DP1214 Multilateral Trade Rules and the Expected Cost of Protection

Author(s): Joseph Francois, Will Martin
Publication Date: July 1995
Keyword(s): Expected Protection, Stochastic Protection, Tariff Bindings, Trade Liberalization, Trade Policy, Trade Rules
JEL(s): F11, F13
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1214

Protection unconstrained by rules typically varies considerably over time. The policy disciplines introduced in the Uruguay Round in `new' areas such as agricultural, services, and developing country industrial protection will constrain, but not eliminate, this variability. The effects of these constraints on the expected costs of protection are examined, taking into account their impacts on both the first and second moments of the distribution of protection. As an application, we examine Uruguay Round agricultural bindings, finding substantial reductions in the expected cost of protection even in some cases where the bindings are above previous protection levels.