Eight Years of Doha Trade Talks: Where Do We Stand?

In 2001 the World Trade Organization launched a highly ambitious program of multilateral liberalization. Eight years later, concluding the negotiations is uncertain, though an opportunity still exists. Since 2001, many proposals on market access have been brought to the negotiating table by the European Union, the United States, and the G20. Because it is politically and economically acceptable to many parties, the final December 2008 package could be the basis of an agreement. An evaluation of these various proposals shows how trade negotiations have been following countries’ strategic interests. In eight years, the ambition of the formula in agricultural market access tariff reduction has increased, but additional flexibilities designed to accommodate domestic political constraints have offset delivered market access. The various scenarios imply losses for least-developed countries, reflecting eroded preferences and rising terms of trade for imported commodities, including food products. We study how this trade reform can be more development-friendly.computable general equilibrium modeling, least developed countries, trade negotiations, Financial Economics, International Development, International Relations/Trade, Political Economy, Public Economics,

Why is the Doha development agenda failing? And what can be done?: A computable general equilibrium-game theoretical approach

"We herein use a world Computable General Equilibrium (CGE) model to simulate 143 potential trade reforms and seek solutions to the issues hampering progress in the Doha Development Agenda (DDA). Inside the domain defined by all these possible outcomes, we apply the axiomatic theory of bargaining and select the Nash solution of cooperative games. The solutions vary according to the objective functions adopted by the trade negotiators. When real income is the objective and services are excluded, or when optimizing terms of trade is the objective, the Nash solution is the status quo. Trade liberalization is feasible only when the negotiators focus on national exports or Gross Domestic Product (GDP). Our assessment of some possible solutions reveals that excluding members having a GDP below a certain threshold improves the bargaining process, regardless of the governments' objective. Formation of coalition, such as the G20, constitutes an option for its members to block outcomes imposed by rich members. We also find that side payments may be a solution, but represent a very high share of the global income gain." from authors' abstractTrade negotiations, Computable general equilibrium (CGE) modeling, Nash solution, Side payments, Cooperative games, Globalization, Markets, Doha Development Agenda,

The potential cost of a Failed Doha Round

The potential cost of a Failed Doha Round

Economics of export taxation in a context of food crisis

This paper aims to assess the rationales for the use of export taxes, in particular in the context of a food crisis. First, we summarize the effects of export taxes using both partial and general equilibrium theoretical models. When large countries have an objective of constant food domestic prices, in the event of an increase in world agricultural prices the optimal response is to decrease import tariffs in net food-importing countries and to increase export tariffs in net food-exporting countries. The latter decision is welfare improving while the former is welfare reducing: it is the price to pay to get domestic food prices constant. Small countries are harmed by both decisions. Second, we illustrate the costs of a lack of cooperation in and regulation of (binding process) such policies in a time of crisis using a global computable general equilibrium (CGE) model illustration, mimicking the mechanisms that have appeared during the recent food price surge. We conclude with a call for international regulation, in particular because small net food-importing countries may be substantially harmed by these beggar-thy-neighbor policies that amplify the already negative impact of the food crisis.Computable general equilibrium (CGE), export taxes, Food crisis, optimum tariff,

Searching for an alternative to economic partnership agreements:

"On January 1, 2008, Economic Partnerships Agreements (EPAs), currently being negotiated between the European Union (EU) and nearly 80 African, Caribbean, and Pacific (ACP) countries, are expected to replace the Cotonou Agreement, which has governed trade relations between these countries since 2000. The Cotonou Agreement, implemented through a waiver from the World Trade Organization (WTO), expires on December 31, 2007. At the second EU-Africa summit, held in Lisbon on December 8–9, trade issues have been a major bone of contention, with several African heads of state denouncing the way the negotiation had been led by the European Commission. At the end of the summit, the Commission agreed to continue EPA negotiations in 2008." from textInternational agreements, Trade agreements,

Formulas and flexibility in trade negotiations : sensitive agricultural products in the WTO's Doha agenda

Many trade negotiations involve large cuts in high tariffs, with flexibilities allowing much smaller cuts for an agreed number of politically-sensitive products. The effects of these flexibilities on market access opportunities are difficult to predict, creating particular problems for developing countries in assessing whether to support a proposed agreement. Some widely-used ad hoc approaches to identifying likely sensitive products -- such as the highest-bound-tariff rule -- suggest that the impacts of a limited number of such exceptions on average tariffs and on market access are likely to be minor. This paper uses a rigorous specification based on the apparent objectives of policy makers in setting the pre-negotiation tariff. Applying this approach with detailed data allows the authors to assess the implications of sensitive-product provisions for average agricultural tariffs, economic welfare, and market access under the Doha negotiations. The authors conclude that highest-tariff rules are likely to seriously underestimate the impacts on average tariffs, and that treating even 2 percent of tariff lines as sensitive is likely to have a sharply adverse impact on economic welfare. The impacts on market access are also adverse, but much smaller, perhaps reflecting the mercantilist focus of the negotiating process.Free Trade,International Trade and Trade Rules,Markets and Market Access,Debt Markets,Trade Policy

