of new rules.<sup>68</sup> Eight different negotiating rounds were initiated and concluded between 1947 and 1994.

For a number of reasons, very little is known about the exact levels of import tariffs that countries applied in 1947, immediately prior to the first set of GATT tariff-cutting negotiations. Bown and Irwin (2015) suggest that the average applied import tariff in 1947 was likely around 22 percent for the United States, Japan, and the major countries of Western Europe.<sup>69</sup> While the exact starting point for tariff negotiations may not be known, there is a consensus on the evolution of average applied imports tariffs for these major economies over the subsequent decades. Overall, Figure 12 presents the path of average tariffs for these major countries between 1947, beginning at roughly 22 percent, and 1999, by which time most of the GATT’s Uruguay Round tariff reduction commitments had been phased in, at roughly 3 percent.

However, the remainder of this section showcases a number of ways by which this headline result, of a broad downward trend in average tariffs for the major economies, is nevertheless incomplete. First, this figure reveals nothing about the applied tariffs for countries other than the US, Japan, and Western Europe, most of which have quite different end points (see again Table 1) as well as tariff liberalization experiences getting there.<sup>70</sup> Second, even for the major economies, the average tariff fails to capture what was happening with other border barriers during this period.

# **4.2 Changing tariff rates under the GATT**

Two distinct legal provisions in the original GATT permitted countries to increase their tariffs after negotiations with key trading partners. The first was for permanent changes to the tariff (Article XXVIII), and thus was a renegotiation of binding commitments. The other allowed a temporary increase to the tariff (Article XIX) in light of unforeseen, but temporary, events. One common feature of both is that tariff-changing countries were required to provide _compensation_

> 68Bagwell, Staiger and Yurukoglu (2015), for example, present a micro-level empirical bargaining investigation of the negotiations that took place during the GATT’s (third) set of negotiations, referred to as the ‘Torquay Round’ of 1950-1951.

69A separate issue is the extent to which applied import tariffs were even the major policy constraint on trade flows at the time; e.g., Curzon (1965, 80-81) points out that quotas and foreign exchange controls were major impediments to trade for many countries during this era. Nevertheless, Bown and Irwin (2015) suggest a number of reasons why even calculating average tariffs for 1947 is difficult. First, there was a lack of transparency across countries about their applied tariff policies; i.e., data unavailability. Second, even if data were available, there was no common tariff classification scheme across countries, making it potentially difficult to make meaningful cross-country comparisons of simple average tariffs. Third, alternative measures of trade-weighted average tariffs, while readily calculable from available data, suffer from potentially severe biases associated with high tariffs leading to low import volumes and thus under-weighting. Fourth, the frequency of tariffs being applied as specific duties is known to have been a major measurement issue for United States tariffs during the period (e.g., Irwin 1998a,b; Crucini 1994); and while the prevalence of specific tariff use for other countries during this period is unknown, it is expected to potentially also play a major complicating role. Note that Ossa (2014) adopts a distinct approach that relies on quantitative modeling techniques to construct counterfactual estimates for the size of Nash (noncooperative) tariffs in a model featuring seven regions (including the US, EU, Japan, China, India, Brazil, and rest of the world). He computes the median tariff to be 58.1 percent, which is somewhat higher than estimates of the pre-GATT levels of average applied tariffs described above.

> 70The WTO (2007) provides an important survey of the first sixty years of the GATT/WTO system and includes additional, country-specific descriptions of tariff data over the decades for a number of countries not covered in depth here, such as Brazil, India, Senegal, Nigeria, Argentina and Korea (pp. 211-219).

39