Peeling Away the Layers: Impacts of Durable Tariff Elimination

Arevik Gnutzmann-Mkrtchyan and Christian Henn

No 2018/109, IMF Working Papers from International Monetary Fund

Abstract: We demonstrate that durable MFN tariff elimination affects trade patterns through several layers, which generates non-linear impacts. First, complete tariff elimination results in a large additional trade gains over and above tariff reductions. Second, commitment to durable tariff elimination, through WTO bindings, further boosts both imports and exports of ITA members. The unique setting of the WTO Information Technology Agreement (ITA) allows us to identify these effects of non-discriminatory trade policies because (i) ITA constitutes a quasi-natural experiment as several “passive” signatories joined it as an unavoidable part of pursuing of a larger policy objective, and (ii) ITA's partial coverage of the IT sector provides a natural control group for cross-product identification. Commitments under the ITA spurned development of a downstream IT export sector in “passive” signatories.

Keywords: WP; commitment effect; ITA product export; ITA accession; ITA goods; Non-discriminatory Trade Policies; MFN Tariff Elimination; World Trade Organization; Information Technology Agreement; Trade Policy Certainty; Global Value Chains; Product-Level Data; tariff elimination; ITA products; tariff reduction; ITA export sector; ITA signatory; ITA exporter commitment effect; ITA membership; Tariffs; Exports; Imports; Trade policy; Information technology in revenue administration; Global (search for similar items in EconPapers)
Pages: 61
Date: 2018-05-10
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Citations: View citations in EconPapers (7)

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