IMF Working Papers

Peeling Away the Layers: Impacts of Durable Tariff Elimination

By Arevik Gnutzmann-Mkrtchyan, Christian Henn

May 10, 2018

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Arevik Gnutzmann-Mkrtchyan, and Christian Henn. Peeling Away the Layers: Impacts of Durable Tariff Elimination, (USA: International Monetary Fund, 2018) accessed September 18, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Exports, Imports, Information technology in revenue administration, International trade, Revenue administration, Tariffs, Taxes, Trade policy

Keywords: Commitment effect, Exports, Global, Global Value Chains, Imports, Information Technology Agreement, Information technology in revenue administration, ITA accession, ITA export sector, ITA exporter commitment effect, ITA goods, ITA membership, ITA product export, ITA products, ITA signatory, MFN Tariff Elimination, Non-discriminatory Trade Policies, Product-Level Data, Tariff elimination, Tariff reduction, Tariffs, Trade policy, Trade Policy Certainty, World Trade Organization, WP

Publication Details

  • Pages:

    61

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2018/109

  • Stock No:

    WPIEA2018109

  • ISBN:

    9781484353684

  • ISSN:

    1018-5941