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Peeling Away the Layers: Impacts of Durable Tariff Elimination

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  • Arevik Gnutzmann-Mkrtchyan
  • Christian Henn

Abstract

We demonstrate that durable MFN tariff elimination affects trade patterns through several layers, which generates non-linear impacts. First, complete tariff elimination results in a large additional trade gains over and above tariff reductions. Second, commitment to durable tariff elimination, through WTO bindings, further boosts both imports and exports of ITA members. The unique setting of the WTO Information Technology Agreement (ITA) allows us to identify these effects of non-discriminatory trade policies because (i) ITA constitutes a quasi-natural experiment as several “passive” signatories joined it as an unavoidable part of pursuing of a larger policy objective, and (ii) ITA's partial coverage of the IT sector provides a natural control group for cross-product identification. Commitments under the ITA spurned development of a downstream IT export sector in “passive” signatories.

Suggested Citation

  • Arevik Gnutzmann-Mkrtchyan & Christian Henn, 2018. "Peeling Away the Layers: Impacts of Durable Tariff Elimination," IMF Working Papers 2018/109, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2018/109
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    References listed on IDEAS

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    1. de Sousa, José, 2012. "The currency union effect on trade is decreasing over time," Economics Letters, Elsevier, vol. 117(3), pages 917-920.
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    Cited by:

    1. Bernard Hoekman & Charles Sabel, 2019. "Open Plurilateral Agreements, International Regulatory Cooperation and the WTO," Global Policy, London School of Economics and Political Science, vol. 10(3), pages 297-312, September.
    2. Manfred Elsig & Sebastian Klotz, 2021. "Digital Trade Rules in Preferential Trade Agreements: Is There a WTO Impact?," Global Policy, London School of Economics and Political Science, vol. 12(S4), pages 25-36, May.
    3. Bernard Hoekman & Charles Sabel, 2021. "Plurilateral Cooperation as an Alternative to Trade Agreements: Innovating One Domain at a Time," Global Policy, London School of Economics and Political Science, vol. 12(S3), pages 49-60, April.
    4. Gnutzmann-Mkrtchyan, Arevik & Volmer, Maximilian, 2022. "EU trade policy reform: towards reciprocal concessions with developing countries," Hannover Economic Papers (HEP) dp-697, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    5. Gnutzmann, Hinnerk & Gnutzmann-Mkrtchyan, Arevik, 2020. "The Cost of Borders: Evidence from the Eurasian Customs Union," Hannover Economic Papers (HEP) dp-664, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    6. Bernard Hoekman, 2020. "Trade Wars and the World Trade Organization: Causes, Consequences, and Change," Asian Economic Policy Review, Japan Center for Economic Research, vol. 15(1), pages 98-114, January.

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