of the initial tariff and according to the Schwarz criterion the speci fi cation without it is preferred, we choose to focus on the latter, which follows our theoretical model more closely as well.<sup>49</sup> The food products industry, SIC 311, contains approximately half of all the products in our sample that do not enter the EU duty-free through preferential agreements. Although this category does not include primary agricultural products (it includes processing of food related products) it does share one important characteristic with agriculture: high protection. To the extent that this feature is timeinvariant, then it is immediately addressed by the fact that we estimate the equations in differences. If on the other hand the amount of the reduction depends on the initial tariff, which is on average higher for 311 than other industries, this could potentially affect the results because half of the products in 311 are non-PTA products and they represent a large share of all non-PTA products in the sample. However, this last concern should be addressed by including the initial tariff as a regressor, which, as we have just described, does not affect the results signi fi cantly.

To study whether the stumbling block effect is merely driven by a cross-industry difference in the average tariff cut, we re-estimate the model by dropping the observations in 311 and obtain estimates that are qualitatively similar to those in table 2 in terms of the signs and signi fi cance of the coefficients. The point estimates of the relative growth effect in the basic speci fi cation are higher when we exclude products in 311 but the 95% con fi dence intervals overlap with those of the corresponding speci fi cation in table 2.<sup>50</sup> A fi nal concern that we address is the potential measurement error in the production data for petroleum re fi neries (sic 353) and miscellaneous petroleum and coal products (sic 354). Given that these are sensitive sectors, the production data for them can be inaccurate and is in some cases missing. To calculate the EU weighted average production variable used in the main speci fi cations, we imputed the missing data for a few countries in 1992 by using information from previous years.<sup>51</sup> However, since these sectors produce outlier values for the political economy variable, ∆x, we re-ran the basic speci fi cations by dropping the two industries. They account for less than 0.8% of all products in the sample and so dropping them does not affect the results.

As we argue in section 4.1, there are good reasons to expect the main regressors to be subject

> 49 We treat the initial tariff as an endogenous regressor.

> 50 Again, a simple explanation for why the basic estimates are not too sensitive is that, to the extent that the change in tariffs for that industry was not already accounted for by the political economy or reciprocity variables, it indicated the existence of an omitted variable but since we instrument for the preference variable, this omitted variable should not bias the estimates.

> 51 For these industries we do not have data in 1992 (or surrounding years) for France (354), Germany and Italy (353, 354). We impute it based on the 1978 values by assuming a similar share in total output. For example if the value of output is available for all sectors 1, 2, and 3 in 1978 but missing for sector 2 in 1992 in country c. We impute the value for output, v2<sup>92</sup> c<sup>with[v</sup> 2<sup>78</sup> c<sup>/(v</sup> 1<sup>78</sup> c<sup>+ v</sup> 3<sup>78</sup> c<sup>)] ∗(v</sup> 1<sup>92</sup> c<sup>+ v</sup> 3<sup>92</sup> c<sup>).</sup>

31