Trade preferences are a key element in industrial countries’ efforts to assist
the integration of least developed countries (LDCs) into the world economy. Brenton
provides an initial evaluation of the impact of the European Union’s recently
introduced “Everything but Arms” (EBA) initiative on the products currently
exported by the LDCs. He shows that the changes introduced by the EBA initiative
in 2001 are relatively minor for currently exported products, primarily because over
99 percent of EU imports from the LDCs are in products which the EU had already liberalized,
and the complete removal of barriers to the key remaining products—rice, sugar,
and bananas—has been delayed. Brenton looks at the role EU preferences to LDCs
in general have been playing and could play in assisting the integration of the LDCs.
He shows that there is considerable variation across countries in the potential impact
that EU preferences can have given current export structures. There is a group of
LDCs for whom EU trade preferences on existing exports are not significant since
these exports are mainly of products where the most-favored-nation duty is zero.
Export diversification is the key issue for these countries. For other LDCs, EU preferences
have the potential to provide a more substantial impact on trade. However, the author
shows that only 50 percent of EU imports from non-ACP (Africa, Caribbean, and Pacific)
LDCs which are eligible actually request preferential access to the EU. The prime
suspect for this low level of use are the rules of origin, both the restrictiveness
of the requirements on sufficient processing and the costs and difficulties of providing
the necessary documentation. More simple rules of origin are likely to enhance the
impact of EU trade preferences in terms of improving market access and in stimulating
diversification toward a broader range of exports.