Eliminating excessive tariffs on exports of Least Developed Countries

Eliminating excessive tariffs on exports of Least Developed Countries

The potential effects on the value of trade from granting LDCs duty free access for tariff peak items in Quad markets

This paper assesses the potential effects on the value and the pattern of trade from implementing initiatives to grant least developed countries (LDCs) duty free access for tariff peak items in Quad markets. The paper is motivated by recent proposals of the Commission of the European Communities to provide LDCs with free access to the EU for all products except arms. Paper investigates what implementation of this proposal by all Quad countries would mean for LDCs. The paper focuses on tariff peaks only-tariffs below 15 percent are ignored.

Although average tariffs in Quad markets are very low, tariff peaks and tariff escalation have a disproportional effect on exports by least developed countries (LDCs). Tariff peak products tend to be heavily concentrated in agriculture and food products and in labour intensive sectors such as apparel and footwear. Full duty and quota free access for LDCs in the Quad for tariff peak products would result in an 11 percent increase in their total exports-on the order of $2.5 billion. Exports to Quad countries of tariff peak products would expand by 30 to 60 percent. Given that LDC exports of tariff peak items account for only a small share of total developing country exports, granting LDCs duty free access has a negligible impact on other developing countries. For the same reason, Quad imports increase only marginally, suggesting that this should not be a factor constraining implementation of duty free access for the poorest countries.

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