independently of the WTO (through either preferential or unilateral tari¤ liberalization), there remain roughly 500 million people that reside in countries entirely outside of the WTO system. Seven percent of the global population has not taken on WTO obligations and does not enjoy the WTO legal bene...ts that we describe in more detail below.

Contemporary tari¤ commitments under the WTO Table 3 summarizes many of the salient features resulting from the GATT/WTO’s “shallow” integration approach to trade liberalization, including information on contemporary multilateral tari¤s across and within the major economies. The table splits countries into three groups –the high income members of the Group of 20 (G20), the emerging economy members of the G20 (which includes the BRICS, namely, Brazil, Russia, India, China and South Africa), and a selected sample of other major developing countries with 2012 populations of over 50 million - some of which are not (yet) WTO members, as they are currently only WTO “observers.”<sup>6</sup> Overall, the tari¤ data indicate substantial heterogeneity across countries and industries and include many examples of applied MFN import tari¤s, as well as the bindings that have been legally negotiated to constrain them, that are not close to free trade.

Consider ...rst the US. The simple average MFN tari¤ that the US applies to imports from any other WTO member is 3.4 percent. One hundred percent of the US tari¤ lines are bound at some level, and the simple average binding rate is 3.5 percent. The rate above which a country promises not to raise its applied MFN tari¤ is referred to as the binding, and the binding serves as the formal legal commitment that a country submits to the WTO membership. The WTO permits countries to apply tari¤s below their bound rates, provided that such o¤erings are made to all other members on a nondiscriminatory (MFN) basis. That the US applied MFN import tari¤ is pushing up against the binding rate is an indicator that it has very little scope to unilaterally increase its applied MFN import tari¤s without running afoul of WTO rules.

While average US applied and bound MFN tari¤s are quite low, there is considerable heterogeneity both across and within even high-income countries. Most major industrialized economies have almost universal binding coverage and applied rates that are relatively close to their tari¤ bindings. Nevertheless, while applied MFN tari¤s may be low in historical terms, they range from an average of 2.7 percent (Australia) to 13.3 percent (South Korea). There also remain important examples of outliers or tari¤ “peaks” in high-income economies; for example, 2.7 percent of US tari¤s have applied MFN rates higher than 15 percent, with the highest rate being 350 percent. Canada, the EU, and South Korea each have more than 5 percent of MFN tari¤ lines with rates higher than 15 percent, and maximum applied rates in these economies are greater than 500 percent.

Tari¤s exhibit even more heterogeneity across emerging and developing economies. While average applied MFN tari¤s are also relatively low for these countries in historical terms, the rates applied by even the relatively advanced (G20) emerging economies are typically substantially higher than their high-income country counterparts. Furthermore, some countries (e.g., India) have not committed to legally binding a signi...cant share of their tari¤ lines at any level. Finally, within

> 6 Governments with WTO observer status are non-members that are granted limited rights (e.g., access to certain WTO meetings) and are expected to uphold certain obligations (e.g., minimal contributions to the WTO’s budget).

5