Trade Liberalization and Politics of Tariff Reductions

Abstract

This paper investigates the effect of politics on the implementation of trade liberalization. We present a simple model to show the relationship between political economy factors and the determination of tariff cut rates in a trade liberalization process, and empirically examine whether the political economy factors played a key role in the Uruguay Round agricultural tariff reductions in Japan. Our empirical analysis shows that the farmers who could bring stronger political pressure to politicians resisted the tariff reductions more successfully and received greater protection than those who could not.