How, and to what extent, does the WTO make a difference in terms of global economic welfare? This 900-page volume contains 31 previously published papers on various aspects of measuring the economic impact of WTO membership and negotiations. Together, these papers span the major empirical topics of trade liberalization from the late GATT period through the Doha Round, including price distortion measurement, the economic impact of the Uruguay Round, Trade-Related Aspects of Intellectual Property Rights (TRIPS), Doha Round measurement issues and (potential) global welfare estimates, trade facilitation, as well as GATT/WTO accession, and membership effects. Trade economists will recognize some of the important contributions to the literature included here, such as Bela Belassa's essay on effective protection, Andrew Rose's challenge to the notion that the WTO increases trade, and the well-known article by Kyle Bagwell and Robert Staiger on what WTO trade negotiators negotiate about. There are many other familiar names among the many contributors to this volume, including Dominique van der Mensbrugghe, Joseph Francois, Will Martin, Bernard Hoekman, J. Michael Finger, Thomas Rutherford, and the volume's editor, Kym Anderson. The influence of the World Bank's trade and research departments looms large in this volume: Approximately half of the articles either appeared originally in World Bank publications, received significant World Bank funding, or had World Bank economists as authors. Most of the remaining authors also have World Bank connections in their resumes. The field of empirical trade policy analysis, especially as it applies to multilateral liberalization, thus owes much of its recent output to the World Bank's interest in trade as a driver of development and global economic growth.

The volume's editor, Kym Anderson, formerly deputy director of economic research at the GATT and lead economist for trade policy at the World Bank, is Professor of Economics at the University of Adelaide and at the Australian National University. His 30-page introductory overview essay is valuable in its own right in surveying much of the empirical trade policy literature in recent years, which he then links to the more focused papers selected for this volume. He begins the essay, however, with an important caveat. Of the WTO's five major functions – establishing trade rules, negotiating trade liberalization, settling trade disputes, monitoring members' trade policies, and coordinating with other international economic institutions – only the negotiating function has been the subject of systematic empirical analysis of welfare effects. While the institutional contribution of WTO membership to trade expansion has received increasing attention in recent years (see below), the many subtle welfare contributions of WTO disciplines, economic incentives associated with dispute settlement cases, trade policy monitoring, and trade links with IMF and World Bank activities have yet to receive empirical welfare analysis. These broader institutional benefits are likely to be important in view of the fact that WTO membership is now close to universal, and most of the remaining non-members are waiting to join. There appears to be consensus among the members on the value of the WTO ‘system’, even when global trade liberalization and its measurable gains have stagnated during the Doha Round. The challenge to trade policy research raised indirectly by this volume is to find ways to model and measure the significant economic effects of WTO rules and incentives beyond the traditional boundaries of specific trade liberalization measures.

Even when trade and price data are available, and the measurement of market and welfare effects is relatively straightforward, calculating trade and welfare effects is a tricky business. The first section of the volume focuses on problems of the structure of protection in trade policy. Balassa's 1971 article on effective protection summarizes early developments in this field. Kym Anderson's 2010 article examines historical trends in agricultural price distortions, while Kee, Nicita, and Olarreaga address issues of constructing trade restrictiveness indices, and Warren and Findlay address the special problems of analyzing impediments to services trade.

The second section examines trade liberalization effects during the Tokyo and Uruguay Rounds, including a 1992 essay by Shoven and Whalley on developing global and general equilibrium trade models, as well as an early contribution by Francois, McDonald, and Nordström on the likely impact of the Uruguay Round on developing countries. In view of the heated debate that later arose over distributional effects of the Uruguay Round, it would have been interesting if the volume had included subsequent critical reviews and retrospective studies of the Uruguay Round welfare effects, such as Whalley (Reference Whalley2000) and Brown, Stern, and Deardorff (Reference Brown, Stern, Deardorff, Appleton and Plummer2005). Perceived welfare losses among developing countries from the Uruguay Round textiles, agricultural, and TRIPS agreements would, after all, affect the Doha Round that followed. The two articles on TRIPS by McCalman and by Chaudhui, Goldberg, and Jia do in fact point out the potentially negative net welfare effects of patent protection on developing countries, but their focus is on the empirical issues of patent harmonization and on a case study of pharmaceuticals rather than on the broader distributional impact of the Uruguay Round. As editor, Kym Anderson has thus made the choice to keep the articles focused on issues of modeling and measurement, leaving the debates over distributional impacts and post-round empirical assessments to other fora.

