“There is a significant deal on the table that will help the global economy get out of the recession,” said Bernard Hoekman, World Bank Director for Trade. “A conclusion of the Doha Round will reduce the probability of protectionism, help reduce fiscal pressures by imposing limits on subsidies, and improve prospects for trade policy cooperation in other critical areas such climate change.”
According to the working paper, prepared by Bernard Hoekman, Will Martin, and Aaditya Mattoo, despite outstanding disagreements –on agricultural safeguards, the extent of liberalization commitments for merchandise trade, and the coverage of additional services commitments – the benefits of what is now on the table are larger than what many skeptics think.
According to the document, even by taking into account likely product exceptions and sensitivities, the modalities under consideration will generate increased trade that in turn could produce an additional US$160 billion in real income for the world. Average farm tariffs exporters face would fall to 12 percent (from 14.5 percent) and the tariffs on exports of manufacturers to less than 2.5 percent (from about 3 percent). Just as important, there are substantial opportunities for the DDA to deliver enhanced security of market access for services activities—which account for 60-75 percent of total employment and production in many countries.
Global trade volumes are expected to decline by some 10 percent in 2009. While an unavoidable consequence of the collapse in demand, trade will be critical for the recovery, especially for the many developing countries with small domestic markets that rely heavily on external markets as a source of employment and foreign exchange.
Apart from constraining the scope for tariff protection in all goods, the DDA would ban agricultural export subsidies in the industrial countries and sharply reduce the scope for distorting domestic support –by 70 percent in the European Union (EU) and 60 percent in the U.S.
On the environmental front, Conclude Doha: It Matters! notes there will be benefits from disciplining the use of subsidies that encourage over-fishing and from lowering tariffs on technologies that can reduce global warming. Over 75 percent of global fish stocks –crucial for food security in many developing countries—are over-exploited with a resulting annual loss for the world economy of US$50 billion.
According to the working paper, developing countries will benefit from a Doha deal as a result of reductions in high “peak” tariffs that constrain their exports. They also have much to gain from actions to reduce the costs of moving goods through borders and from taking advantage of the Aid for Trade initiative, which seeks to improve infrastructure, trade institutions and policies to help countries to exploit trade opportunities.
