Alternative Approaches to Reciprocal Tariff Liberalization
(Forthcoming in a guide for negotiations for developing countries edited by Bernard Hoekman): The paper outlines various approaches to reciprocal reductions in tariffs and and their relative merits. If the objective is to achieve maximum liberalization worldwide, an across-the-board approach that lowers higher tariffs more such as that based on the Swiss formula would be the right choice. The across-the-board approach minimizes the room for successful lobbying by political powerful sectors, which often happen to be the most protected sectors in the first place. Moreover, a formula that lowers high tariffs more reduces the dispersion in tariffs and hence effective protection in all sectors. A formula approach also has the advantage that it does not tie up negotiating resource in a major way as do sector-by-sector negotiations.