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Legislated Protection and the WTO
Legislated Protection and the WTO
International Economic Review. November
2015, Vol. 56, Issue 4, Pages 1349-1384
Tariff bindings and administered protection are two characteristics of the World Trade Organization (WTO) that are little understood. Tariff bindings place a ceiling on tariffs that is not always reached, while administered protection provides all industries with some minimum import protection, effectively creating a floor for protection. How do these policies affect applied MFN tariff rates that are enacted through the legislature? I model tariffs determined by a dynamic legislative process and show that low applied MFN tariffs is less likely with tariff bindings and more likely with administered protection, than under purely legislated protection.