DP1008 The Uruguay Round and Trade in Manufactures and Services. General Equilibrium Simulations of Production, Trade and Welfare Effects of Liberalization

Author(s): Jan I. Haaland
Publication Date: July 1994
Keyword(s): GATT, Liberalization, Regionalization, Trade Policy
JEL(s): D58, F12, F13, F15, F17
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1008

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.