Open Markets for the Poorest Countries: Trade Preferences That Work

The CGD Working Group on Global Trade Preference Reform
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Many rich countries provide special market access for exports from least developed countries (LDCs), but the trade preferences are often inhibited by tough restrictions and do not extend to the products that matter most to poor countries. Improving these programs could make a major difference in the lives of the poor with only minimal effects on production or exports in preference-giving countries.

Now is the time to make preferences work for development. To that end, the Center for Global Development convened a working group made up of members from the academic, nongovernmental, and business communities, as well as observers from key governments, to study the weaknesses in existing preference programs and suggest improvements. The core recommendations of the working group include the following:

  • Extend trade preferences to all exports from all LDCs.

  • Change program rules that raise costs and impede market access for LDCs, especially rules of origin restricting input sourcing.

  • Ensure program stability and predictability to encourage investment in potential export sectors, particularly by making the programs permanent or longlasting.

Update: After the report went to the printer, we learned that the government of South Korea had changed its preference program for least developed countries to expand product coverage. Rather than 75 percent of tariff lines, as indicated in the executive summary table (page 2) and on page 7, coverage rose to 85 percent on January 1, 2010, and is scheduled to rise again to 95 percent in 2012.