Review of Middle East Economics and Finance Vol. 3, No. 1, 21–38, April 2005 The Tax Structure and Trade Liberalization of the Middle East and North Africa Region MEHMET SERKAN TOSUN West Virginia University, Morgantown, USA ABSTRACT There has been an unprecedented trade liberalization which started in the mid- 1980s in a wide spectrum of developing countries. In the same period, there have also been considerable changes in the tax structures of countries. This paper uses panel data on 65 countries, including 16 Middle East and North Africa (MENA) countries, for the period 1980–1997 to examine how tax structures responded to trade liberalization. It is found that, unlike other non-OECD countries, the MENA countries did not increase their reliance on domestic consumption taxes in response to trade liberalization. Trade liberalization did not seem to have a strong impact on major revenue sources of the MENA countries. KEY WORDS: Trade liberalization, tax structures, MENA countries JEL CLASSIFICATIONS: E62, H20, H71, H87 Introduction There has been widespread international trade and investment liberalization in developing countries throughout the 1980s and 1990s. There are two major events that led to significantly lower use of international trade taxes. The first was the Tokyo Round, completed in 1979, in which 99 participating countries agreed to a substantial reduction in tariff rates by 1986. Another important aspect of the Tokyo Round was that developing countries took part in the tariff reductions for the first time. The second major event was the Uruguay Round of trade talks, which started in 1986 and comprised 125 participating countries. With the formal signing in April 1994, countries reached substantial new agreements on general tariff reduction. 1 A key feature of these events is Correspondence Address: Mehmet Serkan Tosun, Bureau of Business and Economic Research, College of Business and Economics, West Virginia University, Morgantown, WV 26506-6025, USA. Email: metosun@mail.wvu.edu. Review of Middle East Economics and Finance ISSN 1475-3685 print/ISSN 1475-3693 online ß 2005 Taylor & Francis Group Ltd DOI: 10.1080/14753680500063952