Dysfunction, Diversion and the Debate over Preferences : (How) Do Preferential Trade Policies Work?

Should the trade regime provide differential treatment to developing states? Or are uniform, nondiscriminatory rules more appropriate? Twenty years ago, in Developing Countries in the GATT System, Robert Hudec used political economy arguments to claim that preferential trade policies harmed developing states. This essay, part of a volume marking publication of a new edition of Developing Countries, argues that Hudec's claims are necessarily limited by the methodological approaches he used, the theory of trade politics he adopted, and the ontology of the international system that he drew upon. The paper examines Hudec's arguments in light of subsequent scholarship on preferences that uses other methodologies, particularly econometrics. Thus, the paper seeks to examine what we know about preferences, and how we know it. Moreover, in juxtaposing different methodological approaches, the paper suggests a progressive research agenda designed to enhance our understanding of how preferences work and, in particular, their effects on developing states