Trick or treat ? : development opportunities and challenges in the WTO negotiations on industrial tariffs

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