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Go ahead and trade: the effect of uncertainty removal in the EU's GSP scheme

Ingo Borchert and Mattia Di Ubaldo ()

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: We estimate the trade effect of removing uncertainty about future trading conditions in the context of the 2014 reform of the Generalized System of Preferences (GSP) of the European Union (EU). EU GSP members receive non-reciprocal trade preferences (NRTPs), but only as long as they are not too competitive; i.e. they will graduate in case their share of EU GSP imports in a sector exceeds a certain threshold. However, the 2014 reform removed the threat of these competitivenessrelated graduations for a members of the GSP+, a sub-scheme of the main programme. We and that the reform increased EU imports from GSP+ countries by about 7% on average whilst tariffs stayed the same. This trade impact is driven by the country-sector pairs most exposed to NRTPs uncertainty prereform. The effect is robust to taking into account other aspects of the reform, such as the reduction in GSP membership and changes in tariff margins, respectively.

Keywords: GSP; trade preferences; trade policy uncertainty (search for similar items in EconPapers)
JEL-codes: F13 F14 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-int
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