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Trade diversion under selective preferential market access

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  • Ingo Borchert
Abstract
The European Community (EC) operates a multi‐layered GSP scheme in which different groups of developing countries are granted varying degrees of market access. This paper analyzes the question of trade diversion among different categories of beneficiary countries ensuing from the selectivity of preferential market access. Evidence from a disaggregated panel data analysis reveals sizable intra‐developing country trade diversion. The losses for relatively disadvantaged countries in terms of forgone trade volume are estimated to range between about 2% to 20% of their total trade with the EC. The distortions are driven by highly substitutable, mostly labour‐intensive commodities. La Communauté européenne (CE) opère dans un système généralisé de préférences à plusieurs niveaux dans lequel différents groupes de pays en développement obtiennent un accès aux marchés à des degrés variables. Le texte analyse la question de la diversion de commerce entre les différentes catégories de pays bénéficiaires qui découle d'un arrangement d'accès préférentiel sélectif aux marchés. Les résultats d'une analyse désagrégée de données de panel montrent qu'il y a diversion considérable du commerce entre pays en développement. Les pertes des pays relativement désavantagés à cause du commerce perdu sont entre 2% et 20% de leur commerce total avec la CE. Les distorsions sont engendrées par le commerce de biens hautement substituables et à forte intensité du facteur travail.

Suggested Citation

  • Ingo Borchert, 2009. "Trade diversion under selective preferential market access," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(4), pages 1390-1410, November.
    • Handle: RePEc:wly:canjec:v:42:y:2009:i:4:p:1390-1410
    DOI: 10.1111/j.1540-5982.2009.01549.x
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    Cited by:

    1. Ingo Borchert & Mattia Di Ubaldo, 2024. "The Trade Impact of Surprise Graduations from the EU’s GSP scheme," Working Paper Series 1224, Department of Economics, University of Sussex Business School.
    2. Maria Cipollina & Luca Salvatici, 2010. "The trade impact of European Union agricultural preferences," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(1), pages 87-106.
    3. Manuel Tong Koecklin, 2018. "Experimenting in Export Markets," Economics PhD Theses 0918, Department of Economics, University of Sussex Business School.
    4. Maria Cipollina & Federica Demaria, 2020. "The Trade Effect of the EU’s Preference Margins and Non-Tariff Barriers," JRFM, MDPI, vol. 13(9), pages 1-20, September.
    5. Emanuel Ornelas, 2016. "Special and Differential Treatment for Developing Countries," CESifo Working Paper Series 5823, CESifo.
    6. Sèna Kimm Gnangnon, 2023. "Do unilateral trade preferences help reduce poverty in beneficiary countries?," International Journal of Economic Policy Studies, Springer, vol. 17(1), pages 249-288, February.
    7. Emanuel Ornelas & Marcos Ritel, 2020. "The not‐so‐generalised effects of the Generalized System of Preferences," The World Economy, Wiley Blackwell, vol. 43(7), pages 1809-1840, July.
    8. Gnangnon, Sèna Kimm, 2021. "Effect of the Utilization of Non-Reciprocal Trade Preferences offered by the QUAD on Economic Growth in Beneficiary Countries," EconStor Preprints 242848, ZBW - Leibniz Information Centre for Economics.
    9. Katerina Gradeva & Inmaculada Martínez-Zarzoso, 2009. "Trade as Aid: The Role of the EBA-Trade Preferences Regime in the Development Strategy," Ibero America Institute for Econ. Research (IAI) Discussion Papers 197, Ibero-America Institute for Economic Research.
    10. Gnangnon, Sèna Kimm, 2021. "Do Unilateral Trade Preferences Help Reduce Poverty in Beneficiary Countries?," EconStor Preprints 247346, ZBW - Leibniz Information Centre for Economics.
    11. Maria Cipollina & David Laborde Debucquet & Luca Salvatici, 2017. "The tide that does not raise all boats: an assessment of EU preferential trade policies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(1), pages 199-231, February.
    12. Gnangnon, Sèna Kimm, 2023. "Effects of the Utilization of Non-Reciprocal Trade Preferences Offered by QUAD Countries on Economic Growth in Beneficiary Countries," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 45(1), pages 33-68.
    13. Gnangnon, Sèna Kimm, 2022. "Effect of the utilization of non-reciprocal trade preferences offered by the QUAD countries on beneficiary countries' economic complexity," Journal of the Japanese and International Economies, Elsevier, vol. 65(C).
    14. Fabien Forge & Jason Garred & Kyae Lim Kwon, 2021. "When are Tariff Cuts Not Enough? Heterogeneous Effects of Trade Preferences for the Least Developed Countries," Working Papers 2106E, University of Ottawa, Department of Economics.
    15. Persson, Maria, 2013. "Trade Preferences from a Policy Perspective," Working Papers 2013:3, Lund University, Department of Economics.
    16. Gnangnon, Sèna Kimm & Iyer, Harish, 2021. "Effect of Aid for Trade and Foreign Direct Investment Inflows on the Utilization of Unilateral Trade Preferences offered by the QUAD countries," EconStor Preprints 238211, ZBW - Leibniz Information Centre for Economics.

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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