The impact of trade preferences removal

Evidence from the Belarus Generalized System of Preferences withdrawal

authored by

Hinnerk Gnutzmann, Arevik Gnutzmann-Mkrtchyan

Abstract

Under the Generalized System of Preferences (GSP), high-income countries grant unilateral trade preferences to developing countries. These preferences are subject to political conditionality, but little is known about the trade impact of loss of preferential access. We study the EU's complete withdrawal of GSP preferences from Belarus in 2007 in response to labour rights violations to fill this void. The withdrawal caused a significant drop in trade for affected products (25%–27% trade decline) and some trade reduction at the extensive margin. For products where trade was affected at the intensive margin, there is some evidence of adjustment through falls in quantities but also through prices for larger export sectors. The impact was uneven across sectors, with textiles and plastics particularly strongly affected by the withdrawal.

Organisation(s)

Institute of Macroeconomics

External Organisation(s)

Munich Society for the Promotion of Economic Research - CESifo GmbH
Belarusian Economic Research and Outreach Center (BEROC)

Type

Article

Journal

World Economy

Volume

45

Pages

2977-3000

No. of pages

24

ISSN

0378-5920

Publication date

02.09.2022

Publication status

Published

Peer reviewed

Yes

ASJC Scopus subject areas

Accounting, Finance, Economics and Econometrics, Political Science and International Relations

Sustainable Development Goals

SDG 8 - Decent Work and Economic Growth

Electronic version(s)

https://doi.org/10.1111/twec.13265 (Access: Open)