Discussion Paper

No. 2011-23 | July 11, 2011
From Trade Preferences to Trade Facilitation: Taking Stock of the Issues

Abstract

The objective of the paper is to explore and give an overview of two central policy alternatives to improve the integration between the European Union and developing countries by removing barriers to trade: trade preferences and trade facilitation. After reviewing the relevant literatures and discussing the issues which constitute problems or opportunities for practitioners and researchers in both areas, the paper concludes that while at least some trade preferences actually have been less of a failure than their reputation suggests, trade facilitation is a far more promising policy option for the future.

Paper submitted to the special issue
Trade Facilitation, Transport Costs and Logistics: A New Challenge for European Competitiveness
 

JEL Classification

F10 F13 F15

Cite As

Maria Persson (2011). From Trade Preferences to Trade Facilitation: Taking Stock of the Issues. Economics Discussion Papers, No 2011-23, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2011-23

Assessment



Comments and Questions


Oliver Morrissey - suggestions
July 14, 2011 - 17:27

The paper provides a nice overview of the literature on trade preferences and on trade facilitation. One aspect that should be improved is the linkage between the two as this is underdeveloped in the paper. In part this is because the discussion of preferences is largely from the developing country ...[more]

... (especially ACP) perspective, whereas much of the discussion of TF takes a more EU perspective. It is not clear, in respect of TF, what the EU could do to help developing/ACP countries, in particular regarding utilisation of preferences (or compensating for preference erosion). Similarly, more could address what ACP countries can do.

The discussion of how preferences may provide benefits in terms of higher export prices or export diversification should be more nuanced. Insufficient attention is paid to observations that, at least for ACP, the potential benefits of preferences have been limited by steady erosion of margins at the same time as competition (from non-ACP) has been increasing, notably in more processed or value-added products (e.g. garments). An important criticism of preferences is not addressed, that they have tended to 'lock in' unfavourable production structures in ACP and have been a disincentive to export diversification. Consequently ACP remain dependent on primary commodity exports. One may diasgree but should address the issue: for ACP, preferences provided market access but did little to increase export prices or diversification.

In elaborating on how TF may relate to preferences it would be useful to discuss EPAs, the main trade issue for ACP currently. TF measures in ACP have the most immediate effect on imports (reducing non-policy trade costs); in the context of EPAs this implies tariffs and trade costs on EU imports are reduced together (this may be one reason why ACP resisted, at least initially, including TF within EPA negotiations). Furthermore, EPAs offer no actual improvement in preferential access to the EU for ACP, unless significant ROO reforms are included. Is the author suggesting that EU TF reforms could benefit ACP exporters? It would strengthen the paper to elaborate on these issues - some are addressed on O. Morrissey (ed), Assessing Prospective Trade Policy: Methods applied to EU-ACP EPAs (2011, London: Routledge).


Maria Persson - Reply to Oliver Morrissey
July 30, 2011 - 15:31

First and foremost, I would like to thank Oliver Morrissey for taking the time to read and comment my paper! Your suggestions are interesting and will certainly be taken into account in revisions of the manuscript.

Regarding the comment about export diversification: I would actually say that the ...[more]

... questions you raise have been touched upon in the paper, but I am sure you are right that the discussion could be more explicit. Thank you for your specific suggestions.

Regarding the linkage between trade preferences and trade facilitation: your point that the EPAs are an interesting area where this link can be explored is well taken. In the literature review, I briefly mention an article by myself which have studied the probable trade volume effects of trade facilitation for groups of countries negotiating EPAs. Briefly, that paper find that reforms in the EU (import procedures) as well as in the exporting EPA-countries themselves (export procedures) would have significant effects on exports from the ACP countries involved to the EU. In the submitted version of the manuscript, I chose not to describe that study very lengthily, but that section could easily be extended to incorporate the discussion you suggest is missing. I also thank you for drawing my attention to Morrissey (2011) – I am sure that will be useful.


Anonymous - Referee Report 1
October 05, 2011 - 11:51

See attached file


Anonymous - Referee Report 2
January 18, 2012 - 09:08

See attached file


Maria Persson - Reply to Referee Report 1
April 25, 2012 - 11:17

See attached file


Maria Persson - Reply to Referee Report 2
April 25, 2012 - 11:19

See attached file


Maria Persson - Revised Version
April 25, 2012 - 11:20

See attached file


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