Potential gains from post-Uruguay round trade policy reform: impacts on developing countries

World Development, 1996

Implementation of the results of Uruguay Round will bring about significant increases in trade, investment, income and welfare for developing countries. This derives from increased market access to developed countries' markets and from enhanced efficiency originating from their own liberalization commitments, although the distribution of benefits will be uneven. Developing countries will also benefit from improved rules for trade and investment coupled with enhanced institutional enforcement of these rules, and greater exposure to global competition within a more predictable, secure and credible international trading environment. To maximize the benefits, however, developing countries will need to continue with recent unilateral reforms to improve their supply response. Copyright 0 1996

Open Economies Review, 1995

This paper examines the provisions of the recently completed Uruguay Round and evaluates the qualitative and quantitative effects of the Round on major countries and regions of the world. The implications of the Uruguay Round are measured using the G-cubed multicountry model. This model captures macroeconomic and sectoral linkages within the global economy. This study differs from other studies in that it considers the dynamic adjustment path, the impact of expectations formation, and the sectoral as well as macroeconomic consequences of the Round. The results are compared with other studies of the Uruguay Round. Ignoring major changes in productivity induced by the Round, it is found that the gains to the world economy are likely to be around $200 billion (1990) per year by the year 2000. The distribution of the gains across regions from the Round differ from other studies because of the adjustment of international capital flows. Private capital flows to regions that undertake the most extensive liberalization initially worsen their trade positions. In regions that liberalize less and experience a capital outflow, the production gains tends to be less than conventional studies find. The adjustment of private capital has important implications for exchange rates, and therefore for the adjustment of the international trading system over the decade of the implementation of the Round.

The World Trade Organization: Legal, Economic and Political Analysis

We have used the Michigan Model of World Production and Trade to simulate the economic effects of the Uruguay Round of multilateral trade negotiations completed in 1993-94 on the major industrialized and developing countries/regions. We estimate that the Uruguay Round negotiations increased global economic welfare by $73.0 billion. The developed countries overall have an estimated welfare gain of $53.8 billion, and the developing countries an estimated welfare increase of $19.2 billion. We have also simulated the effects of assumed 33 percent reductions in trade barriers in the ongoing Doha Development Round. There is an estimated increase in global welfare of $574.0 billion. There is a global welfare decline of $3.1 billion from agricultural liberalization due primarily to the assumed reductions in export subsidies. There are global welfare gains of $163.4 billion from reductions in manufactures tariffs and $413.7 billion from reductions in services barriers. All of the countries/regions covered in the Michigan Model show overall welfare increases, with the largest absolute gains going to the developed countries.

1996

1992

One issue dominating recent discussions on free trade areas and other minilateral associations (preferential trade arrangements) is whether such arrangements will detract from further multilateral trade liberalization on a most-favored-nation basis. But for much of this debate empirical information has been lacking on: the global importance of minilateral arrangements that have been, or are being, concluded; the relative size of other major bilateral trade flows not affected by minilateral arrangements, and their suitability for such arrangements; the global importance of Europe in this process; the possibility that other sorts of arrangements - such as managed trade initiatives (arrangements specifying quantitative trade targets) - are a more likely threat as far as trade flows not presently covered by free trade area arrangements are concerned. The authors argue that this lack of relevant data has led to several misconceptions about the movement toward minilateralism. In particula...

China Economic Review, 1995

The Pacific Rim members of the Asia Pacific Economic trade within the free trade area. The U.S.-Japan trade Cooperation (APEC) group have different views about balance improves only slightly (by $1.4 billion), and the the role each should play in fostering further trade U.S.-China balance worsens slightly. Movements in other liberalization. But at the November 1994 APEC meetings bilateral balances are much larger, suggesting that in Bogor they committed themselves to forming an APEC changes in sectoral protection make movements in free trade area. Lewis, Robinson, and Wang explore: particular bilateral trade balances nearly impossible to * The impact of such a free trade area on trade, predict. welfare, and the economic structure of the Pacific Rim When one economy is excluded: There are gains from economies and the European Union. making the free trade area as broad as possible. Omitting * The implications of forming a partial free trade area, any one region (China, the United States, or the ASEAN excluding such potential partners as China, the 4) makes that region significantly worse off and lowers Association of Southeast Asian Nations (ASEAN) the gains for all other members as well. The Asian NIEs economies, or the United States. have the most to gain from broad membership. * Whether an APEC free trade area provides more Excluding China reduces Asian NIE gains by about half, benefits than full trade liberalization that includes the and excluding the United States yields even greater European Union. declines. Excluding the United States has the worst They analyze these issues using a multicountry, impact on all other potential members, greater than the computable general equilibrium model to simulate effect of omitting China or the ASEAN 4. The European alternative liberalized trade scenarios. Their findings: Union is largely unaffected by different versions of the Under the base-case scenario (in which all tariff and APEC free trade area. most nontariff barriers are removed among the APEC Global (versus regional) liberalization: Global countries, China, Japan, ASEAN, the Asian newly liberalization that includes the European Union is the industrializing economies [NIEs], and the United States): best outcome in terms of world GDP and welfare. And All APEC countries gain in GDP and the excluded all countries gain more from global liberalization than European Union loses slightly. Gains are greatest for the they do from joining an APEC free trade area alone. poorer countries, for whom trade externalities are more Forming a regional free trade area may be politically significant. Trade expands greatly, and although there is easier than continued global liberalization, but there are some trade diversion away from the European Union and economic incentives for all parties to expand on the the rest of the world, that is swamped by the creation of completed GATT round. This papera product of the Country Operations Division, East Asia and Pacific, Country Department III-is part of a larger effort to understand the policy implications for countries in the region of the current and future changes in the world trading environment. Copies of the paper are available free from the World Bank,

