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