Mfn Tariff Reductions and Developing Country Trade Benefits Under the Gsp

Pomfret contends that our I977 '....results are almost guaranteed by (our) model's assumptions and hence (our) results provide little objective support for such policy advice '.1 We disagree with this conclusion and still contend that the use of our model and the resulting policy conclusions are valid. In our model trade creation (TC) and trade diversion (TD) can be specified in terms of cross-price elasticities as follows:2