The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
We demonstrate that durable MFN tariff elimination affects trade patterns through several
layers, which generates non-linear impacts. First, complete tariff elimination results in a large
additional trade gains over and above tariff reductions. Second, commitment to durable tariff
elimination, through WTO bindings, further boosts both imports and exports of ITA
members. The unique setting of the WTO Information Technology Agreement (ITA) allows
us to identify these effects of non-discriminatory trade policies because (i) ITA constitutes a
quasi-natural experiment as several 'passive' signatories joined it as an unavoidable part of
pursuing of a larger policy objective, and (ii) ITA's partial coverage of the IT sector provides
a natural control group for cross-product identification. Commitments under the ITA spurned
development of a downstream IT export sector in 'passive' signatories.