Small trade flows, compliance costs and trade preferences: The case of EU imports from African LDCs

Previous work has shown that a significant number of preference eligible goods are imported into the EU from developing countries at relatively small values and that the rate of preference utilisation of these imports are low and in many cases zero. This fact is unobserved in the aggregate figures and thus rarely noticed. This paper examines this phenomenon further by using monthly data on EU imports from African LDCs at the lowest level of (publicly) available aggregation thereby coming close to transaction level data. It identifies the average values of preference eligible imports, utilising and not utilising preferences, by country and product category and test their empirical relevance for explaining the African LDCs' preference utilisation rates.