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Tariff Cuts, Policy Uncertainty, and the Force of Many: The Impact of Plurilateral Agreements

Author

Listed:
  • Lasha Chochua

    (International School of Economics at TSU)

  • Irene Iodice

    (Bielefeld University)

Abstract

Do countries gain more by liberalizing trade together than alone? We study the WTO’s 2016 Phase II expansion of the Information Technology Agreement (ITA), which eliminated tariffs on products covering roughly 12% of world goods trade. Using triple-difference structural gravity, importer–product market access rose by 4–6%. Decomposition reveals nearly half reflects generalequilibrium coordination spillovers—exceeding contributions from direct tariff cuts or reduced policy uncertainty. Exploiting variation in coalition size, spillovers turn positive once participants span about two-thirds of world imports—well below the 80% critical-mass benchmark commonly assumed for plurilaterals. Conditional general equilibrium counterfactuals show ITA Phase II reduced members’ import price indexes by 1.4 percentage points on average, peaking near 2.0 percentage points by 2019. Joint liberalization yields benefits beyond the sum of individual actions— evidence of the force of many.

Suggested Citation

  • Lasha Chochua & Irene Iodice, 2026. "Tariff Cuts, Policy Uncertainty, and the Force of Many: The Impact of Plurilateral Agreements," Working Papers 02-26, International School of Economics at TSU, Tbilisi, Republic of Georgia.
    • Handle: RePEc:tbs:wpaper:2026-02
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    References listed on IDEAS

    as
    1. Chad Bown, 2020. "How the United States Marched the Semiconductor Industry into Its Trade War with China," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 24(4), pages 349-388.
    2. Maddalena Conte & Pierre Cotterlaz & Thierry Mayer, 2022. "The CEPII Gravity Database," Working Papers 2022-05, CEPII research center.
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