What's Left for the WTO?

Suppose that when addressing the question of “what’s left for the WTO?,” negotiators relied not on the agenda established in 2001 but instead on the terms-of-trade theory of trade agreements to identify tariff negotiating priorities. This paper uses the lens of the terms-of-trade theory to investigate three specific areas in which it is frequently alleged that currently applied tariffs are “too high,” the implication being that there are still tariff reductions out there for an agreement like the WTO to facilitate. These three areas include applied tariffs for countries that are not members of the WTO, applied tariffs for WTO members that are unbound, and applied tariffs for WTO members set in the presence of large amounts of tariff binding overhang. As it turns out, these three areas are almost exclusively found to be the trade policies that developing countries themselves impose. I build upon recent developments in the empirical literature to present tentative evidence - some direct, some indirect - that sheds light on each of these three areas. I then draw insights from these results to highlight open and additional policy questions for additional research.