A large section of articles focuses on projected estimates of welfare effects of a completed Doha Round. Three of these articles focus on measurement issues. Van der Mensbrugghe notes that estimates are sensitive to the selection of the base year for comparison, since trade preferences changed after the Doha Round began, Uruguay Round reforms such as the elimination of textile quotas were backloaded, and the accession of China in 2001 had a strong impact on global trade. Francois and Martin provide an extensive overview of the problems of capturing the gains from trade in empirical studies, based on difficulties in measuring and aggregating barriers, incorporating productivity gains and factor supply, measuring the value of product improvements and variety, and including trade-related gains from foreign investment. Balistreri, Hillberry, and Rutherford apply a non-linear structural estimation procedure to address the problem of firm heterogeneity within domestic industries in calculating the benefits of trade-driven resource re-allocation. This approach leads to estimates of much greater gains from trade than in conventional trade models.

The second part of the Doha section addresses the challenges of structuring empirical assessments of various components of a complicated, unfinished round. Francois, van Meijil, and van Tongeren use a computable general equilibrium (CGE) model to estimate the potential effects of a single undertaking that includes agriculture, industrial tariffs, services, and trade facilitation. Given the wide range of possible negotiated outcomes during the course of the Doha Round, the authors acknowledge that welfare gains could be quite small or quite large, depending on the degree of liberalization, which in turn depends on the engagement of the parties in liberalizing their own markets. Anderson, Martin, and van der Mensbrugghe pick up on this theme, using the Global Trade Analysis Project (GTAP) database to focus on developing country interests in the Doha Round. Lowering their own agricultural tariffs and agreeing to significant trade facilitation reforms are the sources of largest welfare gains for those countries, in addition to providing the bargaining chips needed to extend their export market access.

Further refinements in analyzing trade reforms are found in Laborde, Martin, and van der Mensbrugge, who introduce new techniques to aggregate tariff changes for calculating real income effects; Anderson and Nelgen, who address the importance of defining the baseline counterfactual used for agricultural trade liberalization; and van der Mensbrugghe, who tackles the politically sensitive problem of estimating the value of trade preferences for developing countries. Winters, Walmsley, Wang, and Grynberg estimate the significant potential gains from mode 4 services trade liberalization, especially the temporary movement of low- and medium-skilled workers from developing to developed countries. Even though progress on this issue faces many political obstacles, calculating the gains from trade from the movement of temporary labor provides a useful marker for more research, and perhaps eventually serious negotiations. In general, despite the limitations and wide margins of error in these Doha Round studies, the benefit of projecting the welfare effects of an ongoing round is to alert the negotiators of what is at stake, where the largest potential gains are to be found, and what sort of ‘concessions’ countries need to offer in order to get a deal. This point alone justifies a compendium of research papers such as this volume.

The section on the broader impact of WTO membership on trade activity addresses a controversy in which empirical details and methodology play a central role. It begins with Andrew Rose's provocative 2004 article ‘Do We Really Know that the WTO Increases Trade?’ Using a gravity model to tease out the effect of GATT/WTO membership, his answer, in short, is that GATT/WTO has not increased trade. His study has led to a lively and continuing debate. Using the same data and other variants of the gravity model, other authors reach the opposite conclusion. Subramanian and Wei, for example, find differentiated effects based on the development status of GATT/WTO members, and conclude that trade expansion has been uneven, favoring developed countries and trade sectors that have liberalized the most. Tomz, Goldstein and Rivers also show a positive GATT/WTO impact on trade, based on an expanded definition of GATT participation and the additional use of country and trade dyad fixed effects. Rose, in a rejoinder, maintains, however, that these findings do not fully nullify his original results. Grant and Boys add to the debate by using an expanded agricultural trade data set and conclude that the GATT/WTO, contradicting Subramanian and Wei, has indeed increased agricultural trade, despite the lack of trade liberalizing measures in that sector. Is there any way to determine the ‘proper’ econometric specification for showing the impact of GATT/WTO membership on trade? The most recent contribution, by Chang and Lee, claims that parametric gravity models may be misspecified, largely because they incorrectly assume homogeneous trade effects for all GATT/WTO participants. The authors apply non-parametric methods, which yield results that show a strong and positive impact of membership on trade.

