The trade effect of Generalised Scheme of Preferences removal: evidence from Belarus

Under the Generalised Scheme of Preferences (GSP), rich countries grant unilateral trade preferences to developing countries. We study the EU’s withdrawal of GSP preferences from Belarus in 2007 to understand how the GSP affects export patterns. The withdrawal caused a signifcant drop in trade for affected products (26%-29% trade decline) and some trade reduction at the extensive margin. However, there is little evidence of a GSP effect on total trade. This is due to the fact that the main exports of Belarus were not eligible for the GSP program.