERENTIAL TRADE AGREEMENTS PREFERENTIAL TRADE LIBERALIZATION PREFERENTIAL TREATMENT PRICE CHANGES PRICE EFFECTS PRICE SUPPORT PRODUCERS PRODUCTS ORIGINATING REGIONAL BLOC RULES OF ORIGIN SCALE EFFECT TARIFF CONCESSIONS TARIFF DATA TARIFF LIBERALIZATION TARIFF LINES TARIFF REDUCTION TARIFF REDUCTIONS TARIFF REVENUE TRADE BARRIERS TRADE DATA TRADE DIVERSION TRADE EFFECT TRADE EFFECTS TRADE NEGOTIATIONS TRADE PREFERENCES TRADE VOLUMES TRADING PARTNERS TRADING SYSTEM UNILATERAL PREFERENCE PROGRAMS UNILATERAL PREFERENCES UNILATERAL TRADE URUGUAY ROUND WEIGHTED TARIFF WELFARE EFFECTS WELFARE GAINS WORLD MARKET WORLD MARKETS WORLD PRICE WORLD PRICES WORLD TRADE WTO |
| spellingShingle |
AGRICULTURE APPAREL APPAREL PRODUCTS AVERAGE TARIFF BALANCE OF PAYMENTS BARGAINING POWER BENCHMARK CD COMPARATIVE ADVANTAGE COMPETITIVE POSITION DEMAND ELASTICITIES DEMAND ELASTICITY DEVELOPED COUNTRIES DEVELOPMENT ASSISTANCE DIRECT TRANSFERS DUTY FREE DUTY-FREE ACCESS DYNAMIC GAINS EMPIRICAL EVIDENCE ENVIRONMENTAL STANDARDS EQUILIBRIUM EQUILIBRIUM MODEL EXPORT DATA EXPORT MARKETS EXPORT PRICE EXPORT QUANTITIES EXPORT REVENUE EXPORT SUPPLY EXPORTERS EXPORTS EXTERNALITIES EXTERNALITY FREE ACCESS FREER TRADE GATT/WTO GDP GENERALIZED SYSTEM OF PREFERENCES HUMAN RIGHTS IMPORT DEMAND IMPORT QUANTITIES IMPORT SIDE IMPORT SUBSIDY IMPORT TARIFFS IMPORTS INCOME INCOME COUNTRIES INCOME EFFECT INTELLECTUAL PROPERTY INTERNATIONAL TRADE LDCS LEGISLATION MARGINAL BENEFIT MARGINAL UTILITY MARKET ACCESS MFN TARIFFS MOST-FAVORED-NATION MULTILATERAL LIBERALIZATION MULTILATERAL TARIFFS MULTILATERAL TRADE MULTILATERAL TRADE LIBERALIZATION MULTILATERAL TRADE NEGOTIATIONS NEGOTIATING PARTIES NEGOTIATION RESOURCES NET EXPORTS NON-TRADE ISSUES OPPORTUNITY COST POLITICAL ECONOMY PREFERENCE EROSION PREFERENCE SCHEMES PREFERENTIAL ACCESS PREFERENTIAL AGREEMENT PREFERENTIAL LIBERALIZATION PREFERENTIAL MARGIN PREFERENTIAL MARGINS PREFERENTIAL SCHEME PREFERENTIAL TARIFF PREFERENTIAL TARIFF MARGIN PREFERENTIAL TARIFFS PREFERENTIAL TRADE PREFERENTIAL TRADE AGREEMENTS PREFERENTIAL TRADE LIBERALIZATION PREFERENTIAL TREATMENT PRICE CHANGES PRICE EFFECTS PRICE SUPPORT PRODUCERS PRODUCTS ORIGINATING REGIONAL BLOC RULES OF ORIGIN SCALE EFFECT TARIFF CONCESSIONS TARIFF DATA TARIFF LIBERALIZATION TARIFF LINES TARIFF REDUCTION TARIFF REDUCTIONS TARIFF REVENUE TRADE BARRIERS TRADE DATA TRADE DIVERSION TRADE EFFECT TRADE EFFECTS TRADE NEGOTIATIONS TRADE PREFERENCES TRADE VOLUMES TRADING PARTNERS TRADING SYSTEM UNILATERAL PREFERENCE PROGRAMS UNILATERAL PREFERENCES UNILATERAL TRADE URUGUAY ROUND WEIGHTED TARIFF WELFARE EFFECTS WELFARE GAINS WORLD MARKET WORLD MARKETS WORLD PRICE WORLD PRICES WORLD TRADE WTO Limão, Nuno Olarreaga, Marcelo Trade Preferences to Small Developing Countries and the Welfare Costs of Lost Multilateral Liberalization |
| relation |
Policy Research Working Paper; No. 3565 |
| description |
The proliferation of preferential trade liberalization over the past 20 years has raised the question of whether it slows down multilateral trade liberalization. Recent theoretical and empirical evidence indicates this is the case even for unilateral preferences that industrial countries provide to small and poor countries but there is no estimate of the resulting welfare costs. To avoid this stumbling block effect the authors suggest replacing unilateral preferences by a fixed import subsidy. They argue that this scheme would reduce the drag of preferences on multilateral liberalization and generate a Pareto improvement. More important, the authors provide the first estimates of the welfare cost of preferential liberalization as a stumbling block to multilateral liberalization. By combining recent estimates of the stumbling block effect of preferences with data for 170 countries and over 5,000 products they calculate the welfare effects of the United States, European Union, and Japan switching from unilateral preferences to the developing countries to the import subsidy scheme. Even in a model with no dynamic gains to trade the authors find that the switch produces an annual net welfare gain for the 170 countries ($4,354 million) and for each group: the United States, European Union, and Japan ($2,934 million), the developing countries ($520 million), and the rest of the world ($900 million). |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Limão, Nuno Olarreaga, Marcelo |
| author_facet |
Limão, Nuno Olarreaga, Marcelo |
| author_sort |
Limão, Nuno |
| title |
Trade Preferences to Small Developing Countries and the Welfare Costs of Lost Multilateral Liberalization |
| title_short |
Trade Preferences to Small Developing Countries and the Welfare Costs of Lost Multilateral Liberalization |
| title_full |
Trade Preferences to Small Developing Countries and the Welfare Costs of Lost Multilateral Liberalization |
| title_fullStr |
Trade Preferences to Small Developing Countries and the Welfare Costs of Lost Multilateral Liberalization |
| title_full_unstemmed |
Trade Preferences to Small Developing Countries and the Welfare Costs of Lost Multilateral Liberalization |
| title_sort |
trade preferences to small developing countries and the welfare costs of lost multilateral liberalization |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2005/04/5752850/trade-preferences-small-developing-countries-welfare-costs-lost-multilateral-liberalization http://hdl.handle.net/10986/9022 |
| _version_ |
1764407251416645632 |