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1992 and 2017. To harmonize the product codes across years, we convert all HS 6-digit-level codes into HS 1996 revision 6-digit codes using the concordance tables provided by WITS. The detailed tariff information allows us to examine how the trade effects of preferences under the AGOA or the GSP LDC vary with the magnitude of the preference margin offered to the beneficiary countries and how this effect changes over time. The database also provides detailed tariff information to examine how these trade effects change in response to the reciprocal and nonreciprocal preferential tariff rates granted to other countries. A limitation of the tariff information is that it does not capture the ad valorem equivalents of quotas, such as those on apparel exports implemented under the MFA. To account for the effects of the MFA phaseout in our analysis, we complement the tariff data using quota information for 1992–2004 from Brambilla, Khandelwal, and Schott (2010). They construct quota fill rates in the United States, by exporting country and year, for 3-digit MFA categories defined by the Office of Textiles and Apparel that are mapped to 10-digit US HS codes using a concordance table.4
US Trade Preferences: The GSP and AGOA GSP Programs Over the past half century, high-income countries have aimed to support the integration of low- and middle-income countries (LMICs) into the world economy by providing them with “special and differential treatment,” including nonreciprocal preferential access to their markets. The GSP has become a key instrument for such trade preferences.5 The GSP programs were established in 1971, led by the United Nations Conference on Trade and Development (UNCTAD), under the assumption that preferential market access to high-income country markets—in the form of duty-free status or lower tariff rates for a wide range of products—could spur export-driven growth in LMICs. The argument was that the markets of high-income countries were sufficiently large to provide economic motivation and space for LMICs to achieve those goals. The European Union (EU) was the first to establish a GSP program for LMICs in the early 1970s, and other high-income countries followed, with the United States beginning its GSP program for beneficiary LMICs in 1975.6 In 1997, the scope of the US GSP benefits was expanded for LDC beneficiaries (“GSP LDC”) by allowing duty-free entry into the United States for a larger number of products. To be eligible for the GSP, countries must not be classified as “high income” by the World Bank.7 As for the GSP LDC, the United Nations determines eligibility on the basis of three criteria: per capita gross national income, human assets, and economic vulnerability to external shocks.8 In addition to the GSP programs, the EU and the United States signed other nonreciprocal PTAs with LMICs, such as, respectively, Everything but Arms (EBA) and the AGOA.
