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Does regionalism affect trade liberalization toward non-members ?

Antoni Estevadeordal, Caroline Freund () and Emanuel Ornelas

No 4751, Policy Research Working Paper Series from The World Bank

Abstract: This paper examines the effect of regionalism on unilateral trade liberalization using industry-level data on applied most-favored nation tariffs and bilateral preferences for ten Latin American countries from 1990 to 2001. The findings show that preferential tariff reduction in a given sector leads to a reduction in the external (most-favored nation) tariff in that sector. External liberalization is greater if preferences are granted to important suppliers. However, these"complementarity effects"of preferential liberalization on external liberalization do not arise in customs unions. Overall, the results suggest that concerns about a negative effect of preferential liberalization on external trade liberalization are unfounded.

Keywords: Free Trade; Trade Policy; International Trade and Trade Rules; Trade and Regional Integration; Trade Law (search for similar items in EconPapers)
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Date: 2008-10-01
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