In Discussion Paper No. 1533, Joseph Francois and Bradley McDonald provide a quantitative examination of initiatives for post-Uruguay Round liberalization in ‘traditional’ GATT/WTO market-access areas. They emphasize the need for further tariff liberalization in industrial and agricultural trade and for trade in information technologies, and also the need for an expanded Agreement on Government Procurement (AGP). They argue that, given the limited supply of ‘trade-negotiating capital’, there will, of necessity, be a trade-off between those scarce negotiating resources devoted to new issues, and those devoted to further progress in more traditional GATT/WTO market-access areas, although the potential benefits in both areas are substantial.

By using a computable model for the global economy, the authors estimate that an elimination of all remaining tariffs on information technology products would save roughly $72 billion in annual world income. Moreover, a 50% reduction in remaining industrial tariffs would yield approximately $270 billion in global income (welfare) gains per year in the long run. The authors argue also that a formula approach that offers simplicity and transparency should at least be considered for future industrial tariff liberalization. Lastly, they warn that progress towards these objectives can be inhibited by sectoral negotiations, and therefore recommend that integration of parallel initiatives to promote liberalization in different sets of market-access areas should be encouraged.

The Multilateral Trade Agenda: Uruguay Round Implementation and Beyond
Joseph F Francois and Bradley McDonald