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Preferential Market Access Design: Evidence and Lessons from African Apparel Exports to the US and the EU

ACCOUNTING AGGREGATE EXPORTS APPAREL APPAREL EXPORT APPAREL EXPORTS APPAREL MARKET APPAREL PRODUCERS APPAREL PRODUCT APPAREL PRODUCTS APPAREL SECTOR AVERAGE TARIFFS BENCHMARK BENEFICIARIES BENEFICIARY BILATERAL CUMULATION BORDER PRICE BUSINESS ENVIRONMENT CHECKS COEFFICIENT ESTIMATE COMPLIANCE COSTS COUNTRY MARKETS CUMULATIVE EFFECTS CUSTOMS CUSTOMS UNION CUSTOMS UNIONS DEMAND CURVE DEMAND FUNCTION DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DUMMY VARIABLE DUMMY VARIABLES ECONOMETRIC ANALYSIS ECONOMETRICS ECONOMIC POLICY ELASTICITY EQUILIBRIUM EXPENDITURES EXPORT COSTS EXPORT DIVERSIFICATION EXPORT GROWTH EXPORT MARKET EXPORT PATTERNS EXPORT PRODUCTS EXPORT SALES EXPORT VOLUME EXPORT VOLUMES EXPORTER EXPORTERS FISCAL POLICIES FIXED COSTS FOREIGN INVESTMENT FOREIGN INVESTORS FREE ACCESS FREE MARKET FREE MARKET ACCESS FREE TRADE FREE TRADE AGREEMENT FREE TRADE AGREEMENTS GDP GENERALIZED SYSTEM OF PREFERENCES GRAVITY MODEL GRAVITY MODELS GROWTH RATE IDIOSYNCRATIC FACTORS IMPORTS INSTRUMENT INTERMEDIATE GOODS INTERNATIONAL BANK INTERNATIONAL ECONOMICS INVESTMENT PATTERNS LDCS LESS DEVELOPED COUNTRIES LOW TARIFF MARGINAL COST MARGINAL COSTS MARGINAL REVENUE MARKET PRICE MARKET SHARE MARKET SHARES MIDDLE INCOME COUNTRIES MOST FAVORED NATION MULTILATERAL TRADE MULTILATERAL TRADE LIBERALIZATION NORMAL GOOD PERFECT SUBSTITUTES PREFERENTIAL ACCESS PREFERENTIAL BASIS PREFERENTIAL MARGIN PREFERENTIAL MARGINS PREFERENTIAL MARKET ACCESS PREFERENTIAL REGIME PREFERENTIAL STATUS PREFERENTIAL TARIFF PREFERENTIAL TRADE PRICE INDEX PRODUCTION COSTS PRODUCTION FUNCTION PROTECTIONIST PROTECTIONIST DEVICES REAL EXCHANGE RATE REDUCTION IN TARIFFS REGIONAL TRADE REGIONAL TRADE AGREEMENTS REGIONALISM RULES OF ORIGIN SALES SPECIAL REGIME SUPPLIERS TARIFF CLASSIFICATION TARIFF DATA TARIFF LINES TARIFF REDUCTION TAX TAX CONCESSIONS TRADE AGREEMENT TRADE AGREEMENTS TRADE DEFLECTION TRADE FLOWS TRADE POLICIES TRADE POLICY TRADE REGIME TRADING TRADING BLOCS VALUE ADDED VALUE OF EXPORTS VER WORLD TRADE WORLD TRADE ORGANIZATION WORLD TRADING SYSTEM WTO
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World Bank, Washington, DC
Africa | Europe and Central Asia | Africa | European Union | UNITED STATES
2013-04-11T17:09:23Z | 2013-04-11T17:09:23Z | 2013-02

Least developed countries rely on preferential market access. Proof of sufficient transformation has to be provided to customs in importing countries by meeting Rules of Origin requirements to benefit from these preferences. These Rules of Origin have turned out to be complicated and burdensome for exporters in the least developed countries. Starting around 2001, under the United States Africa Growth Opportunity Act, 22 African countries exporting apparel to the United States can use fabric from any origin (single transformation) and still meet the criterion for preferential access (the so-called Special Rule), while the European Union continued to require yarn to be woven into fabric and then made into apparel in the same country (double transformation). This paper uses panel estimates over 1996-2004 to exploit this quasi-experimental change in the design of preferences. The paper estimates that this simplification contributed to an increase in export volume of about 168 percent for the top seven beneficiaries or approximately four times as much as the 44 percent growth effect from the initial preference access under the Africa Growth Opportunity Act without the single transformation. This change in design also mattered for diversity in apparel exports, as the number of export varieties grew more rapidly under the Africa Growth Opportunity Act special regime.

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