Academic article

Preferential tariffs and development of Norwegian rose import from Africa

Published: 13 May 2020
Summary:

Purpose
Imports of cut roses increased after Norway implemented a preferential tariff scheme for the Least Developed Countries in 2002. When the scheme was extended to more countries in 2008 – among them Kenya – imports exploded. This article studies the subsequent changes in supply channels, import costs and the way Norwegian firms imported.
Design/methodology/approach
Qualitative data, obtained through interviews among five rose importers, are combined with quantitative data for all importing firms and transactions in Norway for years 2003–2014. These data are analysed in light of recent economic theories on international trade.
Findings
When Kenya was included in the scheme, imports from Europe and domestic production in Norway decreased substantially. Imports from some African countries with low income levels also declined. Importing under GSP involves high fixed import costs due to stringent procedures. Each firm’s imports increased gradually, and over time learning may have facilitated importing. Direct trade with African producers and control over the logistics chain seem to have become more important.
Research limitations/implications
The analysis build mainly on data for Norwegian importers, not for African exporters.
Managerial or Policy implications
Simplifying the GSP procedures could increase Norwegian imports from developing countries and induce establishment of new trade relationships, perhaps also for other products than roses.
Originality/value
Using a mixture of original qualitative data as well as unique, detailed and comprehensive quantitative data, the article provides new insights into how a developed country’s preferential tariff reductions towards developing countries affect trade and buyer-supplier relationships.