2.2 Why Some Preferences May Not Work
While the empirical literature, as outlined above, actually tends to find statistically significant effects of at least some of the EU’s preference schemes, in policy and academic circles, many commentators still tend to view trade preferences as having failed in their stated goals of increasing the value of developing countries’ exports and leading to diversified exports. This section will outline some of the factors that have been discussed as potential reasons for preferences not to work.
2.2.1 Preference Margins
A key factor in determining the value of trade preferences is the preference margin, i.e. the difference between the preferential tariff rate and the MFN rate.