Working Paper: CEPR ID: DP7703
Authors: Marco Fugazza; Frdéric Robert-Nicoud
Abstract: Using a detailed data set at the tariff line level, we find an emulator effect of multilateralism on subsequent regional trade agreements involving the US. We exploit the variation in the frequency with which the US has granted immediate duty free access (IDA) to its Free Trade Area partners across tariff lines. A key finding is that the US has granted IDA status especially on goods for which it had cut the multilateral MFN tariff during the Uruguay round the most. Thus, the Uruguay Round (multilateral) ?concessions? have emulated subsequent (preferential) trade liberalisation. We conclude from this that past liberalisation sows the seeds of future liberalisation and that multilateral and preferential trade agreements are dynamic complements.
Keywords: Multilateralism; Regionalism; Stumbling bloc; Uruguay Round
JEL Codes: F13; F14; F15; N70
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Multilateral tariff cuts (F13) | Preferential trade liberalization (F13) |
| Multilateral tariff cuts (F13) | Goods liberalized rapidly on a preferential basis (F13) |
| Presence of NTMs and prohibitively costly ROO (R38) | Emulator effect (Y60) |
| Past multilateral trade liberalization (F13) | Resistance to future preferential trade liberalization (F13) |
| Multilateral tariff cuts (F13) | Dynamic complementarity with preferential trade liberalization (F12) |