infonet-economy

Least developed countries (LDCs) hoped that the DOHA round would bring them greater market access in the Organization for Economic Cooperation and Development countries than for non-LDCs. Using HS-6 tariff level data for the United States and the EU for 2004, this paper estimates that, once the erosion from preferential access into the EU to non-LDCs is taken into account, LDCs have about a 3% preferential margin in the EU market. In the US market, in spite of preferences under the African Growth and Opportunity Act(AGOA), on a trade-weighted basis, LDCs are discriminated against. Under various ‘Swiss formulas’ for tariff cuts, effective market access for LDCs in the EU will be negligible and still negative in the United States. If the United States were to apply a 97% rule (i.e, duty-free quota-free access for all but 3% of the tariff lines), LDCs could increase exports by 10% or about USD 1 billion annually. Effective market access is further reduced by complicated Rules of Origin (RoO) applied by the EU and the United States. Furthermore, generally, the most restrictive RoO fall on products in which LDCs have the greatest preferential market access.