Working Paper: CEPR ID: DP4884
Authors: Nuno Limo
Abstract: Most countries are members of preferential trade agreements (PTAs). The effect of these agreements has attracted much interest and raised the question of whether PTAs promote or slow down multilateral trade liberalization, i.e. whether they are a ?building block? or a ?stumbling block? to multilateral liberalization. Despite this long-standing concern with PTAs and the lack of theoretical consensus there is no systematic evidence on whether they are actually a stumbling block to multilateral liberalization. We use detailed data on US tariff reductions during the most recent multilateral trade round to provide the first systematic evidence that the US?s PTAs were a stumbling block to its multilateral liberalization. We also provide evidence of reciprocity in multilateral tariff reductions that amplify the stumbling block effect.
Keywords: MFN; tariff concessions; multilateral trade negotiations; preferential trade agreements; reciprocity
JEL Codes: D78; F13; F14; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Existence of PTAs (C62) | U.S. multilateral tariff reductions (F13) |
| PTAs (J44) | Magnitude of tariff reductions (F13) |
| Reciprocity in tariff concessions (F13) | U.S. tariff reductions (F13) |
| PTAs (Z22) | Average price effects for goods exported under any PTA (F14) |
| PTAs (Z22) | Smaller tariff cuts for PTA goods (F13) |