Both DC (developed country) tariffs and LDC (developing country) export taxes are "escalated" to protect local processors of primary commodities. The paper develops an analytical model of north-south commodity trade which is used to estimate the effects of reciprocal elimination of these trade barriers for eight commodities. It is estimated that processing would increase by 9 percent in the LDCs and decline by less than 1 percent in the DCs. The LDC export revenue for the eight-commodity sample would increase by 11 percent, or just over $1 billion (based on 1973 trade flows), which is considerably more than the estimated effect of the Generalized System of Preferences.

I. Introduction, 169. — II. The data and methodology, 170. — III. Comparisons of levels, 173. — IV. Recent changes in transport costs, 174. — V. Conclusions, 175.

Both DC (developed country) tariffs and LDC (developing country) export taxes are "escalated" to protect local processors of primary commodities. The paper develops an analytical model of north-south commodity trade which is used to estimate the effects of reciprocal elimination of these trade barriers for eight commodities. It is estimated that processing would increase by 9 percent in the LDCs and decline by less than 1 percent in the DCs. The LDC export revenue for the eight-commodity sample would increase by 11 percent, or just over $1 billion (based on 1973 trade flows), which is considerably more than the estimated effect of the Generalized System of Preferences.