EU Exports and Uptake of Preferences: A First Analysis

Abstract

More focus is increasingly being put on implementation of the free trade agreements (FTAs) the European Commission has negotiated on behalf of the European Union (EU). Based on data gathered by EU Delegations from competent authorities in partner countries, this article is the first of its kind to analyse the uptake of preferences by EU exports in these markets. Overall, the preference utilization rate (PUR) stood at about 75% in 2013, up from 63% in 2009, albeit with a changing country coverage over the years. The PURs vary significantly by originating EU Member State (MS) and by broad product group. EU export flows of low values make relatively good use of preferences as opposed to low value exports from developing countries to developed countries, which is something the literature has pointed to. Similarly, the figures challenge a commonly held view that the preferential margin needs to be in the range of 3%–6% for preferences to be used. The empirical analysis examines the extent to which the PUR is influenced by the preferential margin, the value of exports and potential duty savings.