Trade Liberalization and Trade Taxes

This note discusses trade liberalization and trade taxes. The main issue should not be the reduction of trade taxes but of total tax revenue. By potentially changing the structure of the economy, trade liberalization will affect not just tax revenue but also the role of the state in the economy and, thus, also public spending. In this discussion the author focuses on taxation and ignores the potential impact of trade liberalization on public spending. This note was prepared for the meeting of Trade and Integration Network held on August 14th-15th, 2003.