Tariff Cuts, Policy Uncertainty, and the Force of Many: The Impact of Plurilateral Agreements

Lasha Chochua and Irene Iodice
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Lasha Chochua: International School of Economics at TSU
Irene Iodice: Bielefeld University

No 02-26, Working Papers from International School of Economics at TSU, Tbilisi, Republic of Georgia

Abstract: Do countries gain more by liberalizing trade together than alone? We study the WTO’s 2016 Phase II expansion of the Information Technology Agreement (ITA), which eliminated tariffs on products covering roughly 12% of world goods trade. Using triple-difference structural gravity, importer–product market access rose by 4–6%. Decomposition reveals nearly half reflects generalequilibrium coordination spillovers—exceeding contributions from direct tariff cuts or reduced policy uncertainty. Exploiting variation in coalition size, spillovers turn positive once participants span about two-thirds of world imports—well below the 80% critical-mass benchmark commonly assumed for plurilaterals. Conditional general equilibrium counterfactuals show ITA Phase II reduced members’ import price indexes by 1.4 percentage points on average, peaking near 2.0 percentage points by 2019. Joint liberalization yields benefits beyond the sum of individual actions— evidence of the force of many.

Keywords: Plurilateral agreements; trade liberalization; Information Technology Agreement (ITA); trade policy uncertainty; structural gravity model; triple-difference estimation; general equilibrium counterfactuals; import price index (search for similar items in EconPapers)
Pages: 46 pages
Date: 2026-05
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