2.2.3 Certainty of Access
A problem with trade preferences may also be that the improved market access they offer is unstable or uncertain. An important distinction in this respect is whether the preferences are available on a contractual basis or unilaterally granted by the donor country. If preferences are offered unilaterally by the donor country, they may be altered or withdrawn at short notice, which means that there are small incentives for investors to allocate resources based on the preferential market access. Preferences that are available as part of a negotiated agreement between two parties will generally offer stable market access for at least a few years, which will reduce the risks involved in investing in potential export sectors. These contractual preferences are therefore, as a rule, easier to use. One should note, however, that this is a complex issue. Even if preferences are offered as part of a legally binding agreement, the time horizon is central. A market access agreement lasting only a few years will be more difficult to use than one that has unlimited duration. On the other hand, as discussed above, even an agreement with unlimited duration will not offer constant benefits over time, since the value of preferences may be eroded due to multilateral trade liberalization, or the offering of similar preferences to more beneficiaries. Likewise, a unilaterally granted preference scheme could be made more attractive if the donor country credibly fixes the level of market access for a number of years.