Choosing Formulas for Market Access Negotiation: Efficiency and Market Access Considerations

Abstract

An important issue in multilateral trade negotiations is the approach taken to reduce tariffs. Francois, Martin, and Manole believe that there are important advantages in formula approaches and survey a range of options between the sharply top-down Swiss formula and proportional cuts in tariffs. Over the range the authors consider, they find that the economic efficiency impacts for the importer are not greatly influenced by the extent to which higher tariffs face bigger cuts. However, top-down approaches appear to be more effective in reducing tariff escalation, and provide greater market access gains to poor countries.

This paper - a product of the Trade Team, Development Research Group - is part of a larger effort in the group to understand the impact of trade policies on trade performance and development opportunities.

Keywords: market access, tariff formulas, WTO, tariff reductions

JEL Classification: F13, F1