Exports of Argentina and Brazil under the Generalized System of Preferences

Abstract

In this paper we investigate the impact of the Generalized System of Preferences implemented by the United States on exports of Argentina and Brazil. Our evidence indicates that the GSP increased exports from these countries to the United States, both in export quantities (intensive margin) and the fact that a product is exported or not (extensive margin). The effect, however, is more important the more advantageous is the benefit from the initial level of tariffs. We also show that the cancellation of the GSP involves falls in exports. This finding indicates that the advantage conferred by GSP does not manifest itself in competitive improvements that make redundant their existence. We also find that the products included in the GSP increase its exports in other destinations, especially in the OECD; region similar to the United States market. This result suggests advantages associated with increased activity and experience in markets in advanced countries such as the United States. Finally, we note that the GSP promotes exports of goods favored at the expense of similar goods not included in the preferential access. This result reduces, at least partially, the effect pro-GSP exports and highlights potential trade diversion, even for the same exporting country, these programs can generate.

JEL classification: F13 ; F14