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Does regionalism affect trade liberalization toward non-members ?

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  • Estevadeordal, Antoni
  • Freund, Caroline
  • Ornelas, Emanuel

Abstract

This paper examines the effect of regionalism on unilateral trade liberalization using industry-level data on applied most-favored nation tariffs and bilateral preferences for ten Latin American countries from 1990 to 2001. The findings show that preferential tariff reduction in a given sector leads to a reduction in the external (most-favored nation) 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 do not arise in customs unions. Overall, the results suggest that concerns about a negative effect of preferential liberalization on external trade liberalization are unfounded.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4751.

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Date of creation: 01 Oct 2008
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Handle: RePEc:wbk:wbrwps:4751

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Keywords: Free Trade; Trade Policy; International Trade and Trade Rules; Trade and Regional Integration; Trade Law;

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  1. Trade agreements from the bottom-up
    by Pierre-Louis in Rigotnomics on 2009-09-09 17:51:00
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