Preference utilisation by EU trading partners

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There’s a gap between trade preferences on paper and in practice. The preference margins have to be large enough that enteprises bother to use them. Remember Jagdish Bhagwati’s quip that Europe’s trading partners now enjoy least favored nation status?

In consequence, the EU’s MFN tariffs now apply only to five countries, with all others enjoying politically driven lower-tariff access under different terms to the EU under multiple PTAs, differentiated GSP (Generalized Scheme of Preferences), EBA (Everything but Arms) and other schemes. Evidently, MFN in the EU has now become LFN — the least favored nation tariff.

But practice differs:

Even so, in spite of the European Union’s expanding patchwork quilt of preferential arrangements, 74 percent of its trade remains on an MFN basis, according to the European Commission’s own estimates.

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