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Does Regionalism Affect Trade Liberalization Towards Non-Members?

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Author Info
Antoni Estevadeordal
Caroline Freund
Emanuel Ornelas

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Abstract

We examine the effect of regionalism on unilateral trade liberalization using industry-level data onapplied MFN tariffs and bilateral preferences for ten Latin American countries from 1990 to 2001.We find that preferential tariff reduction in a given sector leads to a reduction in the external (MFN)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 donot arise in customs unions. Overall, our results suggest that concerns about a negative effect ofpreferential liberalization on external trade liberalization are unfounded.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0868.

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Date of creation: May 2008
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Handle: RePEc:cep:cepdps:dp0868

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Keywords: regionalism external tariffs trade liberalization

Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
F15 - International Economics - - Trade - - - Economic Integration

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