Tariff Preferences,WTO Negotiations and the LDCs: The Case of the ‘Everything But Arms’ Initiative

By assessing the impact of the recently adopted ‘Everything But Arms’ (EBA) initiative of the EU on the Least Developed Countries (LDCs) and by showing how further multilateral trade liberalisations erode the EBA preferences and impact the LDCs, this paper attempts to uncover the LDCs’ difficult positions in the WTO trade negotiations. Due to its limited product coverage and previous preferences granted by the EU, welfare impacts of the EBA on the LDCs are shown to be small and the bulk of these gains are associated with the ‘sensitive’ products that are subject to gradual liberalisations. Moreover, these small gains are likely to disappear if the EU conducts trade policy reforms in fulfilling its WTO obligations, resulting in an actually worse‐off situation for the LDCs. Extending the analysis to a multilateral trade liberalisation scenario reinforces the above results that the LDCs may well lose due to preference erosion and higher world market prices. It concludes that other development assistance measures from developed countries should be made available to the LDCs to ease their dependency on trade preferences and to foster their supply capacities. The LDCs themselves should attempt to integrate the duty and quota‐free market access status contained in the EBA into a binding WTO agreement to secure a stable trading environment. But more importantly, in order to solve the difficulties at the root these countries should actively engage in reforming their own trade policies.     

Preference Erosion,Government Revenues and Non‐tariff Trade Barriers

Developing countries benefiting from developed country unilateral trade preferences fear that Doha Round tariff cuts will erode the value of those preferences. That these programmes confer significant benefits, however, is not clear. Studies indicate that the impact of preference erosion would be minimal for most developing countries. But for a small subset of middle‐income and least‐developed countries, concern may be warranted. WTO members, should address affected countries’ concerns, perhaps by tailoring WTO tariff negotiations to lessen adjustment pressures and providing development assistance. Developing countries also are anxious that lower tariffs will reduce government revenues. Dependence on tariff revenue is diminishing and trade liberalisation need not result in lower total tax revenues or even lower customs revenues. Much depends on a country's current tariff and trade regime, its tax structure and its overall economic structure. At some point, a country does need to broaden its tax base and look to other revenue sources to offset declining tariff revenues. Tax reform, therefore, complements trade reform. A third area of developing country concern is non‐tariff barriers (NTBs), which may limit market access even after tariffs are reduced. Despite prior WTO work in this area, NTBs remain a thorny issue for all WTO members.     

Economic and Environmental Benefits of Eliminating Log Export Bans – The Case of Costa Rica

An increasing number of tropical timber‐producing nations have enacted bans on export of logs arguing that this will reduce deforestation, expand downstream wood processing and improve the scale efficiency of domestic processing, create jobs and retain more value‐added nationally. The theoretical literature is clear that trade restrictions are generally welfare reducing (except in special cases such as when there is a potential for an optimal export tax). At best, a log export ban is a second‐best policy tool for reducing deforestation and addressing the associated environmental externalities. In overall terms, the suggestion that log export bans can achieve the objectives expected of them is dubious. However, very little quantitative evidence exists to demonstrate this claim and the paper attempts to address this gap by looking at the economic and environmental impacts of eliminating a log export ban in Costa Rica. The authors argue that eliminating the export ban is Pareto improving and could generate economic gains as high as $14 million per annum with the possibility of relatively modest environmental benefits.     

The ‘Real’ Impact of GATT/WTO – a Generalised Approach

Rose’s result in 2004 that GATT/WTO has no significant impact on bilateral trade triggered off a series of empirical studies. Each of those studies augments Rose’s paper in one specific methodological aspect with the general finding that GATT/WTO significantly fosters members’ trade, although the estimated impact varies between 2 per cent and 195 per cent of trade creation. We combine the methodological contributions of previous studies to overcome these isolated approaches, to account for possible interactions and to develop a more general view on the impact of GATT/WTO. In particular, we find that GATT/WTO promotes members’ trade by around 86 per cent.     

2004 Trade Policy Review – The United States

Many of the findings of the seventh Trade Policy Review of the United States are similar to those reached in earlier reviews: the US is unanimously acknowledged as having an open and transparent system; the US economy has remained amongst the world's most competitive, and has continued to support global growth by keeping its import market largely open. This review finds, however, that the US has developed a disturbing pattern of non‐compliance with WTO rules. During the period of review the United States enacted policies, most notably the infamous Byrd Amendment and the 2001–02 steel safeguard action, that were found to be clear violations of its WTO obligations. Despite these and other such findings, the United States has obstinately refused to bring its domestic statutes in line with WTO rules. In addition, in recent years the United States’ aggressive pursuit of regional and bilateral initiatives has led many Members to question whether the United States is committed to the multilateral approach espoused by the WTO. Overall, despite the US's many virtues, Member countries expressed concern that the US's stated leadership of and commitment to the WTO is not matched by its actions.     

THE CONSUMERS' COUNCIL 1918–1921

A Consumers' Council was established in the closing months of the Great War. Its work seems to have been overlooked, but it was an important body with achievements to its credit and a notable membership. The Council deserves a new look in the decade when a new National Consumer Council has been created.     

Malaysia – Trade Policy Review 2006

The Trade Policy Review (TPR) is an important document for small open economies like Malaysia. It provides an outsider perspective of its trade policies and implementation. In this paper we provide an update of the Malaysian economy emphasising the degree of competitiveness vis‐à‐vis other Asian counterparts. We also discuss the issue of regional and bilateral trading agreements involving Malaysia with a focus on the services sector. Finally, we briefly consider the issue of tariff protection – an issue raised by many commentators of the TPR.     

The political economy of regulations and trade: Wine trade 1860–1970

Dramatic changes in the 1860–1970 wine trade provide insights on the political economy of regulations and policy instrument choice and trade. An invasion of Phylloxera in the 1870s turned France from the world's leading exporter to a massive importer of wine and grapes. When French production recovered a combination of tariffs, safety regulations and quality standards were introduced to protect its French producers, causing dramatic changes in global wine and grape production and trade, including in Spain, Italy, Turkey, Greece, Algeria, Tunisia and Morocco. Changes in wine regulations were caused by relative income and loss aversion factors in political economy. Tariffs were the preferred policy instruments as they directly restrict imports, bring in revenues, have low transaction costs and are preferred political instruments when there are information imperfections. Safety regulations and quality standards, including labelling and input prohibitions, reduce asymmetric information for consumers or undesirable externalities, and simultaneously protected domestic producers. Regulations were often targeted at imported products (wine and raisins) when tariffs were ineffective or constrained by institutions (such as on colonial wine). Hence, tariffs and quality regulations were jointly used in wine policy, both as complements and as substitutes in policy design.