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Title:Preferences, rent destruction and multilateral liberalisation: The building block effect of CUSFTA PDF Logo
Authors:Ketterer, Tobias
Bernhofen, Daniel M.
Milner, Chris
Issue Date:2012
Series/Report no.:CESifo Working Paper: Trade Policy 3985
Abstract:If a free trade agreement (FTA) is characterized by the exchange of market access with a large and competitive trading partner, the agreement can cause a leakage of protectionist benefits to domestic industry from lobbying against external tariff cuts. This rent destruction effect of an FTA can free policy makers to be more aggressive in multi-lateral tariff cuts. We argue that the Canadian-US free trade agreement (CUSFTA) provides an ideal policy experiment to link this mechanism to the data. Exploring the determinants of Canada's tariff cuts at the 8 digit HS product level, we find that CUSFTA acted as an additional driver of Canadian multilateral tariff reductions during the Uruguay Round.
rent destruction
multilateral liberalization
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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