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Does regionalism affect trade liberalization toward non-members ?, Volume 1
Author:Estevadeordal, Antoni; Freund, Caroline; Ornelas, Emanuel; Country:World;
Date Stored:2008/10/14Document Date:2008/10/01
Document Type:Policy Research Working PaperSubTopics:Free Trade; Trade Policy; International Trade and Trade Rules; Trade and Regional Integration; Trade Law
Language:EnglishMajor Sector:Industry and trade
Rel. Proj ID:1W-Does Regionalism Help Or Hinder Multilateralism? -- -- P082870;Region:The World Region
Report Number:WPS4751Sub Sectors:Other domestic and international trade
Collection Title:Policy Research working paper ; no. WPS 4751Volume No:1

Summary: This paper examines the effect of regionalism on unilateral trade liberalization using industry-level data on applied most-favored nation tariffs and bilateral preferences for ten Latin American countries from 1990 to 2001. The findings show that preferential tariff reduction in a given sector leads to a reduction in the external (most-favored nation) tariff in that sector. External liberalization is greater if preferences are granted to important suppliers. However, these "complementarity effects" of preferential liberalization on external liberalization do not arise in customs unions. Overall, the results suggest that concerns about a negative effect of preferential liberalization on external trade liberalization are unfounded.

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