1887

Preferential Trading Arrangements in Agricultural and Food Markets

The Case of the European Union and the United States

image of Preferential Trading Arrangements in Agricultural and Food Markets

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.

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Introduction

Non-discrimination is one of the fundamental principles of the General Agreement on Tariffs and Trade (GATT), signed by the 148 countries that are members of the World Trade Organisation (WTO). The Most Favoured Nation (MFN) clause of the 1947 Agreement prohibits the existence of preferential trade insofar as “any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties” (Article I).

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