Trade Preferences from a Policy Perspective

Focusing on North–South trade relations, this chapter explores non-reciprocal trade preferences for developing countries, where the preference-receiving developing countries are not expected to make market access concessions to the preference-giving developed countries, from a policy perspective. The chapter offers a comprehensive overview of legal and economic aspects of non-reciprocal preferences, in particular on how the specific design of preference programmes influences whether or not preferences will have their intended effects of increasing and diversifying developing-country exports. The issues will be discussed from the perspective of how they influence developing countries’ interests rather than how the preference-granting countries are affected. The chapter provides a basis for a reform agenda including: universal product coverage in all preference programmes; consolidating the current spaghetti bowl of preferences into two preference variants per donor – one for all developing countries, and additional preferences for LDCs; increasing the security of preferential markets to promote long-term investments. Preference givers could increase the transparency and predictability of safeguards, graduation and conditionality; bind preferential tariff rates; liberalize rules of origin; and harmonize across donors and programmes.