DP4077 Market Access for Sale: Latin America's Lobbying for US Tariff Preferences

Author(s): Hiau Looi Kee , Marcelo Olarreaga , Peri Silva

Publication Date: October 2003

Keyword(s): Trade , political economy , latin america , united states

JEL(s): F10 , F11 , F13

Programme Areas: International Trade and Regional Economics

Link to this Page: www.cepr.org/pubs/dps/DP4077.asp

This Paper assesses the foreign lobbying forces behind the tariff preferences that the United States grants to Latin American countries. The basic framework is one developed by Grossman and Helpman (1994) that is extended to explain the relationship between foreign lobbying and tariff preferences. Results suggest that returns to Latin American exporters lobbying for tariff preferences in the United States are above 50%. The reason for these large returns is the relatively low estimated weight given to social welfare in the US government’s objective function when deciding whether or not to grant tariff preferences to LAC exporters.