Integrating Latin America and the Caribbean: Potential effects of removing tariffs and streamlining non-tariff measures

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February 2021
Paper author(s): 
Marcelo Dolabella
José Elías Durán Lima
Globalization - Trade

This work analyzes the potential economic effects in Latin America and the Caribbean of reducing intra-regional trade barriers. First, trade costs coming from two main sources; customs tariffs and non-tariff measures (NTMs), are analyzed. The impact of NTMs on trade quantities was estimated for more than 5,000 products at the 6-digit level of the Harmonized System using a panel for 2001-2015 with NTM data notified by more than 150 member countries of the World Trade Organization (WTO). Trade effects were transformed into Ad-valorem equivalents (AVEs) using import elasticities and were aggregated into a GTAP country-sector classification. These estimates were used to assess the potential effects of liberalizing intra-regional trade in Latin America and the Caribbean by both eliminating tariffs and streamlining trade restrictive NTMs. Results point to a positive impact of 0.73 in the regional GDP, with a larger share of this impact coming from tariff liberalization.


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