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Non-tariff Measures: What’s Tariffs Got to Do with It?

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  • David J. Kuenzel

    (Department of Economics, Wesleyan University)

Abstract

After successive rounds of tariff reductions by GATT/WTO members, non-tariff measures (NTMs) have increasingly become the focal point of multilateral trade negotiations. It remains an open question whether the liberalization in tariff rates has subsequently been weakened or even erased by increases in NTMs. Using a product-level global panel of WTO members over the period 1996-2018, this paper systematically examines the empirical relevance of various tariff measures for the imposition of NTMs. I find that bound or applied tariff reductions on their own have not much of an impact on NTM incidence. The relevant trade policy margin for detecting a tariff-NTM nexus is instead tariff overhangs, the difference between WTO members’ bound and applied tariff rates. Countries impose more NTMs when their sectoral applied tariffs are close to their respective bound rates, indicating that small tariff overhangs signal limited legal trade policy flexibility.

Suggested Citation

  • David J. Kuenzel, 2020. "Non-tariff Measures: What’s Tariffs Got to Do with It?," Wesleyan Economics Working Papers 2020-006, Wesleyan University, Department of Economics.
    • Handle: RePEc:wes:weswpa:2020-006
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    More about this item

    Keywords

    GATT/WTO; Non-tariff Measures; Tariff Overhangs; Tariffs;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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