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plicit reduction of the cross-price elasticity of imports vis-à-vis domestically produced goods. In turn, this means that price competition from imports is lower than it otherwise would be. NTMs that reduce the elasticity of imports thus not only convey protection to domestic producers from imports, they create increased monopolistic pricing power domestically, with implications for domestic policy. For example, in response to trade liberalization, governments appear to have been willing to see greater domestic industrial consolidation in the belief this would promote export competitiveness, implicitly counting on competition in the domestic market being provided by trade. But if proliferating NTMs reduce the competition flowing from trade, we get the worst of all worlds which are limited domestic competition and ineffective trade competition. This is perhaps one of the factors prompting civil society response to globalization which targets growing corporate power.

The third issue is that the gains from trade liberalization derive from the responsiveness of imports to changes in relative prices through tariff reductions, a dampened price response will lead to disappointing results from trade liberalization compared to expectations which are calibrated according to assumed stronger responses.

4.2 Consequence of UNCTAD and WTO decisions on NTMs

It is inevitable that there is a certain arbitrariness in such a classification. For example, most measures, including technical barriers, have price and quantity effects. A glossary of individual non-tariff measures, derived from Laird and Yeats (1990), and based on the above five broad categories of NTMs. OECD (1994), dealing only with agriculture, lists some 150 measures or bodies administering country-specific schemes. In the UNCTAD classification these would fall within the more limited, but more general, list of individual measures, since many are simply national descriptions for a widely used basic measure.

Typically, the objectives or motives for using NTMs range from the long-term desire to promote certain social and economic objectives, including broad economic, industrial or regional development, to shorter term purposes such as balance of payments (BOP) support or action to protect a specific sector from import surges or from dumped or subsidized imports. Price or volume control measures or subsidies have been used

In any type of liberalization simulation, it may be important to look realistically at the likelihood of such measures being removed. It is unlikely that Governments will remove permanent controls on technical barriers to trade or on trade in arms, drugs, pornography and so forth, although technical barriers may become more harmonized. However, support for industrial development can be achieved in more open economies supported by improved macroeconomic management and realistic exchange rates. Furthermore, Governments seem attached to support for specific sectors (sometimes in key political constituencies) by means of hidden subsidies through government procurement and technology development (e.g. aircraft), but so far international disciplines on the use of such measures remain relatively weak. As a consequence, even after the Uruguay Round, there are still important peaks in sectoral protection in most countries, sometimes in the same sector, for example textiles and clothing.

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