Issue linkage and trade policy uncertainty: Evidence from trade preferences for developing countries

Stefan Suttner

No 07/2023, FAU Discussion Papers in Economics from Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics

Abstract: This paper quantifies potential costs of issue linkage examining trade preferences granted under the US Generalized System of Preferences (GSP). Preferential market access via US GSP is conditional on political practices by beneficiaries. Using monthly import data, I study trade policy uncertainty related to country-level GSP eligibility reviews conducted by the US administration. For cases initiated between 2003 and 2019, I find negative effects for trade flows from countries under review despite the fact that applied tariffs remained unchanged during the review process. The estimated trade effects of eligibility reviews are sizable and larger for less differentiated product categories. Placebo events before reviews yield no trade effects. The results suggest that trade policy uncertainty induced by issue linkage may undermine trade-promoting incentives of trade preferences at stake.

Keywords: Trade Policy Uncertainty; Trade Preferences; Generalized System of Preferences; Developing Countries; Issue Linkage (search for similar items in EconPapers)
JEL-codes: F13 F14 O19 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/280145/1/1871309077.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwqwdp:280145

Access Statistics for this paper

More papers in FAU Discussion Papers in Economics from Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().