Does liberalisation promote international trade? An empirical analysis of the Kennedy Round GATT negotiations, 1964-67

"As reported in the literature, studies on the effectiveness of GATT/WTO in enhancing the growth of world trade have produced remarkably different results. Rose (2004a and 2004b), whose work paved the way for an empirical analysis of the impact of GATT/WTO, reported no positive effects. Subsequently, other scholars (Tomz, Goldstein, Rivers 2007a and 2007b; Subramanian and Wei, 2007; Eicher and Henn, 2011, among others) tried to confirm or overturn Rose’s result by refining the analysis on econometric or economic grounds but produced ambiguous results. The work described herein contributes to this debate by providing an empirical analysis of the effects of the GATT Kennedy Round (1964-1967) on world trade. Our research question was whether the 1968-1972 multilateral tariff reductions implemented as a result of the Round enhanced trade growth. To address this question, we refined the method with which the effectiveness of GATT/WTO could be measured by accounting for asymmetries across countries and products in the GATT-liberalizing path. We first considered the different levels of GATT-activity participation of its members, and, secondly, after disaggregating imports by products, we measured the effects of tariff reduction on these products for the twenty-nine countries that attended the Round. This preliminary version of our paper focused on asymmetries across countries, and our findings indicated that the Kennedy Round had a positive effect on the imports of those countries that reduced tariffs significantly. We further demonstrated GATT’s negative or insignificant effect on average GATT members and showed that non-GATT members traded less than members. Our preliminary results are consistent with the history and design of GATT and are exactly in line with the path of liberalization."