Most IMF borrower countries have reduced important barriers to trade over the past decade. Although progress has varied among countries and over time, generally tariff and nontariff barriers have fallen. Despite this progress, many policies remain that restrict free and open trade, and some IMF borrowers still maintain very high restraints. However, borrowers’ restrictiveness levels are similar to those of nonborrowers, and about two- thirds are WTO members. Only a few of the 98 IMF borrowers trade enough to have much ability to significantly affect any individual sectors of the U.S. economy. We analyzed the import barriers of IMF borrower countries using several available measures of restrictiveness, including average tariff rates;nontariff barriers; and indexes constructed by the IMF, the Heritage Foundation, and the Fraser Institute. Although these indicators do not comprehensively measure all the policies that countries may use to restrict trade, they do reflect important barriers and provide information on the relative restrictiveness of countries among one another and over time. Overall, we found that these measures demonstrated growing trade liberalization. The IMF conducted a study of 27 countries’ trade policies during 1990-96, using its own restrictiveness measures. The study found that during this period the number of countries labeled “restrictive” fell from 63 to 41 percent, while the number of “open” countries rose from 11 to 33 percent. Taking the same 27 countries and reviewing their progress through 1998, we found that the number of restrictive countries further fell to 7 percent, and the number of open countries rose to 48 percent. Other indicators also confirmed this liberalization trend across the full group of 98 IMF borrowers. Despite the progress made in reducing trade barriers, many restraints remain that inhibit imports into IMF borrower countries. According to the IMF’s measure, about one-half of the 98 current borrowers maintain moderate (38 percent of borrowers) or restrictive (14 percent of borrowers) barriers. The Heritage Foundation and Fraser Institute indicators also show a range of restrictiveness, although the Heritage Foundation’s measure reported less openness than either the IMF or Fraser Institute indicator, placing over one-half of borrowers in its most restrictive groupings. The tariff data we reviewed showed that average tariffs for borrowers ranged from as low as 0.1 percent to over 40 percent, but the majority fell between 7 percent and 24 percent. In comparison, the United States, the EU, and Japan maintain average tariffs of approximately 3 to 7 percent. Thirty of the 98 borrowers are listed in a March 1999 U.S. government report that identifies the most significant foreign trade barriers that affect U.S. exports. Most of the 30 countries listed were cited for having inadequate intellectual property protection or for maintaining restrictive import policies, such as setting investment barriers and creating barriers to foreign participation in government procurement. Our analysis shows that the 98 current IMF borrowers restrict trade to about the same extent as the 78 IMF member countries that do not owe funds to the IMF. As figure 1 shows, the IMF trade measure rates 48 percent of borrowers as open, compared with 53 percent of nonborrowers; 38 percent as moderate, compared with 33 percent of nonborrowers; and 14 percent as restrictive, compared with 14 percent of nonborrowers. Also, lesser economically developed borrowers and nonborrowers alike tended to have higher levels of restrictiveness. However, we did find that borrowers and nonborrowers tend to use different types of policies to restrict trade. Borrowers generally use higher tariff barriers, while nonborrowers tend to use higher nontariff barriers such as import quotas. Of the 98 IMF borrowers, about two-thirds are WTO members. WTO membership commits them to following WTO disciplines on their trade policies, providing some degree of market access, and complying with WTO dispute settlement procedures. Many IMF borrowers have also undertaken additional WTO liberalization commitments, as well as made commitments under bilateral agreements with the United States on investment and other matters. For example, 37 IMF borrowers have signed the WTO agreement on basic telecommunications services, and 51 have reached bilateral accords with the United States on such matters as investment and intellectual property. Despite greater integration into the world trading system and growing trade, many borrower countries have been involved in trade disputes with the United States. One-fifth (17) of the 98 borrowers have been subject to formal market access complaints under the WTO’s dispute settlement procedures. Only a few of the 98 IMF borrowers are large enough traders to significantly affect any particular sectors of the U.S. economy. Eight borrowers accounted for 21 percent of U.S. trade in 1998, while the other 90 borrowers accounted for 5 percent. As figure 2 shows, of these eight countries, Mexico traded the most with the United States in 1998, accounting for about 11 percent of U.S. trade; followed by Korea with 3 percent; Brazil