SSRN Electronic Journal, 2012

What has been the overall global welfare impact of the accession to the World Trade Organization of a large country like China, or the global welfare impact of the completion of the Uruguay round of GATT negotiations? Can we come up with a simple user-friendly formula to calculate the global welfare impact of the simultaneous trade liberalization of a number of countries? How sensitive is the answer to the assumption of the trade model? We find a striking answer to these questions. We find that, for a very broad class of models and settings, the global welfare impact of trade liberalization in a country, or a simultaneous liberalization of a number of countries, is given by the same simple formula. We find that the global welfare impact of the simultaneous trade liberalization of different countries only depends on two sets of statistics: (i) the ratio of the value of bilateral trade between each and every pair of trading partners and global income; and (ii) the change in exporting cost for each and every pair of trading partners. Most interestingly, the formula applies to a very broad class of models and settings, which include the general Ricardian model (including, for example, Anderson, 1979, and Eaton and Kortum, 2002), the models of Krugman (1980), Melitz (2003) and its extensions, and the extensions of these models to the multi-sectoral case, multi-factor production technology, multi-stage production, the existence of tradable intermediate goods and the existence of a large outside good sector in each country. We find that global welfare would have been 0.05% lower in the year 2008 if China had not gained accession to the WTO in 2001.

2016

Many recent papers have pointed to ambiguous trade effects of developing regional trade agreements (RTAs), calling for a reassessment of their economic merits. We focus on seven such agreements currently in force in Sub-Saharan Africa (ECOWAS and SADC), Asia (AFTA and SAPTA) and Latin America (CACM, CAN and MERCOSUR), estimating their impacts on their members ' trade flows. Instead of the usual dummy variables for RTAs, we propose a variable taking into account the number of years of membership. We then combine a gravity model with kernel estimation techniques so as to capture the non-monotonic trade effects while imposing minimal structure on the model. The results indicate that except for SAPTA, all these RTAs have had a positive impact on their members ' intra-trade over the estimation period (1960-1999). AFTA seems to be the most successful among them with an estimated positive impact on its members ’ imports from the rest of the world (ROW), but its impact on their ex...

In this paper we evaluate the effects of a Free Trade Area of the Americas (FTAA) on Canada and other major players using a dynamic general equilibrium multi-sector, multi-region model of global trade. The model is calibrated to GTAP version 5 Database benchmarked to 1997. We analyse the implications of a FTAA in which an arrangement like NAFTA is extended to rest of the FTAA members. This is done both under competitive and imperfect market structures. We show that the magnitudes of the effects of the FTAA differ under different market structure. Our results suggest that there are modest gains in terms of welfare, defined as Hicksian equivalent variation (EV), from the FTAA to the existing NAFTA members. However, the rest of the FTAA members lose in the short run due to the adverse terms of trade effect. Mexico, followed by Canada, is the biggest gainer. Instead of removing the differences in tariffs instantly, phasing out tariffs over 10 years minimizes the short-term welfare losses for Mercosur and Latin America.

1998

This paper explores the impact on economies of trade liberalization under alternative regional and multilateral arrangements: unilateral liberalization; liberalization as part of the ASEAN regional grouping; liberalization as part of the APEC regional grouping; or liberalization as part of a multilateral trade liberalization regime. The paper is based on a Dynamic Intertemporal General Equilibrium model (DIGEM) called the Asia-Pacific G-Cubed Model. It is shown that the long run gains from a country's own liberalization tend to be large relative to the gains from other countries liberalizing although this varies across countries. It is also shown that there is a significant difference between the effects on GDP (production location) and the effects on consumption per capita of the alternative liberalization approaches across countries. The timing of liberalization is also shown to matter. With open capital markets the gains from credibly announced trade liberalization are realized before the reforms are put in place because there is a rise in global investment which raises the global capital stock. In addition there is a reallocation of capital via financial market adjustment. This paper also demonstrates that for some economies, there can be short run adjustment costs to trade liberalization because resources cannot be instantly reallocated across sectors in an economy. These adjustment costs from own liberalization can be reduced if more countries also liberalize. The nature of the dynamic adjustment suggests that other macroeconomic policies may play an important role during the early period of phased-in trade liberalization.