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Foreign import restrictions, WTO commitments, and welfare effects: The case of Republic of Korea

This paper examines foreign import restrictions on Republic of Korea's exportsand its two policy responses: a domestic response in trade policy, investment policy, andforeign exchange regime; and an external policy response in the form of WTO commitments.The paper also analyzes the welfare effects of trade liberalization under WTO Agreementsbased on two alternative tariff reduction scenarios using a computable general equilibriummodel. The simulation results indicate that WTO is expected to create annual gains ofUS$38 to 50 billion globally, with Korea expected to gain relatively the most from the globalimplementation of the commitments by WTO member countries, earning $3.3 to 3. 7 billion.Therefore, Korea's policy response to increasing protectionism abroad in the form of a fullcommitment to WTO Agreements is fully warranted.

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