Working Paper: CEPR ID: DP1008
Authors: Jan I. Haaland; Truls Cook Tollefsen
Abstract: Using a numerical general equilibrium model we examine the possible production, trade and welfare effects of successful implementation of the Uruguay Round results. The model includes trade in manufactures and (some) services among industrial regions and countries; there is imperfect competition in most markets in the model, and we account for reductions in both tariffs and non-tariff barriers (NTBs). Our results indicate that the welfare effects of the liberalization we consider (i.e. ignoring both agriculture and trade with developing countries) may be fairly limited. Compared with a scenario of GATT failure and global protectionism, on the other hand, the gains are significant, and we conclude that the Uruguay Round plays an important role in avoiding a trade war in manufactures. We also show that the dynamic effects through endogenous investment growth might be just as important as the static effects reported.
Keywords: GATT; liberalization; regionalization; trade policy
JEL Codes: 058; F12; F13; F15; F17
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| reductions in NTBs (F13) | increased trade volumes (F19) |
| increased trade volumes (F19) | greater long-term welfare (D69) |
| trade liberalization (F13) | modest overall welfare gains (D69) |
| endogenous investment growth following liberalization (O16) | amplify initial welfare gains (D69) |
| trade liberalization (F13) | prevent trade war scenario (F13) |
| Uruguay Round (F13) | stabilize trade relations (F13) |