The name is absent

16

These preferential schemes have been of some value, though often less than expected. Their
product coverage is quite extensive, ranging in 2001 from over 60 percent of dutiable imports into the
Quad countries from GSP beneficiaries to 100 percent for imports into the EU from least developed
countries under its Everything But Arms scheme once the scheme is fully implemented, according to
UNCTAD (2003). Measured as a discount on the MFN rate, the tariff preference also sounds quite large.
Mattoo and Subramanian (2004) calculate that, under the GSP scheme of the Quad countries, tariffs are
roughly 50 percent below those applied under the MFN, and more under the other schemes. However, in
some schemes, the actual use of these preferences falls far short of their potential use. According to
UNCTAD (2003, p. 5), under the Quad’s GSP schemes, less than 40 percent of the covered imports
actually entered the importing countries at the preferential rates.¹² One possible reason for this lack of use
is that exporters found the transaction costs of the certification process too heavy in relation to the saved
preferential margin. That is, despite the large discount on the MFN rate, the margin is, in fact, only some
2 to 4 percent on average, according to Mattoo and Subramanian (2004, p. 397). A more common
speculation is that exporters were unable to comply with rigorous rules of origin.

The conclusion we draw is that, while the schemes have surely benefited individual producers,
their impact on the overall export performance of countries is an open question. The fact that some 60
percent of the products listed under the Quad’s GSP schemes were exported without the inducement of a
preferential margin suggests that the schemes may have played only a minor role in assisting the export
growth of developing countries in general. The main impetus may have come from internal economic
growth, structural change, and export-oriented policies.

Much more controversial is the question whether distributive equity demands that the global
trading system should also allow developing countries freedom to apply preferential measures in support
of firms within their own domestic markets. Responses turn on the causal beliefs held about the
effectiveness of protectionist measures in assisting national development. There is ample empirical

¹²We should note, however, that the fragmentary evidence, in UNCTAD (2003, p. 6), does seem to indicate that
exporting firms in the least developed countries have responded more fully to the inducement, having recorded

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