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Preferential and multilateral liberalization: Evidence from Latin America’s use of tariffs, antidumping and safeguards

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  • Tovar, Patricia
Abstract
I test the predictions of Bagwell and Staiger’s (1999) theory of the effects of preferential liberalization on import protection imposed against non-member countries. In contrast to the existing literature, which has (for the most part) focused on investigating whether external tariffs rise or fall due to preferential trade liberalization, by testing the predictions of a specific model in a way that closely follows the theory, I am able to examine the channels through which those effects take place. Importantly, and unlike most existing studies, I analyze not only tariffs but also the temporary trade barrier (TTB) policies of antidumping and safeguards. I focus on Latin America and find strong support for the theoretical predictions of Bagwell and Staiger (1999). First, there is evidence of tariff complementarity: i) a larger reduction in the preferential import protection leads to a larger reduction in protection against non-members; ii) the more consumption increases, the more external protection decreases with the fall in preferential protection; and iii) the more imports from the rest of the world fall, the more external protection decreases with a preferential protection cut. Furthermore, I also find evidence consistent with the punishment effect and the tariff discrimination effect, which arise when enforcement difficulties are incorporated into the theory. Finally, the overall results point toward a building block effect of preferential liberalization.

Suggested Citation

  • Tovar, Patricia, 2019. "Preferential and multilateral liberalization: Evidence from Latin America’s use of tariffs, antidumping and safeguards," Journal of Development Economics, Elsevier, vol. 141(C).
    • Handle: RePEc:eee:deveco:v:141:y:2019:i:c:s0304387818314603
    DOI: 10.1016/j.jdeveco.2019.102383
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    References listed on IDEAS

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    Cited by:

    1. Prusa, Thomas J. & Teh, Robert & Zhu, Min, 2022. "PTAs and the incidence of antidumping disputes," Journal of International Economics, Elsevier, vol. 138(C).
    2. Ornelas, Emanuel & Tovar, Patricia, 2022. "Intra-bloc tariffs and preferential margins in trade agreements," Journal of International Economics, Elsevier, vol. 138(C).
    3. Min Zhu & Thomas J. Prusa, 2023. "The impact of preferential trade agreements on the duration of antidumping protection," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(2), pages 553-592, May.
    4. Xi He, 2022. "Political and economic determinants of export restrictions in the agricultural and food sector," Agricultural Economics, International Association of Agricultural Economists, vol. 53(3), pages 439-453, May.

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    More about this item

    Keywords

    Preferential trade agreements; Multilateral liberalization; Tariffs; Antidumping; Safeguards; Temporary trade barriers;
    All these keywords.

    JEL classification:

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

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