New Trade Policy of EU: Implications for LDCs
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The European Union (EU) has notified its revised Generalized System of Preference(GSP) on 31 October, 2012 which will come into effect from 1 January, 2014. The EU isalso in the process of, or contemplating, to sign Free Trade Agreements (FTAs) with manydeveloping countries. Recently, EU has officially announced initiation of FTA negotiationswith USA. Such preferential tariff arrangements could lead to significant erosion ofpreferences enjoyed currently by the Least Developed Countries (LDCs). In this backdrop,the main objective of the present study is to investigate the economic impacts originatingfrom preference erosion in the EU market which could potentially affect LDCs in general,Bangladesh in particular. In this context, a dynamic computable general equilibrium(CGE) analysis has been developed by using the Global Trade Analysis Project (GTAP)model and database to explore the aggregate impact of the preferential erosion as well assectoral implications for which different partial equilibrium analyses were used. Theanalysis evince that if the EU eliminates all tariffs for Pakistan, India and Vietnam,Bangladesh's real GDP could decrease by 0.27 per cent whilst welfare loss could be to thetune of US$ 54 million. Total exports to the EU will be reduced by 0.18 per cent;consequently, Bangladesh’s terms of trade and exports of textiles and clothing could be fallby about 1 percent. The product level disaggregated analysis using RCA and unit price ofmajor items also indicate that a number of products including textiles and clothing will beconfronted with formidable market access difficulties in the EU.
Abstract
The European Union (EU) has notified its revised Generalized System of Preference(GSP) on 31 October, 2012 which will come into effect from 1 January, 2014. The EU isalso in the process of, or contemplating, to sign Free Trade Agreements (FTAs) with manydeveloping countries. Recently, EU has officially announced initiation of FTA negotiationswith USA. Such preferential tariff arrangements could lead to significant erosion ofpreferences enjoyed currently by the Least Developed Countries (LDCs). In this backdrop,the main objective of the present study is to investigate the economic impacts originatingfrom preference erosion in the EU market which could potentially affect LDCs in general,Bangladesh in particular. In this context, a dynamic computable general equilibrium(CGE) analysis has been developed by using the Global Trade Analysis Project (GTAP)model and database to explore the aggregate impact of the preferential erosion as well assectoral implications for which different partial equilibrium analyses were used. Theanalysis evince that if the EU eliminates all tariffs for Pakistan, India and Vietnam,Bangladesh's real GDP could decrease by 0.27 per cent whilst welfare loss could be to thetune of US$ 54 million. Total exports to the EU will be reduced by 0.18 per cent;consequently, Bangladesh’s terms of trade and exports of textiles and clothing could be fallby about 1 percent. The product level disaggregated analysis using RCA and unit price ofmajor items also indicate that a number of products including textiles and clothing will beconfronted with formidable market access difficulties in the EU.
참고문헌 (19)
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