Nontariff Measures and Developing Countries: Has the Uruguay Round Leveled, the Playing Field?

Abstract

In the policy environment prevailing before implementation of the Uruguay Round results, exports from developing countries face significant nontariff measures in industrial countries. Based on 1992 trade flows, the import coverage ratio of nontariff measures on this trade was more than 18 percent, compared with less than 11 percent for trade among industrial countries. Trade liberalization measures agreed to in the Uruguay Round will dramatically reduce the incidence of nontariff measures on developing country exports: the coverage ratio will drop to less than 4 percent on nonoil exports. This change has the dual effect of increasing export market opportunities for developing countries and of substantially reducing - if not eradicating - the relatively negative bias against developing country exports. These impressive results from the Uruguay Round are attributed to"tariffication"in agriculture, the abolition of the Multi-Fibre Arrangement (MFA), and the elimination of voluntary export restraints (VERs) under the safeguards agreement. But all these aspects of liberalization will not happen instantaneously when the Uruguay Round results come into force. Agricultural tariffication will occur immediately, but the MFA will be phased out over ten years and VERs will be eliminated over four years. Considering the extent of the liberalization presaged by these policy changes, the authors speculate about likely sources of pressure for measures to mitigate the effects of removing nontariff measures. They conclude that the greatest risks will probably come from safeguards and antidumping. The new safeguards agreement permits the use of quantitative restrictions to stem the flow of injurious imports, and although the agreement tightens existing GATT rules in some respects, it loosens them in others. The antidumping instrument has been used with increasing frequency by an increasing number of countries in the past two decades or more. The efforts of several governments in the Uruguay Round to impose additional controls on antidumping met with little success, and antidumping continues to offer considerable scope for imposing protectionist trade measures.