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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United States Preference Schemes

The study shows that the utilisation rate for US non-reciprocal preferences is high. Developing countries make considerable use of preference schemes for their exports to the US. Cases where relatively little use is made of certain schemes in proportion to eligible imports are generally because the product can enter the US duty-free under a competing scheme. When eligible goods are exported under Most-Favoured Nation rules it is partly due to compliance costs and rules of origin. These costs can exceed the preference margin and result in goods being imported under Most-Favoured Nation rules, which are much less administratively complex. Constraints imposed by rules of origin or inspection and certification procedures may be dissuasive...

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