Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/268220 
Year of Publication: 
2022
Series/Report no.: 
Hannover Economic Papers (HEP) No. 697
Publisher: 
Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät, Hannover
Abstract: 
The European Union (EU) supports developing countries with a unilateral trade preference scheme. The scheme underwent a major reform in 2014, in which many countries lost access to reduced tariff rates. We analyse how this radical step that removed preferences from 103 countries by 2018 fits into the EU's strategy to promote bilateral agreements and how it affected imports from the removed beneficiaries. Using the gravity model of trade with high-dimensional fixed effects, we show that the removal results in a significant decline in exports of affected developing countries. Some countries formed a bilateral free trade agreement with the EU, in which case the negative effect of removal of unilateral trade preferences is compensated but we do not find significant and consistent additional benefits. Thus, the threat of removal can be seen as a lever for beneficiaries that are about to become ineligible to negotiate a bilateral agreement with the EU.
Subjects: 
trade preferences
reciprocity
GSP
FTA
gravity model
JEL: 
F13
F14
O19
O24
D78
Document Type: 
Working Paper

Files in This Item:
File
Size
569.92 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.