The potential cost of a failed Doha Round:

"In times of economic turmoil, countries might decide to increase current tariff rates to protect domestic industries or raise revenues in order to finance domestic programs. Using the highest applied or bound rate imposed by countries from 1995 to 2008 as an indicator, this study presents several scenarios regarding the economic costs of a failed Doha Round and a subsequent rush into protectionism. For example, in a scenario where the applied tariffs of major economies would go all the way up to currently bound tariff rates, world trade would decrease by 7.7 percent. In a more modest scenario where countries would raise tariffs to maximum rates applied during the past 13 years, world trade would decrease by 3.2 percent. These increases in duties would reduce world welfare by US$353 billion under the first scenario, and by US$134 billion under the more modest scenario. While such an increase in duties would particularly impact agricultural exports (–6.9 percent), especially in developing countries (–11.5 percent), exports of industrial goods could also face a substantial reduction: 2 percent in developed countries and 4.8 percent in developing countries. This study concludes there would be a potential loss of US$1,064 billion in world trade if world leaders were to fail to conclude the Doha Development Round of trade negotiations in the next few weeks and if countries were to implement subsequently protectionist policies, as occurred after the end of the Uruguay Round. The failure of the negotiations would prevent a US$336 billion increase in world trade that would have come from a reduction in tariffs and domestic support, while a worldwide resort to protectionism would contract world trade by US$728 billion." from textAgricultural policies, WTO Doha round, International trade, exports, tariffs, Protectionism,

An Impact Study of the Economic Partnership Agreements (EPAs) in the Six ACP Regions

This article intends to present a very detailed analysis of the trade-related aspects of Economic Partnership Agreements (EPAs) negotiations. We use a dynamic partial equilibrium model – focusing on the demand side – at the HS6 level (covering 5,113 HS6 products). Two alternative lists of sensitive products are constructed, one giving priority to the agricultural sectors, the other focusing on tariff revenue preservation. In order to be WTO compatible, EPAs must translate into 90 percent of bilateral trade fully liberalised. We use this criterion to simulate EPAs for each negotiating regional block. ACP exports to the EU are forecast to be 10 percent higher with the EPAs than under the GSP/EBA option. On average ACP countries are forecast to lose 70 percent of tariff revenues on EU imports in the long run. Yet imports from other regions of the world will continue to provide tariff revenues. Thus when tariff revenue losses are computed on total ACP imports, losses are limited to 26 percent on average in the long run and even 19 percent when the product lists are optimised. The final impact on the economy depends on the importance of tariffs in government revenue and on potential compensatory effects. However this long term and less visible effect will mainly depend on the capacity of each ACP country to reorganise its fiscal base.Preferential Trade Agreements, Africa, EPAs, Partial Equilibrium Simulations, International Relations/Trade,

How to make agriculture policies comparisons in the EU-MERCOSUR relations

It seems obvious that fruitful negotiations can not succeed if negotiators have not a precise and clear picture of the object of trade talks. Looking at the EU-Mercosur bilateral negotiations, the agriculture issues are the core elements. However due to their complexity and the large scope of what is it called "agriculture policies", it appears that this sensitive topic suffers from a deficit of information and that making comparisons of the policies implemented in the two regions has never be done. This paper is aimed at defining a methodology for answering this question. First, looking at existing literature, we emphasizes that no standard methodological framework exists. Then, we analyse the different issues that have to been tackled and define the criteria for making a rationale comparison of agriculture policies. Applying these criteria, we define the policies perimeter of investigation and make the list of variables that will allow you to capture the tools implemented and to get an assessment of their success and failures. (Résumé d'auteur

The potential cost of a failed doha round:

"This study offers new conclusions on the economic cost of a failed Doha Round. The first section is devoted to an analysis of how trade policies evolve in the long and medium runs. We show that even under normal economic conditions, policymakers modify tariffs to cope with the evolution of world markets. We then use the MIRAGE Computable General Equilibrium model to assess the potential outcome of the Doha Round, and then examine four protectionist scenarios. Under a scenario where applied tariffs of major economies increase up to the currently bound tariff rates, we find that world trade decreases by 7.7 percent and world welfare drops by US$353 bn. We then compare a resort to protectionism when the Doha Development Agenda (DDA) is implemented versus a resort to protectionism when the DDA is not implemented. We find that this trade agreement could prevent the potential loss of US$ 809 bn of trade, and could therefore act as an efficient multilateral insurance scheme against the adverse consequences of “beggar-thy-neighbor” trade policies." from authors' abstractTrade negotiations, Computable general equilibrium (CGE) modeling, Bound duties, Domestic support, Globalization, Markets, Doha Development Agenda,