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Tariff Phase-Outs: Theory and Evidence from GATT and NAFTA

  • Carsten Kowalczyk
  • Donald Davis

This paper considers tariff phase-outs in multilateral and preferential agreements. The paper finds that early GATT rounds primarily were over bindings of existing rates and that it was not until the 1962-67 Kennedy Round's 50% reduction in manufactured goods tariffs that time paths of tariff reductions became a substantive part of GATT agreements. Existing empirical work has demonstrated that U.S. industries with high initial tariffs tended to receive long periods for tariff adjustment or tended to be exempted from agreed reductions in both the Kennedy and Tokyo Rounds. This paper demonstrates that high U.S. tariffs and little intra-industry trade are associated with long NAFTA phase-out periods for U.S. imports from Mexico. Mexico's phase-outs are correlated, on the other hand, with those of the United States but not generally with Mexico's tariffs.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5421.

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Date of creation: Jan 1996
Date of revision:
Publication status: published as The Regionalization of the World Economy, Frankel, Jeffrey, ed., Chicago: University of Chicago Press, 1998.
Handle: RePEc:nbr:nberwo:5421
Note: ITI
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