The main coefficient of interest in equation (1) is β . If β̂ > 0 , then subsequent to country _j_ liberalizing preferentially toward _k_ , country _j_ also reduced its levels of import protection toward countries _-k_ in industry _i,_ and then preferential liberalization is interpreted as a _building block_ for trade liberalization toward PTA outsiders. Conversely, β̂ < 0 would indicate that the country increased its levels of import protection toward PTA outsiders following an episode of preferential liberalization, and would thus be evidence of a _stumbling block_ effect of preferential liberalization.

The literature thus far, and in particular the Estevadeordal et al. (2008) approach from which we build, has defined ∆τi−k to be the change in the MFN tariff that country _j_ applies toward imports from PTA non-partners, and it has defined L.∆Prefik to be the lagged change in the preferential tariff that country _j_ applies toward imports from PTA partner _k_ . The first contribution of our paper is to redefine each of these measures of import protection so that they include not only MFN and bilateral applied tariffs, but they also reflect country _j_ ’s potential application of temporary trade barriers – i.e., antidumping and safeguards – on imports in industry _i_ .

The decision to examine the impact of more expansive measures of import protection is again motivated by the data for Argentina and Brazil that we reported in Section 2. At the same time that each was reducing its tariffs toward one another bilaterally and implementing applied MFN tariff changes toward MERCOSUR non-partner countries, each was also independently implementing its own new import protection through the application of TTBs.

Ideally, countries would apply their TTBs as ad valorem tariffs; if this were the case then we could simply redefine each of ∆τi−k and L.∆Prefik to reflect the sum of the applied ad valorem tariff plus the ad valorem temporary trade barrier. Unfortunately, many (if not most) of the TTBs that Argentina and Brazil applied during this period were not in ad valorem form; they included the application of tariffs as specific duties, negotiated price undertakings with foreign exporters, and even quantitative restrictions (tariff rate quotas).<sup>15</sup> The implication is that, while the data that we have reveal the year, product, and trading partner affected by Argentina’s and Brazil’s applied TTBs, we do not know the exact (ad valorem equivalent) magnitude of these barriers so as to simply add them to applied tariff levels to construct more

> 15 Price undertakings are an outcome in antidumping investigations that is similar to a voluntary export restraint. I.e., the exporter “voluntarily” agrees to raise its price above some threshold level that the policy-imposing government determines, and if the price falls below that level the government imposes a duty instead. Relative to the approach in Bown and Tovar (2011) which focused on how TTBs affected India’s MFN liberalization, for example, during this period for Argentina and Brazil there were many more instances in which they implemented TTBs in a way through which direct ad valorem equivalent measures of the barrier are not available.

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