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Preferential Trade Agreements as Stumbling Blocks for Multilateral Trade Liberalization: Evidence for the US

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  • Limão, Nuno

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.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4884.

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Date of creation: Jan 2005
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Handle: RePEc:cpr:ceprdp:4884

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Keywords: MFN tariff concessions; multilateral trade negotiations; preferential trade agreements; reciprocity;

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References

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Cited by:
  1. Limao, Nuno & Olarreaga, Marcelo, 2005. "Trade preferences to small developing countries and the welfare costs of lost multilateral liberalization," Policy Research Working Paper Series 3565, The World Bank.
  2. John Romalis, 2005. "NAFTA's and CUSFTA's Impact on International Trade," NBER Working Papers 11059, National Bureau of Economic Research, Inc.
  3. Hoekman. Bernard & Prowse, Susan, 2005. "Economic policy responses to preference erosion : from trade as aid toaid for trade," Policy Research Working Paper Series 3721, The World Bank.
  4. Paolo Epifani & Gino Gancia, 2005. "Openness, government size and the terms of trade," Economics Working Papers 915, Department of Economics and Business, Universitat Pompeu Fabra, revised Jan 2008.
  5. Nuno Limao, 2006. "Preferential Trade Agreements as Stumbling Blocks for Multilateral Trade Liberalization: Evidence for the United States," American Economic Review, American Economic Association, vol. 96(3), pages 896-914, June.

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