Providing Duty-Free Access to Australian Markets for Least-Developed Countries: A General Equilibrium Analysis

14 Pages Posted: 1 Oct 2007

See all articles by Xiao-Guang Zhang

Xiao-Guang Zhang

Government of the Commonwealth of Australia - Productivity Commission

George Verikios

Monash University - Centre of Policy Studies

Abstract

The Doha ministerial declaration commits WTO members to liberalising access to their markets for least-developed countries (LDCs). Preferential trade policies have diverse impacts on the initiating country and its trading partners. These effects are of concern to scholars and policy makers. We use Australia as a case study to quantify the direct and indirect effects of providing preferential access to LDC imports entering Australian markets, using a general equilibrium model of the world economy. LDCs are projected to benefit and Australia is predicted to lose, reflecting adverse terms of trade effects. However, the magnitude of the adverse effect on Australia is small. If one was to view this initiative as an exercise in foreign aid, it suggests that Australia can provide a significant benefit to the poorest nations with which it trades, at almost no cost to itself.

Suggested Citation

Zhang, Xiao-Guang and Verikios, George, Providing Duty-Free Access to Australian Markets for Least-Developed Countries: A General Equilibrium Analysis. Australian Economic Review, Vol. 40, No. 3, pp. 239-252, September 2007. Available at SSRN: https://ssrn.com/abstract=1017931 or http://dx.doi.org/10.1111/j.1467-8462.2007.00452.x

Xiao-Guang Zhang (Contact Author)

Government of the Commonwealth of Australia - Productivity Commission ( email )

Level 28
35 Collins St.
Melbourne, Victoria, Victoria 3000
Australia

George Verikios

Monash University - Centre of Policy Studies ( email )

Clayton, Vic 3800
Australia

HOME PAGE: http://www.monash.edu.au/policy/

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