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Second-Best Linkages and the Gains from Global Reform of Manufactures Trade

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  • Hertel, Thomas W
  • Martin, Will

Abstract

The Uruguay Round's built-in agenda for future WTO negotiations omitted further liberalization in manufactures, yet this paper shows that there are large potential gains to be had from such tariff cuts, especially in the developing countries. In order to fully estimate the benefits of adding industrial products to a future multilateral trade round, we need to take into account the levels of protection in other sectors--most notably agriculture and services--in which many trade flows are highly distorted. This paper examines the nature of the second-best linkages among sectors using a balance-of-trade function approach. The importance of these linkages is evaluated using a numerical general equilibrium model. It is found that, in most cases, the second-best spillovers do not greatly affect the results, implying that the estimated gains from manufacturing reforms will be largely independent of their sequencing. However, in a few regions, most notably the EU, the second-best effects play a significant role. Copyright 2001 by Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 9 (2001)
Issue (Month): 2 (May)
Pages: 215-32

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Handle: RePEc:bla:reviec:v:9:y:2001:i:2:p:215-32

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Cited by:
  1. Conforti, Piero & Velazquez, Beatriz E., 2004. "The Effects of Alternative Proposals for Agricultural Export Subsidies in the Current WTO Round," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, Estey Centre for Law and Economics in International Trade, vol. 5(1).
  2. Conforti, Piero & Velazquez, Beatriz E., 2003. "The Effects Of Alternative Proposals On Export Subsidies To Agricultural Products In The Current Wto Round," Working Papers, National Institute of Agricultural Economics, Italy INEA, Osservatorio Sulle Politiche Agricole dell'UE 14801, National Institute of Agricultural Economics, Italy INEA, Osservatorio Sulle Politiche Agricole dell'UE.
  3. Antimiani, Alessandro & Conforti, Piero & Salvatici, Luca, 2005. "Alternative Market Access Scenarios in the Agricultural Trade Negotiations of the Doha Round," Working Papers, TRADEAG - Agricultural Trade Agreements 18878, TRADEAG - Agricultural Trade Agreements.
  4. Manole, Vlad & Martin, Will & Francois, Joseph, 2005. "Choosing formulas for market access negotiation : efficiency and market access considerations," Policy Research Working Paper Series 3474, The World Bank.
  5. Domingues, Edson P. & Haddad, Eduardo A. & Hewings, Geoffrey, 2008. "Sensitivity analysis in applied general equilibrium models: An empirical assessment for MERCOSUR free trade areas agreements," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 48(2), pages 287-306, May.
  6. Antimiani, Alessandro & Finizia, A. & Henke, Roberto & Manfredi, G. & Merciai, S., 2008. "The impact of the reform of the milk quota regime on the Italian dairy sector," 2008 International Congress, August 26-29, 2008, Ghent, Belgium, European Association of Agricultural Economists 43658, European Association of Agricultural Economists.

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