Peeling Away the Layers: Impacts of Durable Tariff Elimination


Arevik Gnutzmann-Mkrtchyan ; Christian Henn

Publication Date:

May 10, 2018

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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.


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.


Working Paper No. 2018/109



Publication Date:

May 10, 2018



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