Eliminating Excessive Tariffs on Exports of Least Developed Countries

Abstract:     
Average most-favored-nation tariffs in the Quad (Canada, the European Union, Japan, and the United States) have fallen to about 5 percent. But tariffs more than three times the average most-favored-nation duty are not uncommon in the Quad and have a disproportionate effect on exports of least developed countries. Giving the poorest countries duty-free access for peak-tariff products would increase their total annual exports by roughly $2.5 billion.

Most goods imported from developing countries enter Quad markets duty-free, and average tariffs in Quad markets are very low. But tariffs for some commodities are over 100 percent. Such tariff peaks are often concentrated in products developing countries want to export: agricultural and food products - especially such staples as sugar, cereals, and fish; fruits and vegetables; food products with a high sugar content; and tobacco and alcoholic beverages - and products from such labor-intensive sectors as apparel and footwear.

Giving least developed countries full duty- and quota-free access in the Quad for peak-tariff products would increase their total annual exports by 11 percent - or roughly $2.5 billion. Exports to Quad countries of peak-tariff products would expand by 30-60 percent. Considering that peak-tariff items account for only a small share of developing countries' exports, granting least developed countries duty-free access would have only a negligible impact on other developing countries. For the same reason, Quad imports increase only marginally, suggesting that this factor should not constrain implementation of duty-free access for the poorest countries.

This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to analyze impediments to developing country export growth.

Keywords: Market access, least developed countries, trade preferences

JEL Classifications: F13, F14, O19

Working Paper Series