Iran’s WTO accession and the auto industry

Abstract

Iran’s auto industry faces with severe challenges in the post globalization era since it has enjoyed a high degree of protectionism for more than decades now. Infant industry policy beside the international sanctions has paralyzed the industry, limiting the ability of Iranian products to compete in the international markets, creating adverse selection for consumers in the domestic market.

WTO’s accession requires a sharp reduction in tariff rates whereas Iran’s auto industry has been subject to a high level of protection. To investigate the impact of WTO accession on the auto industry this paper tries casts light not only on the quantitative effects of reducing tariff rates on imports and domestic production through econometric models, but also highlights the inconsistencies of Iran’s regulatory system with GATT articles.