Truths and myths about the openness of EU trade policy and the use of EU trade preferences

Abstract

This paper firstly explores the share of EU imports which is subject to duties, how much of the dutiable imports that is covered by trade preferences and how deep these preferences are. Secondly, it analyses the extent to which EU trade preferences are being used. These factors are explored for more countries/country groupings and sectors over a longer and more recent period of time (2003-2007) compared to previous studies. The paper further presents estimates of actual preference margins by developing country groups and sectors, aggregated from tariff line level. In a gravity model setting, the preferential margins then provide a more refined measure of trade preferences compared to the binary variables commonly used in the literature. Regressing these measures on EU preferential imports, as opposed to total imports, introduces another novelty compared to methods used in other studies. ∗ The opinions expressed in this paper are the authors' own and do not necessarily reflect any views of the European Commission. Thanks to Claudio Gasparini and Luc Stroobants for providing statistics on trade and tariffs and to Lucian Cernat for useful discussions. Corresponding author: lars.nilsson@ec.europa.eu

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