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The
Uruguay Round
Gains from Trade
In Discussion Paper 1067, Research Fellow Joseph Francois,
Bradley McDonald and Research Affiliate Håkan Nordström
model three aspects of the Uruguay Round (UR): the improved market
access for goods resulting from tariff reductions; the elimination of
GATT exemptions for quantitative restrictions on industrial products;
and the agreement on agriculture. The analysis is based on the final set
of UR market access offers and allows for imperfect competition. The
effects are examined in a set of simulation experiments. Given the
structure of the world economy in the 1990 benchmark data set, the
question is: what would the economy have looked like if the UR had been
in place?
Results show that the most important source of gains comes from the
elimination of quotas on industrial products. The second most important
source depends on the assumptions imposed in the model: agricultural
reforms provide up to 31% of income gains if constant returns to scale
are assumed, while industrial tariff cuts become relatively more
important when scale and specialisation economies are present. In terms
of income effects, the assessment is that had the market access
provisions been in place in 1990, global incomes may have been $291
billion higher. It is also estimated that by 2005, these provisions may
contribute $510 billion annually to global welfare in 1990 dollars. In
terms of trade and production patterns, developing countries are
expected to expand production and exports of clothing, textiles and
other manufactures, while developed countries will specialise in capital
and technology-intensive products. Moreover, countries well endowed with
arable land are expected to increase significantly their exports of
agricultural products.
The
Uruguay Round: A Global General Equilibrium Assessment
Joseph F Francois, Bradley McDonald and Håkan
Nordström
Discussion Paper No. 1067, November 1994 (IT)
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