Quantifying The Value Of U.S. Tariff Preferences For Developing Countries

Abstract

In recent debates, trade preference erosion has been viewed by some as damaging to developing countries, and by others as insignificant, except in a few cases. However, little data have been available to back either view. The objective of this paper is to improve our measures of the size, utilization and value of all US non-reciprocal trade preference programs, in order to shed some light on this debate. Highly disaggregated data are used to quantify the margins, coverage, utilization and value of nonagricultural and agricultural tariff preferences, for all beneficiary countries in the US regional programs and in the GSP. Results show that US regional tariff preference programs are generally characterized by high coverage of beneficiary countries' exports, high utilization by beneficiary countries, and low tariff preference margins (except on apparel). For 29 countries, the value of US tariff preferences was 5% or more of 2003 dutiable exports to the US, even after incorporating actual utilization. Most of this value is attributable to non-agricultural tariff preferences, and to apparel preferences in particular. These results suggest that preference erosion may be significant for more countries than many had thought.

The Openness of National Economies: The World and Russia

“…60 An import is considered eligible for a particular preference if the product from the exporting country can receive a preference according to the tariff schedule. See, for example, also Dean and Wainio (2006). Country-and product-specific exemptions are taken into account.…”

“…A range of papers exist that obtain similar results finding that preference utilization rates are generally rather high and vary positively with export size and preferential margins. See for instance, Hakobyan (2011), Dean and Wainio (2006), Manchin (2005), Candau and Sebastien (2005) and Brenton and Ikezuki (2004). However, most of the existing papers focus on a specific preference regime.…”

Analyzing the System of Preferential Tariffs for Least Developed Countries

“…The margins in Table 2 suggest that this is the case for African countries from the USA and possibly for all countries from Canada. Studies by Brenton (2006) and Dean and Wainio (2006) suggest that the USA has improved preferential access for African countries.…”

“…The USA and Canada, however, offered few rents and still charged significant tariffs to LDCs in 2001. There is some evidence that they have improved preferential access since then, but a comprehensive analysis is not yet available (Brenton, 2006; Dean and Wainio, 2006).…”

Will the Doha Round Lead to Preference Erosion?

“…Note that a country's comparative advantage is endogenous, and these are presented only for the purposes of illustrating why developing countries might be receiving inferior market access. 19 See Dean and Wainio (2005) for detailed measures of size, utilization, and value of U.S. nonreciprocal trade preferences. enjoy special preferences such as AGOA and because their exports comprise a higher proportion of lower-taxed minerals.…”