Fernandez de Córdoba, Santiago Laird, Sam Vanzetti, David
Year of Publication:
CREDIT Research Paper 04/03
Negotiations on industrial tariffs in the current WTO have turned out to be surpisingly more difficult than expected. On the one hand, developing countries, particularly in Africa, are concerned about the effect on their industrial development of developed country efforts to push them into deep cuts in applied tariffs:after the disillusion of the Urguay Round, promises of welfare gains seem like buying one of Akerloff's lemons. On the other hand, a number of the more complex formula proposals for tariff-cutting make it difficult to evaluate the mercantilist equation: how does what one has to do measure up against what one might expect from others? The negotiations present an important opportunity to address the bias in protection against developing countries' exports. The developing countries are promised greater exports and welfare gains from the more ambitious proposals, but computations show that these also imply greater imports, lower tariff revenues, some labour market adjustments and reduced output, threatening key sectors in some developing regions. Preference losses, while moderate in the aggregate, seem quite significant in some cases. Some way of assisting the developing countries in coping with these adjustments would make the negotiations seem a little less like Trick or Treat? although proposals for Bank-Fund facilities to aleady indebted countries to meet new WTO obligations may not be the highest development priority.
WTO negotiations trade industrial tariffs development special and differential treatment CGE modelling