Truly Preferential Treatment? Reconsidering the Generalised System of (Trade) Preferences with Competing Suppliers

Empirical research on preferential treatment for developing economies has generally not considered how relative preferential margins might influence market access to a given destination market. In this paper, we develop and apply two indices to measure the tariff component of bilateral and multilateral trade restrictions less developed countries face in a given export destination. These indices are then used in a gravity model framework to re‐evaluate the trade effects of the Generalized System of Preferences (GSP). The trade facilitation impacts of the GSP are found to vary both across products and across export destinations. Overall results indicate that the GSP has increased relative market access of low‐income countries to developed country markets and boosted exports from these countries by 26–28%.