Abstract
Do WTO commitments reduce the risk of trade policy reversals? To address this question, we rely on the theoretical model of varying cooperative tariff s by Bagwell and Staiger (1990) to specify our empirical model for the probability of a tariff inc rease. We then study how WTO tariff commitments affect this probability. We estimate our model usin g a database of WTO bound tariffs that we built for all WTO Members from 1996 to 2011 at the HS 6-digit level of disaggregation. Our results show that WTO commitments significantly reduce the probability of a tariff increase, even when the bound tariff is above the MFN applied rate. In addition, the WTO reduces trade policy uncertainty through its monitoring function. These results are robust t o including political economy explanations of tarif f changes and to addressing endogeneity concerns.
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