Foreign Import Restrictions, WTO Commitments, and Welfare Effects: The Case of Republic of Korea
Abstract
This paper examines foreign import restrictions on Republic of Korea’s exports and its two policy responses: a domestic response in trade policy, investment policy, and foreign exchange regime; and an external policy response in the form of WTO commitments. The paper also analyzes the welfare effects of trade liberalization under WTO Agreements based on two alternative tariff reduction scenarios using a computable general equilibrium model. The simulation results indicate that WTO is expected to create annual gains of US$38 to 50 billion globally, with Korea expected to gain relatively the most from the global implementation of the commitments by WTO member countries, earning $3.3 to 3.7 billion. Therefore, Korea’s policy response to increasing protectionism abroad in the form of a full commitment to WTO Agreements is fully warranted.
Disclaimer: The Asian Development Bank (ADB) recognizes its members by their official designations as indicated in https://www.adb.org/who-we-are/about. By making Asian Development Review articles available in this online archive, ADB does not intend to make any judgments as to the legal or other status of any territory or area. The views expressed in this content are those of the authors and do not necessarily reflect those of ADB.
This paper is a condensed version of the paper presented at the Asian Development Bank Conference on Study of the Emerging Trading Environment and Developing Asia held on 29-30 August 1996 in Manila, Philippines. The authors wish to thank the participants in the conference, including M.G. Quibria and C. Rao and the three anonymous referees, for comments received.