What Can The Developing Countries Infer From The Uruguay Round Models For The Millennium Round Positions?

Abstract:

This paper discusses the results from general equilibrium trade models executed towards the end of the Uruguay Round, reporting both aggregate and regional gains. These results were generated some 5 years ago, and were important to the debates at the end of the Uruguay Round as to what would be the foregone gains were the Round not to conclude. The paper argues that there are substantial, and at times hard to explain inconsistencies across model results. One model shows most of the gains come from agricultural liberalization, another from textiles, and yet another from tariff cuts. One model shows developing countries account for around 10% of the total gain, another shows them to gain over 50%. One model shows developing countries losing from elimination of the MFA, another shows them as large gainers. One model shows that imperfectly competitive and scale economy effects double global gains, another shows almost no impact. These differences occur even where similar data sets, and benchmark years are used, and are hard to explain on the basis of parametric specifications for models seemingly used though these are frequently poorly exposited. The paper also discusses the verification of models relative to behaviour since the Round concluded, expressing skepticism as to its feasibility for reasons set out in the paper. It also attempts to discuss what, if any, are the implications for the developing countries, and the possible ways forward in making these models more useable in the Millennium Round.

Keywords: Trade, Uruguay Round, General Equilibrium.

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