Working Paper: CEPR ID: DP3720
Authors: Joseph Francois; Will Martin
Abstract: Most of the large tariff reductions achieved in multilateral trade negotiations have involved tariff-cutting formulas such as the ?Swiss? formula. Wide variations in initial tariff rates between active participants, however, call for new approaches under the Doha Development Agenda. This Paper surveys a range of formula options and examines both targeted and flexible applications of the Swiss formula that target tariff escalation and peaks, and would allow policymakers to directly target how far they will move towards free trade, while providing some flexibility for trading off reductions in peak tariffs against reductions in lower-tariff sectors.
Keywords: market access; tariff formulas; WTO
JEL Codes: F10; F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Implementing a suitable tariff-cutting formula (F13) | Significant reductions in average tariffs (F14) |
| Significant reductions in average tariffs (F14) | Enhanced market access opportunities for developing countries (F63) |
| Flexibility in formula approaches (C51) | Increased likelihood of reaching agreements among WTO members (F13) |
| Flexibility in formula approaches (C51) | Targeted reductions in average tariffs while maintaining progress in reducing peak tariffs (F13) |
| Strategic use of formulas (C69) | Counteracting lobbying pressures from sectors benefiting from protection (L52) |