with 2 percent; and the Philippines, Thailand, Venezuela, India, and Indonesia, with about 1 percent each. One of the other 90 borrowers could significantly affect U.S. companies or workers in certain product sectors, however, if it comprised a large share of U.S. trade of a particular product. For example, flat-rolled iron and nonalloy steel imports from Russia account for approximately 26 percent of U.S. imports of that product. The eight largest U.S. trade partners generally maintain moderate barriers to trade. According to the tariff and other information we analyzed, most have average tariffs between 10 percent and 20 percent and are rated by various indicators as having significant nontariff barriers. For example, Thailand’s average tariff rate in 1998 was 18 percent, Brazil’s was 15 percent, and Indonesia’s was 10 percent. Exceptions include Korea, which in 1998 had an average tariff rate of 8 percent; and India, with a 23 percent average rate. Mexico’s average tariff rate is about 13 percent for all countries outside of the North American Free Trade Agreement (NAFTA), but its average tariff rate on U.S. products is about 2 percent due to NAFTA. All eight of these U.S. trade partners are members of the WTO, and most have bilateral trade agreements with the United States. We evaluated the import barriers and export policies of four of the eight IMF borrowers that accounted for 21 percent of U.S. trade in 1998: Brazil, Indonesia, Korea, and Thailand. These countries accounted for about 7 percent of U.S. trade in 1998. Financial crises in Brazil, Indonesia, Korea, and Thailand have substantially affected their trade with the United States, even as the U.S. government has remained concerned about various trade policies in the four countries. The four countries have experienced either rising trade surpluses or falling trade deficits with the United States since their financial crises began, due primarily to a large decline in U.S. exports to them. Even before their crises began, however, the U.S. government had been concerned about a number of these countries’ trade policies. Prior to the crises, much of the executive branch’s attention had been focused on import policies that affected U.S. exports to the four countries, especially in Korea. Import policies of concern in the four countries have included Korean barriers to imports and distribution of beef, automobiles, and distilled spirits, government procurement procedures in airport construction, and import clearance procedures; restrictions on automobile imports in Brazil and Thailand; and inadequate protection of intellectual property rights, especially in Indonesia. Export policies that the executive branch has been concerned about include Korean government support to its steel and semiconductor industries, and Indonesian government subsidies to its automobile industry. The United States continues to press these and other trade issues even as it places priority on restoring the overall health of crisis countries for their own and the U.S.’ benefit. Any analysis of import barriers and export policies in Brazil, Indonesia, Korea, and Thailand must acknowledge the effects those countries’ recent financial crises have had on their economies and trade. The crises that began in 1997 dramatically reduced incomes and demand for domestic as well as imported goods. The value of these nations’ currencies declined, with each of the countries’ currencies depreciating by 30-50 percent or more relative to the U.S. dollar in real (inflation-adjusted) terms. The depreciations reduced the purchasing power of local currencies, making it hard for these countries to buy U.S. exports. The depreciations also made the affected nation’s exports more competitive on world markets. World prices for key commodities fell, particularly for oil, agricultural goods, and electronic products. Outflows of foreign capital and domestic credit crunches reduced output and stalled commerce, with direct implications for trade accounts. Even without policy changes, such macroeconomic disturbances have a major influence on overall trade levels and balances. Since their crises erupted in 1997, Indonesia and Thailand have widened their trade surpluses with other countries, Korea’s trade balance went from a deficit to a surplus, and Brazil’s deficit has fallen. Most of the shift was caused by a decline in these nations’ imports from abroad, rather than by increases in their exports to other countries. Even though the volume of their exports rose at a double-digit rate, the dollar value of exports from these nations was actually lower in 1998 than it was in 1997 because dollar prices for many of their goods were falling dramatically. The United States, meanwhile, has seen a worsening of its trade deficit with all countries worldwide, not only in absolute terms but also relative to the size of its economy. From 1997 to 1998, the U.S. trade surplus with Brazil fell; for Korea, a U.S. surplus changed to a deficit; and for Indonesia and Thailand, U.S. deficits grew larger. According to a March 1999 USTR report, U.S. government trade policy in 1999 remains centered on assuring recovery in the nations in financial crisis.