foodstuffs), textiles and apparel, and footwear. Third, while the high-income economies have relatively little binding overhang in any sector, there is evidence of significant overhang for emerging and developing countries across all sectors. However, the greatest amount of overhang is in agriculture, suggesting that this is the sector in which emerging and developing economies have the greatest discretion to raise applied tariffs from 2013 levels while maintaining their WTO commitments.<sup>15</sup> For high-income economies in agriculture, we return to this issue in our discussion of specific duties and quantitative restrictions below.

Figure 3 presents an alternative approach to the tariff data by examining the share of HS06 imported products within a sector for which the MFN applied rate is defined as being a tariff peak, or a tariff applied at or above the threshold level of 15 percent. For high-income economies, nearly 30 percent of products in the foodstuffs sector had an applied MFN tariff in 2013 of 15 percent or more. Similar peak tariffs can be found for high-income economies in 18 percent of products in the animal sector, 15 percent in footwear, 13 percent in vegetables, and 6 percent in textiles and apparel. The distribution of peak tariffs across sectors is quite similar for emerging and developing countries; it is simply that in emerging and developing countries the share of products within each sector that has such high tariffs is significantly larger. Nearly 70 percent of footwear products in developing countries had applied MFN tariffs at rates that are higher than 15 percent in 2013. Recent empirical research has sought to explain aspects of the considerable cross-sectional variation in MFN applied tariffs and WTO tariff bindings. One important example is Broda, Lim ̃ao and Weinstein (2008), which exploits the variation in applied rates to assess implications of the terms-of-trade theory across a number of different empirical contexts. They examine tariff variation for a number of WTO _non-member_ countries and conclude that market power helps to explain applied tariffs for countries unconstrained by trade agreements.<sup>16</sup> An alternative theoretical explanation for cross-sectoral variation in applied tariffs is political economy, for which the Grossman and Helpman (1994) structural model of lobbying and endogenous import protection provides a rich set of empirically testable preduictions. However, much of the literature seeking to empirically test the Grossman-Helpman model has focused on the sector-level variation in _non-tariff_ policies - of the sort that we introduce and describe in Section 3.<sup>17</sup>

> 15Some countries have used this flexibility to make relatively high frequency - e.g., weekly, monthly, etc. - changes within years (and thus potentially not captured in the annual data) to applied MFN tariffs on agricultural products, perhaps in light of both political economy concerns and the uncertainty of yields due to weather-related shocks and growing seasons. Recent WTO disputes challenging such policies imposed by Chile and Peru are described in Bagwell and Sykes (2005a) and Saggi and Wu (2016), respectively. On agricultural tariffs more generally, see Hoekman, Ng, and Olarreaga (2002, 2004).

> 16Other research exploring the empirical relevance of the terms-of-trade theory for negotiated trade agreements using applied and bound tariffs includes Bagwell and Staiger (2011), Ludema and Mayda (2013), Nicita, Olarreaga, and Silva (2014), and Beshkar, Bond and Rho (2015). Bown (2015) provides both a survey of these papers and an empirical assessment of some of their implications for the applied and bound tariffs of developing countries.

> 17This literature is surveyed in McLaren (forthcoming). Exceptions for research providing estimates of the Grossman-Helpman model on _tariff_ policies include Mitra, Thomakos, and Ulubasoglu (2002) for Turkey, Bown and Tovar (2011) for India, and Gawande, Krisha, and Olarreaga (2009) for a cross section of countries.

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