Assessing Euro-Med Trade Preferences: The Case of Entry Price Reduction

The EU protects some of its fruits and vegetables through the entry price system. Thissystem consists on a two-tiered tariff, with high-priced exports paying an ad valoremtariff, whereas low-priced exports pay also a supplementary specific tariff. The breakingpoint between high and low export prices is the entry price level decided by the EU,generally the same level for all third countries. In a few cases, some SouthernMediterranean partners of the EU have agreed a reduced entry price for their exports,together with the more common ad valorem tariff reduction. Among the indicators usedfor gauge the value of preferences, there is no one devoted to this case of reduced entryprice, hence we develop a new indicator that allows to split which part of thepreferential gains corresponds to the entry price reduction and which part corresponds tothe “"usual"” ad valorem tariff reduction. We apply this methodology to Moroccanclementines trade flows, with two main findings: 1) The entry price reduction ranges upto 39% of the economic value of preferences in some months; 2) Morocco is notmaximizing the gains due to this reduction, and could take some trade and policylessons, mainly trying to better fit to the concession or, if impossible, use it asnegotiating capital in future reviews of the agreement.