Economic theory suggests that countries' tariff commitments in trade agreements reflect their import market power at the time of negotiations. However, as countries grow, their market power in different sectors can change in unforeseen ways and their commitments may no longer reflect changed economic conditions. Using a newly built dataset of pre-Uruguay Round applied tariffs and relying on the theoretical framework of the terms-of-trade motive for trade agreements, we estimate hypothetical tariff commitments under current levels of market power and compare them with actual tariff commitments.

JEL: F11: International Economics / Trade / Neoclassical Models of Trade ; F13: International Economics / Trade / Trade Policy ; International Trade Organizations ; F53: International Economics / International Relations, National Security, and International Political Economy / International Agreements and Observance ; International Organizations

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  • Published online: 08 Nov 2022
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