Trade Reform in the Partially Liberalized Economy of Turkey

Recent reforms in trade policy in Turkey have produced a foreign trade regime that exhibits very little antiexport bias on average. A quantitative, multisectoral general equilibrium model of the Turkish economy shows that piecemeal trade policy reform, based on first-best rationales that are appropriate for highly distorted economies, would not now be appropriate. Further tariff reductions must be coordinated with export subsidy reductions to attain significant welfare benefits. The dispersion of distortions, especially export subsidies, is more important than their level. A policy of harmonizing tariffs to the common external tariff of the European Community has virtually no effect on welfare.