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| The Developing Countries in the Doha Round |
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October-December 2004 |
A new phase of negotiations is beginning in Geneva, and the proclaimed development focus of the Doha Round will have to be put into place. At the end of July 2004, the Member States of the World Trade Organisation (WTO) were able to reach a framework agreement relating to the multilateral liberalisation of trade. Though dubbed “historic” by the WTO’s Director General, the text remains vague on essential issues and postpones the most difficult decisions to a later date (Bouët et al., 2004). Time has now come to give substance to this agreement, and to make sure that the Doha Round is truly a Development Round. Various CEPII studies over the last years are useful to assessing better what is at stake in this respect.
Market access is a central issue in the negotiations, but is very difficult to measure. Protection needs to be defined at a detailed product level, combining various instruments, and including regional agreements as well as preferential trade schemes which have been in force over the last thirty years. The MAcMap database, developed in collaboration with the International Trade Centre, allows the ad valorem equivalent of applied protection across the world (for 5,111 products), to be measured accurately and in a consistent way, taking into account all preferential agreements. Bouët et al. (2004) describe the corresponding methodology, and review ad valorem equivalent protection across the world. On average, border protection was not very high in 2001 (5.6%), but it is very uneven, across sectors (19.1%, on average for the world for agriculture, 10.5% in textiles and clothing), and across countries (with the average level reaching 33.5% for India). The combination of export specialisation and of preferential agreements also translates into exporters facing very different levels of average protection (e.g., 13.5% for Argentinean exporters, as compared to 2.6% for Mexican exporters). The distribution of tariff duties is also shown to be strongly skewed.
Agriculture is a highly sensitive issue for developing countries. It is a key export sector for many developing countries and it remains strongly protected in most developed countries. Bouët et al. (2004) use the MIRAGE applied general equilibrium model to assess the impact of multilateral trade liberalisation in agriculture. Using original data, the model includes some specific features, such as dual labour markets. In addition to applied tariffs, bound tariffs are also taken into account, at the detailed product level. The various types of farm support are detailed too, and several groups of developing countries are distinguished. Simulations provide a contrasting picture of the benefits developing countries would draw from the Doha development round. The results suggest that previous studies, which have neglected preferential agreements and the "binding overhang" (in tariffs as well as domestic support), and have treated developed countries with a high level of aggregation, have been excessively optimistic about the actual benefits of multilateral trade liberalisation. Thus, regions like Sub-Saharan Africa are more likely to suffer from the erosion of existing preferences. The main beneficiaries of agricultural liberalisation in the Doha round are likely to be developed countries and members of the Cairns group.
For non-agricultural market access, Bchir et al. (2004, forthcoming) also show that an accurate and detailed measurement of both applied and bound protection is the key to assessing the significance of the negotiation. Applying the kind of formula put forward in the Girard Proposal would lower protection of industrial products by approximately one third in developing countries, and by about half in the intermediate developed countries. The provisions of the July Framework Agreement for LDCs and countries with low binding coverage actually exempt most poor countries from any commitment. Industrial exports are found to rise modestly, by slightly more than 3%, while changes in world import prices are very small; inferior to 1%. Not all developing countries would gain from such a liberalisation. Actually, most of them are set to lose out, mainly as a result of a deterioration in their terms of trade. Higher initial levels of protection in developing countries for industrial products largely explain this finding, although liberalisation is also a source of substantial consumer gains in most countries.
Actually, market access is far from being limited only by tariff duties. The Uruguay Round implied the adoption of the Sanitary and Phyto-Sanitary (SPS) agreement. Under this international scheme, countries are allowed to impose barriers to trade for public health or environmental concerns. Fontagné et al. (2001) show that a major share of international trade is restricted by these measures. Environment-related standards are likely to be protectionist in many instances, and especially so in the agricultural sector and in several Cairns Group member countries.
A more general approach is to measure barriers to market access without any restriction, as revealed through the intensity of trade flows. In this case, the obstacles to trade are shown to be far larger than would have been expected, based on tariffs alone (Fontagné et al., 2001; Fontagné et al., 2004). The current Doha Agenda on international trade certainly contains material for negotiation (market access, agricultural policies, trade facilitation, etc.) and will probably generate some controversy. |
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