International Trade:

Comparison of U.S. and European Union Preference Programs

GAO-01-647: Published: Jun 8, 2001. Publicly Released: Jun 8, 2001.

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Both the United States and the European Union (EU) began providing trade preferences to eligible developing countries in the early 1970s. These trade preferences, which reduced tariffs and product quotas, are "nonreciprocal," meaning that beneficiaries need not reciprocate with lower tariffs for donor export countries. This report discusses (1) the volume of U.S. and EU nonreciprocal preferential trade, (2) the U.S. and EU approaches to nonreciprocal trade preferences, (3) the tariff preferences offered by the U.S. and EU nonreciprocal trade programs, and (4) the extent to which U.S. and EU program beneficiaries take advantage of the tariff preferences offered under the programs. GAO found that the volume of imports receiving preferential tariff rates under U.S. and EU nonreciprocal trade preference programs in 1999 represented a relatively small share of total U.S. and EU imports, at two percent ($18 billion) and six percent ($45 billion), respectively. The U.S. and EU approaches to nonreciprocal preferential trade have evolved in similar ways since their inception in the early 1970s. U.S. and EU programs have included increasingly more products, particularly to the poorest countries, and have, over time, relaxed customs requirements that specify where and how products can be made. Despite some program differences, the U.S. and EU nonreciprocal preference arrangements offer relatively similar tariff preferences on average. On the whole, EU programs cover more products than do U.S. programs, but U.S. beneficiary countries use more of their available tariff preferences than do EU beneficiaries.

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