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Preferential Liberalization, Antidumping, and Safeguards: “Stumbling Block” Evidence from Mercosur

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  • Chad P. Bown

    () (Peterson Institute for International Economics)

  • Patricia Tovar

    () (Pontificia Universidad Católica del Perú)

Abstract

There is no consensus in the literature on trade agreements as to whether preferential liberalization leads to more or less multilateral liberalization. Research has focused mostly on tariff measures of import protection. We develop more comprehensive measures of trade policy that include the temporary trade barrier (TTB) policies of antidumping and safeguards. Studies in other contexts have similarly shown how these policies can erode some of the trade liberalization gains that appear based on an assessment of tariffs alone. We examine the experiences of Argentina and Brazil during the formation of the Mercosur customs union (1990–2001) and find that an exclusive focus on applied tariffs may lead to a mischaracterization of the relationship between preferential liberalization and liberalization toward nonmember countries. We find that any “building block” evidence associated with a focus on tariffs during the period in which Mercosur was a free trade area can disappear once we include changes in import protection from TTBs. Furthermore, there is evidence of a “stumbling block” effect of preferential tariff liberalization for the period in which Mercosur became a customs union, and this result tends to strengthen upon inclusion of TTBs. Finally, we provide a first empirical examination of whether market power motives can help explain the patterns of changes to import protection that are observed in these settings.

Suggested Citation

  • Chad P. Bown & Patricia Tovar, 2016. "Preferential Liberalization, Antidumping, and Safeguards: “Stumbling Block” Evidence from Mercosur," Working Paper Series WP16-12, Peterson Institute for International Economics.
  • Handle: RePEc:iie:wpaper:wp16-12
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    References listed on IDEAS

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    More about this item

    Keywords

    preferential trade agreements; tariffs; MFN; antidumping; safeguards; temporary trade barriers; Argentina; Brazil; Mercosur;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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