The European Union preferential trade with developing countries. Total trade restrictiveness and the case of sugar

Piero Conforti (), Deep Ford, David Hallam, George Rapsomanikis and Luca Salvatici

Economics & Statistics Discussion Papers from University of Molise, Department of Economics

Abstract: Preferential trade agreements are a central issue in the multilateral trade liberalization process. The extent to which such agreements are effective in improving market access for developing and developed countries is important because trade liberalization results in eroding their value to the beneficiary countries, expressed as export revenue. This paper focuses on the estimation of a theoretically founded bilateral aggregated measure of trade restrictiveness, the Mercantilistic Trade Restrictiveness Index, by means of a general equilibrium model, in order to measure the effectiveness of preferences granted by the European Union. We also develop an empirical model structure, comprising a partial equilibrium model for the sugar market and a gravity model, in order to replicate least developed countries bilateral trade with Europe, and to estimate the erosion in the value of preferences granted to African, Caribbean and Pacific countries and to least developed countries brought about by changes in the Common Market Organization for sugar and the Everything but Arms initiative. The results highlight the importance of sugar in determining the degree of trade restrictiveness faced by developing countries. Sugar sector policy reform in Europe is expected to result in a significant reduction in the African Caribbean and Pacific countries’ export revenue, whilst the initial impact on least developed countries may be limited, but increasing in the medium run.

Keywords: preferential trade; sugar; policy reform (search for similar items in EconPapers)
JEL-codes: C23 C53 C68 Q18 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2007-04-26
New Economics Papers: this item is included in nep-agr and nep-eec
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:mol:ecsdps:esdp07037

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