A related set of articles addresses the impact of WTO accession on domestic economic policy and performance, income distribution, and tariff levels. Drabek and Bacchetta, using mainly descriptive statistics and detailed institutional analysis, investigate the effects of WTO accession on policy reforms in East European transition economies. Rutherford and Tarr use a CGE model of the Russian economy to predict that WTO membership will improve income for most households, with foreign direct investment reforms and endogenous productivity effects playing a large role in the outcome. Ianchovichina and Martin examine the overall welfare effects of China's 2001 WTO accession, with empirical results that show how supporting domestic reforms, plus foreign investment, reinforce the gains from WTO membership. In China's case, the gains began even before WTO accession, as the country prepared to open its economy. In addition, the size and growth of China's economy, along with its export orientation, had significant – mostly positive – impacts on many other countries, with the exception of countries whose textile exports were displaced. Tang and Wei conduct a broader study of GATT/WTO accession based on the hypothesis that WTO accession standards act as an external ‘anchor’ that disciplines the country's economic policies. In support of this proposition, they present evidence showing that countries acceding to the WTO on more rigorous terms tended to have better post-accession economic performance. In addition, those that started with poorer governance rankings (using the World Bank governance indexes) tended to improve more as a result of accession. Bagwell and Staiger use data from WTO accessions since 1995 to show how the pattern of negotiated tariff cuts by new WTO members tends to support the terms-of-trade bargaining theory, in which countries can, through reciprocal tariff cuts, escape the ‘prisoner's dilemma’ of high mutual tariffs. The accession bargain in this regard is that the WTO applicant countries willingly reduce their tariffs to more efficient levels, receiving in exchange the benefits of MFN tariff treatment and other market access rules that have accumulated over several decades of GATT/WTO trade liberalization.

The final section contains two articles on trade facilitation, an important new trade issue that was first taken up as part of the Doha Round, but was the main subject of a separate negotiation concluded at the Bali Ministerial meeting in 2013. Hoekman and Nicita examine the special empirical problems associated with quantifying trade facilitation as a means for trade liberalization. They use a series of gravity model regressions, along with World Bank ‘Doing Business’ and Logistics Performance indices, to identify the importance of domestic trade and regulatory costs, which act as proxies for trade facilitation restrictions. Gains from reducing such costs, based on these results, are potentially greater than the gains from formal tariff and NTB reductions. Finger's contribution complements the first article by digging into the institutional details of trade facilitation negotiations, providing rosters of relevant trade cost and bureaucracy issues, processes of drawing up agreements, and a discussion of proposals on aid-for-trade financial assistance that will often be necessary for poorer countries to build the capacity needed to meet trade facilitation goals. Finger's emphasis on structuring aid-for-trade as part of an agreement effectively foresaw the principal issue in the subsequent negotiations in Bali.

This well-conceived volume will be of greatest interest to trade economists specializing in the welfare analysis of trade liberalization. Aside from providing modeling and bibliographic references for further applications in this field, many of the articles raise relevant concerns regarding the current limitations of data and methods in identifying the full value of trade liberalization and WTO membership. They can serve as the foundation for further refinements and extensions of the literature. For non-specialists, the book offers valuable insights into the ultimate welfare metrics of trade liberalization, which are often obscured in the fog of politics that surrounds trade negotiations. This volume is a valuable addition to the trade policy bookshelf.