The Uruguay Round and South Asia: An Overview of the Impact and Opportunities

The author examines the impact of the Uruguay Round on four South Asian countries with similar trade structures: Bangladesh, India, Pakistan, and Sri Lanka. These countries are major exporters of textiles and clothing and some agriculture. Their manufacturing sectors - especially textiles and clothing - would seem to be the main beneficiaries of the Round. The impact on agriculture should be modest. The Round improves market security for both exporters and importers, but these countries must do much more to adjust their domestic policies to the realities of the post-Round global environment. There must be further liberalization and more integration with both the region and the world. The trade regimes of the four countries are a mixed bag. All have launched major trade reform away from an inward orientation. They have liberalized trade by removing quantitative restrictions and reducing tariffs, but the degree of liberalization varies. India has done a lot to open up its economy but has not moved forcefully enough to remove restrictions on most imports of consumer goods. Pakistan retains heavy restrictions on many imports but is reducing tariff rates and their dispersion. Quantitative restrictions on imported inputs impede efficiency in Bangladesh textile and pharmaceutical industries. Sri Lanka's trade regime is the most liberal in the region, but anomalies still exist in incentives. Binding tariffs in the four countries must be greatly reduced before these countries can benefit from the Round's disciplines in agriculture. The dismantling of the Multifiber Agreement will increase South Asia's output of textiles by 17 percent, and their exports of textiles by 26 percent. Output on clothing will increase ninefold, and exports more than twentyfold. The region may also benefit from the more liberalized post-Round markets for semi-manufacturing exports. In general, negotiations about new issues - trade in services, trade-related aspects of intellectual property rights, and trade-related investment measures - will affect South Asia in different ways. The impact on the movement of labor, in which the region has a comparative advantage, seems to be more effective than in other areas. More disciplined rules to protect intellectual property rights and more transparency about investment and competition policies will benefit the region in the longer run.