The New GATT: Implications for the United States

By Susan M. Collins; Barry P. Bosworth | Go to book overview
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Economic Effects of Quota and Tariff Reductions

Alan V. Deardorff

The Uruguay Round is a remarkable and important achievement, not because it will change the world, but because it will permit the world to continue to change for the better for other reasons. The round itself, at least in its economic effects, may not make a big difference. Its effects on the world economy will be largely beneficial, but those effects that economists have been able to quantify are rather small, while the sizes of other effects are necessarily uncertain. If these effects, estimates of which I will survey in this paper, were the only reason for the Uruguay Round, then skeptics might be excused for doubting that it was worth the seven years of effort that produced it. Those who expect negative side effects on their particular pet portions of the world economy might be justified in resenting such costs in return for so little gain.

The importance of the Uruguay Round, however, lies instead in the many beneficial changes in the world economy that it will permit to continue. By preserving the momentum of trade liberalization that began almost fifty years ago under the GATT and by extending the liberal market principles of the GATT to many new sectors of the economy never touched before, the Uruguay Round permits the vast majority of the world's governments to reaffirm the importance of these principles and forces them to restrain somewhat their natural inclination to muck things up. The Uruguay Round, like the GATT, which preceded it, is hardly perfect. But the overwhelming message of the round is that self-destructive

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My thanks to Drusilla Brown, Bernard Hoekman, John Jackson, and Bob Stern for their helpful comments and conversations on the topic of this paper and to my discussants, Thea Lea and Bob Lawrence, and to other participants at the Brookings meeting. Partial financial support was provided by the Ford Foundation.

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