following the promised tariffication of many nontariff agricultural trade barriers following the UR, but such is not the case. The reason is that governments agreed to allow countries to set their bound tariff at excessively high levels so long as they promised at least existing levels of imports to come in at low tariffs. That triggered the use of so-called tariff rate quotas (TRQs). TRQs add considerable complexity to modelling empirically even the domestic impacts of agricultural trade policies and their reform, let alone their trade effects. Again, they are better handled in the new Version 6 GTAP database.

Fourth, an additional complication for modelling agriculture is that many countries impose quarantine restrictions and even bans on imports of farm products. Hence even if the bound rates and TRQs had been correctly modelled, the results may still overstate what would actually happen following tariff cuts and TRQ expansions if those quarantine restrictions begin to bite. It will be a long time before we have a comprehensive usable data base showing the extent of protection afforded by these and other technical barriers to trade, even though such barriers may be even larger than that due to the bound tariff on numerous farm products. This problem will escalate as and when food safety process standards (e.g., for GMOs) become more widespread, since the concept of ‘like product’ will come under challenge. Similar protective effects result from technical barriers to trade on non-farm products (Baldwin 2001). The Uruguay Round’s Sanitary and Phytosanitary Agreement and Technical Barriers to Trade Agreement have only gone a small way towards disciplining the abuse of these forms of trade protection.

Fifth, safeguards may be applied under certain circumstances such as import surges. That may well be how the US and/or EU respond when the present voluntary export restraints on textile and clothing trade are removed under the UR Agreement on Textiles and Clothing at the end of 2004 (or a few years later for China and possibly other WTO accedants such as Vietnam). That possibility has to be kept in mind when modelling manufacturing liberalizations.

Sixth, most models have ignored or at best captured only very crudely the distortions to services trade and investment flows. Those barriers are considerable, but are difficult to measure and represent in standard CGE models (see Hoekman 1996; Findlay and Warren 2000; Dee et al. 2000; Stern 2002; Whalley 2003; Winters et al. 2003). Yet when those distortions are not included, there is the same problem with interpreting the welfare effects of goods trade reform generated by a CGE model as there is from a partial equilibrium model of a subset of markets in the presence of distortions in other markets of that economy. That is, if services distortions greatly exceed goods protection then decreasing the latter could worsen national economic welfare even though a CGE model which specifies zero distortions for services markets will suggest a welfare gain from a goods protection cut. The only solution to this problem is to continue to build on the pioneering work reported in Findlay and Warren (2000) on measuring the extent of distortions to markets for services and that of Jensen, Rutherford and Tarr (2004) and others in incorporating those measures into CGE models.

Seventh, most modellers assume the counterfactual is the status quo, when in fact it could be rising protectionism. In the latter case, traditional measures of the gains from reform will underestimate the benefits that could flow. To suggest the most likely alternative path requires a fuller understanding of the political economy forces at work that analysts normally have, however.

Finally, modellers also often fail to compare the adjustment required because of policy reform with that required per year in the course of normal structural changes that accompany economic growth. Such a comparison typically reveals that trade reform causes full implementation of Uruguay Round commitments, would come from agriculture. New results using Version 6 suggest a slightly lower but still massive share (Hertel and Keeney 2005).

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