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GTAP Resource #1123

"Multilateral Trade Liberalization: Scenarios for the New Round and Assessment"
by Fontagné, Lionel, Jean-Louis Guérin and Sebastien Jean

Doha's WTO Ministerial Conference marked the launch of a new round of multilateral trade negotiations. Their results are impossible to forecast, but the subjects to be discussed have been broadly defined, and a built-in agenda has been set up. The aim of this paper is to build a set of possible scenarios for negotiations' outcome, to evaluate accurately their significance in terms of effective protection (on the basis of the most detailed information, as provided by MAcMaps), and finally to assess their impact on world economies with Mirage, a CGE model conceived to study trade policies. Incidentally, we aim at providing to the GTAP network a standard set of scenarios, in GTAP nomenclature, as a follow-up to this contribution to the conference.

The definition of the relevant scenarios requires first to identify the main areas to be discussed (such as agriculture, textile, environment goods, anti-dumping, least developed countries, etc.). For each of these areas, a set of negotiations' possible outcomes is defined. The corresponding hypotheses may concern ad valorem tariffs, specific duties, prohibitions, tariff quotas, tariff peaks and anti-dumping duties, at the most detailed level of existing information (Harmonized System, 10, 8 or 6 digits). Such detail level authorizes to identify products lines on which negotiations will held: for instance, a detailed list of environment-friendly goods defined at the 6 digits level will be mobilized. A broad notion of timing may also be introduced in the liberalization’s hypotheses.

Using the MAcMaps system (Market Access Maps developed by ITC and CEPII on the basis of UNCTAD-TRAINS, AMAD, UNSD-COMTRADE and WTO notifications), the liberalization hypotheses are translated in terms of protection variations, using tariff equivalents for each of these instruments, on a bilateral basis for 137 countries and 220 suppliers. By so doing, we are able to take accurately into account the very complex initial protection patterns, and their possible evolutions by product in terms of instruments as well as of geographic coverage.

To give this information a synthetic and usable form, we then aggregate the data in the GTAP 5 sectoral classification, gathering countries into a limited number of geographic areas. The aggregation procedure defined in MAcMaps minimizes the traditional endogeneity bias by relying on imports of reference groups. The possible outcomes thus defined for each main area are then combined in a coherent way to build a set of plausible scenarios for the new round of multilateral trade negotiations.

The impact of these scenarios are then assessed using Mirage, a dynamic AGE model incorporating imperfect competition, foreign direct investment and immobility of installed capital. The sequential dynamic structure of the model enables the liberalization’s timing to be taken into account. With the exception of protection data, for which MAcMaps is used as a source, as described above, the model is calibrated using the GTAP 5 database.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
2002 Conference Paper
Status: Published
By/In: Presented at the 5th Annual Conference on Global Economic Analysis, Taipei, Taiwan
Date: 2002
Created: Bacou, M. (6/20/2002)
Updated: Hertel, T. (1/16/2003)
Visits: 2,270
No keywords have been specified.

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