Preferences, Rent Destruction and Multilateral Liberalisation: The Building Block Effect of CUSFTA

Tobias Ketterer (), Daniel Bernhofen () and Chris Milner

No 3985, CESifo Working Paper Series from CESifo

Abstract: If a free trade agreement (FTA) is characterized by the exchange of market access with a large and competitive trading partner, the agreement can cause a leakage of protectionist benefits to domestic industry from lobbying against external tariff cuts. This rent destruction effect of an FTA can free policy makers to be more aggressive in multi-lateral tariff cuts. We argue that the Canadian-US free trade agreement (CUSFTA) provides an ideal policy experiment to link this mechanism to the data. Exploring the determinants of Canada‘s tariff cuts at the 8 digit HS product level, we find that CUSFTA acted as an additional driver of Canadian multilateral tariff reductions during the Uruguay Round.

Keywords: preferences; rent destruction; multilateral liberalization; CUSFTA (search for similar items in EconPapers)
JEL-codes: F13 F14 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Preferences, rent destruction and multilateral liberalization: The building block effect of CUSFTA (2014)
Working Paper: Preferences, Rent Destruction and Multilateral Liberalisation: The Building Block Effect of CUSFTA (2012)
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