RESEARCH AND ANALYSIS: WORKING PAPERS

How WTO Commitments Tame Uncertainty

This paper studies how WTO rules and flexibilities shape its members’ trade policy responses to import shocks.

Guided by a cost benefit analysis model and using a unique database of tariff bindings for all WTO countries over the 1996-2011 period, we show that WTO commitments affect members’ trade policy. More stringent bindings reduce the likelihood of responding to import shocks by raising tariffs and increase the likelihood of contingent measures. We argue that this reduces overall trade policy uncertainty. In a counterfactual scenario where WTO members can arbitrarily increase tariffs they are 4.5 times more likely to do so than under current bindings.

No: ERSD-2019-06

Authors: Adam Jakubik and Roberta Piermartini

Manuscript date: April 2019

Key Words:

trade agreements, trade policy, trade policy uncertainty, anti-dumping

JEL classification numbers:

F13; F14; F53

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Disclaimer 

This is a working paper, and hence it represents research in progress. The opinions expressed in this paper are those of its author. They are not intended to represent the positions or opinions of the WTO or its members and are without prejudice to members' rights and obligations under the WTO. Any errors are attributable to the author.

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