ISSUES IN WORLD TRADE POLICY

ISSUES IN WORLD TRADE POLICY

Also by R. H. Snape INTERNATIONAL TRADE AND THE AUSTRALIAN ECONOMY STUDIES IN INTERNATIONAL ECONOMICS (editor with I. A. McDougall)

Issues in World Trade Policy GATT at the Crossroads Papers presented at a conference of the Centre of Policy Studies, Monash University, Australia Edited by R. H. Snape Department of Economics and Centre of Policy Studies Monash University Palgrave Macmillan

ISBN 978-1-349-08638-2 ISBN 978-1-349-08636-8 (ebook) DOI 10.1007/978-1-349-08636-8 Centre of Policy Studies, Monash University, Australia, 1986 Softcover reprint of the hardcover 1st edition 1986 978-0-333-41336-4 All rights reserved. For information, write: Scholarly & Reference Division, St. Martin's Press, Inc., 175 Fifth Avenue, New York, NY 10010 First published in the United States of America in 1986 ISBN 978-0-312-43724-4 Library of Congress Cataloging-in-Publication Data Main entry under title: Issues in world trade policy. Papers presented at the Conference on International Trade Problems and Policies, organized by the Centre of Policy Studies, Monash University, and held on Feb. 13-14, 1984. Includes index. I. Commercial policy-congresses. 2. Contracting Parties to the General Agreement on Tariffs and Trade Congresses. 1. Snape, Richard H. II. Conference on International Trade Problems and Policies (1984: Monash University) III. Monash University. Centre of Policy Studies. HFI41O.5.177 1986 382.9'2 85-27812 ISBN 978-0-312-43724-4

Contents Editor's Note List of the Contributors PART I Introduction R. H. Snape INTRODUCTION PART II DECLINE OF THE GATT SYSTEM 2 The Decay of the Trade Relations System Rodney de C. Grey Comment Fred H. Gruen 3 Should Unconditional MFN Be Revived, Retired or Recast? Gary C. Hufbauer Comment John McDonnell Vll viii 3 17 30 32 55 PART III INDUSTRIES OUTSIDE GENERAL GATT RULES 4 Market Disturbances and the Multifibre Arrangement 61 Gary P. Sampson Comment 88 Graeme A. Thomson 5 International Effects of Agricultural Policies Kym Anderson and Rodney Tyers Comment George Fane PART IV WHAT INSTRUMENTS FOR ASSISTANCE? 6 Policies Towards Market Disturbance W. Max Cor den 93 115 121 v

VI Contents 7 Free Trade Zones and Their Relation to GATT 140 Herbert G. Grube/ 8 The Choice of Instrument for Industry Protection 152 Peter J. Lloyd and Rodney E. Falvey Comment 171 Dietrich Fausten 9 Protection Through Government Procurement 175 Peter G. Warr and Brian R. Parmenter PARTY POLITICS, ECONOMICS, LAW 10 The Interplay of Law and Economics in International Trade Regulation 193 Andrew Farran Comment 218 Colin Phegan II The Political Economy of Protection in Eleven Industrial Countries 222 Helen Hughes 12 Why Have US Tariffs Fallen Since 1930? 238 J. J. Pincus Comment 254 Rodney E. Falvey 13 Ideas Count, Words Inform 257 J. Michael Finger PART VI SUMMARY 14 Summary 283 Anne 0. Krueger Index 291

Editor's Note The contributions to this volume were presented at a Conference on International Trade Problems and Policies, organised by the Centre of Policy Studies at Monash University, on 13-14 February, 1984. Apart from my obvious gratitude to participants, and particularly to the authors of papers, I wish to record my indebtedness to members of the Centre of Policy Studies - particularly Gary Sampson for general advice, encouragement and guidance, Michael Porter, Graeme Woodbridge, Geoff Hogbin, Jacqui Borland and John Cook - to my secretary Mrs A. MacLeod, research assistant Mrs Grazyna Wojciechowicz, and to Jamie Johnson, who compiled the index. Gratitude extends also to the Reserve Bank of Australia which made a very generous financial contribution to the conference, and thereby enabled some of the non-australian participants to attend. R. H. SNAPE vii

List of the Contributors Kym Anderson Senior Lecturer in Economics, University of Adelaide W. Max Corden Professor of Economics, Research School of Pacific Studies, Australian National University Rodney E. Falvey Research Fellow, Research School of Pacific Studies, Australian National University George Fane Senior Lecturer, Faculty of Economics, Australian National University Andrew Farran Special Lecturer in International Law and Organisation, Monash University, and Managing Director, Australia Pacific Consultants Dietrich Fausten Senior Lecturer, Department of Economics, Monash University J. Michael Finger Chief, International Economic Research Division, World Bank, Washington, DC Rodney de C. Grey Senior Partner, Grey, Clark, Shih and Associates; leader of the Canadian Delegation at the 'Tokyo Round' of Trade Negotiations, 1975-9 Herbert G. Grubel Canada Professor of Economics, Simon Fraser University, Fred H. Gruen Professor of Economics, Research School of Social Sciences, Australian National University Gary C. Hofbauer Senior Fellow, Institute for International Economics, Washington, DC Vlll

List of the Contributors IX Helen Hughes Professor of Development Economics, Research School of Pacific Studies, Australian National University; formerly Director, Economic Analysis and Projections Department, World Bank, Washington, DC Anne 0. Krueger Vice-President, Economics and Research, World Bank, Washington, DC; Professor of Economics, University of Minnesota (on leave) Peter J. Lloyd Professor of Economics, University of Melbourne John McDonnell Assistant Secretary, Department of Trade, Canberra Brian R. Parmenter Deputy Director, Institute for Applied Economic and Social Research, University of Melbourne; formerly Senior Lecturer in Economics, LaTrobe University, Australia Colin Phegan Professor of Law, University of Sydney, and Commissioner, New South Wales Law Reform Commission J. J. Pincus Fellow, Australian National University, and Visiting Professorial Fellow, Centre of Policy Studies, Monash University Gary P. Sampson Reserve Bank Senior Fellow, Centre of Policy Studies, Monash University, and Chief, Data and Policy Analysis Section, Manufactures Division, UNCT AD, Geneva R. H. Snape Professor of Economics, Monash University Graeme A. Thomson Principal Advisor, Department of Trade, Canberra Rodney Tyers Research Fellow, Development Studies Centre, Australian National University Peter G. Warr Senior Fellow, Research School of Pacific Studies, Australian National University