A Simulation Model of World Production and Trade with Bilateral Trade and Commercial Policies and Application to the Tokyo Round (Tariffs).

The purpose of this study is to construct a simulation model of world production and trade in which imports are disaggregated by place of production. The model is then applied to the study of the trade, production, price and other effects of the tariff and quantifiable non-tariff barrier reductions negotiated in the Tokyo Round under the auspices of the GATT. There are two types of special arrangements which can be studied using a trade model in which imports are disaggregated of country of origin. The first is trade which is duty-free or trade in which special tariff concessions are granted to select partners. A second type is one in which non-tariff barriers are bilateral or otherwise exclusive. Imports are disaggregated in the manner suggested by Armington. Both consumers and producers are assumed to use a two stage budgeting procedure for choosing the quantity dem and ed of each good produced by each country. In the first stage expenditure is allocated among goods regardless of the country in which the good was produced. In the second stage, expenditure on each good is allocated among competing national suppliers. In addition to the tariff reductions, bilateral concessions in agricultural products were negotiated. The bilateral quota facility in the model consists of an endogenously determined tariff which binds dem and to the quota level. To model the negotiated codes regulating non-defense government procurement, dem and for the domestically produced good is reduced and dem and for imports is increased until the propensity to import non-defense purchases by the government is identical to the propensity to import similar products by the private sector. In order to improve the quality of the simulation several other non-tariff barriers have been introduced in the model and constrain the results obtained. These non-tariff barriers are modeled as either a quota or target price.PhDEconomicsUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/160274/1/8502774.pd