Trade Preference Erosion Measurement and Policy Response

The multilateral trade system rests on the principle of nondiscrimination. Unilateral trade preferences granted by developed countries can help beneficiary countries but can create tensions between "preferred" developing countries-typically beneficiaries from pre-existing colonial regimes-and other developing countries. There is also concern about the potential erosion of these preferences through trade liberalization in the importing countries, an issue that has been important in the current negotiations under the Doha Development Agenda of the World Trade Organization.'Trade Preference Erosion' provides the information needed to make informed assessments of the benefits of trade preferences for developing countries, the risks associated with the erosion of these benefits, and policy options for dealing with these problems. The authors provide detailed analyses of specific preference programs and undertake cross-country, disaggregated analyses of the impact of preferences at the product level. Understanding the likely impacts of these programs and how those impacts are distributed is a precondition for formulating appropriate policy responses. The authors argue that such responses need to go beyond trade policies and need to include a focus on enhancing the competitiveness and supply-side capacity of developing countries.This book is a useful and informative guide for policy makers, non-governmental organizations, and others who wish to better understand the debate on the magnitude and impact of preference erosion.

BERNARD HOEKMAN is Senior Advisor in the Development Research Group of the World Bank, and manages the Bank's research program on trade and international integration. His research focuses on the functioning of the multilateral trading system, trade in services, preferential trade agreements and channels of international technology diffusion. Between 1988 and 1993 he worked as a research economist in the GATT Secretariat in Geneva. He is a graduate of the Erasmus University Rotterdam, holds a Ph.D. in economics from the University of Michigan and is a Research Fellow of the London-based Centre for Economic Policy Research.

WILL MARTIN is a Lead Economist in the World Bank's Development Research Group. He specializes in analysis of trade policy reforms in developing countries, with an emphasis on reforms related to the WTO, and a primary regional focus on East and South Asia. He has written extensively on policy reforms in agricultural trade, textiles and clothing, and non-agricultural trade generally. He has a particular interest in using detailed data on trade barriers to build up a complete picture of the effects of trade barriers on trade and welfare. He has published widely in journals, and books, including recent studies of global trade reform, implications of food prices for poverty, and of China's accession to the WTO.

CARLOS ALBERTO PRIMO BRAGA is currently Director of the Economic Policy and Debt Department at The World Bank. He has written extensively on topics such as the multilateral trade system, regional trade agreements, intellectual property rights, information technology and development, and services liberalization. From 2003 to 2006, he was the Senior Adviser of the World Bank's International Trade Department. Based in Geneva, he was responsible for covering international trade issues vis-a-vis European-based institutions, including the WTO. He is a graduate from the Instituto Tecnolgico de Aeronutica (Mechanical Engineering) and the University of So Paulo (MA, Economics), Brazil, and holds a Ph.D. in economics from the University of Illinois at Urbana-Champaign.