The Doha Development Agenda

1
The Doha Development Agenda

• Yvan Decreux1, Lionel Fontagné2
• WTO, November 2, 2010
• 1 CEPII, ITC
• 2 CEPII, University Paris 1

2
July 2008 package

• Based on two different studies
• Decreux, Y. Fontagné, L. (2009). Economic
  Impact of potential outcome of the DDA, CEPII
  Research Report 2009-01
• More comprehensive includes trade facilitation
• Decreux, Y. (2009). Effets dun accord commercial
  multilatéral sur la base des propositions de
  décembre 2008, Report for the French Government
• More recent
• Includes precisions added in the December 08
  package (anti-concentration clause and other
  elements related to sensitive products)
• Some technical improvements
• More sector details in agriculture

3
Downloadable

• Both studies downloadable here
• https//sites.google.com/site/ydecreux/

4
Subjects covered

• Agriculture
• NAMA
• Services
• Trade facilitation

5
Agriculture

• Domestic support mostly the US and EFTA
• Export subsidies
• US, EU
• Agreement found long ago
• Tariffs EU, EFTA, Japan

6
NAMA

• Tariffs only
• Most efforts to be made by developing countries
  (despite special and differential treatment)
• But many are exempt of actual tariff reductions
  Small and Vulnerable Economies, LDCs

7
Export subsidies

• Not really damaging in a deterministic world
  (stable prices and production), except for
  countries strongly specialised in agriculture
• The world is not deterministic, especially in
  agriculture
• Export subsidies (and tariffs) used to moderate
  internal instability, to the expense of other
  countries
• Early agreement to phase out all export subsidies
  by 2013

8
Modelling

• Based on the Mirage model (CEPII) MAcMap data
  (ITC, CEPII)
• Some data missing (historical AMS for instance) ?
  relied on INRA work (J-C Bureau, J-P Butault) for
  static impact
• Inflation and growth all commitments (except de
  minimis) expressed in LCU

9
Inflation issue (illustrated)
10
Inflation issue (continued)

• Not taking it into account leads to
• Overestimate the effect of export subsidy
  suppression
• Underestimate the effect of domestic support
  reduction
• Overall, broadly neutral on agricultural
  production as a whole for the EU, but significant
  differences at the product level (milk, sugar)

11
Tariff reductions

• Agriculture tiered formulas
• Sensitive products (tariff-rate quotas)
• Special products
• Tariff escalation issue
• Tropical products
• NAMA Swiss formulas
• Sensitive products for developing countries
• Anti-concentration clause

12
Implementation

• Formulas applied to bound tariffs, at the HS6
  level (MAcMap-HS6 2004)
• Impact on applied tariffs
• Aggregated at the sector and region level

13
Other subjects

• Services
• Developed and emerging countries, on a free basis
• Much less quantified at this stage
• Trade facilitation
• Potential source of significant gains
• Not really a negotiation issue

14
Mirage

• Computable General Equilibrium Model of the World
  economy
• Sequential dynamics setting
• Capital accumulation
• Exogenous labour, population and TFP growth
• Exogenous labour supply unemployment
• Based on GTAP, MAcMap and other data sources
  (ILO, IMF, ...)

15
Scenarios

• Goods December 08 proposals
• Services
• Study 1 3 cut for country participating in the
  specific negotiations on services
• Study 2 10 cut of the estimated ad-valorem
  equivalent of barriers to services trade, all
  countries except Sub-Saharan Africa and Rest of
  the World (mostly non-WTO members) ? really
  optimistic

16
World welfare
17
Welfare industrialized regions
18
Welfare Asia
19
Welfare Latin America
20
Welfare losses
21
Sources of gains / losses

• Allocation efficiency gains especially generated
  on high tariffs
• Terms of trade balance of concessions
  preference erosion
• Capital accumulation

22
Employment in agricultural sectors
23
NAMA exports (selected, bn USD)
China Hong-Kong Japan Korea Taiwan Indonesia Malaysia Thailand North Africa Sub-Saharan Africa
Forestry 0.0 0.0 0.0 -0.1 0.0 0.0 0.0
Fishing 0.0 0.1 0.0 -0.0 0.0 0.0 0.0
Primary products 0.8 1.8 1.1 0.1 0.1 1.2 -0.2
Textile 11.5 0.9 12.4 7.0 0.5 -0.1 -0.5
Clothing 36.4 0.2 1.1 2.2 0.7 -0.8 -0.6
Leather 7.6 -0.0 0.2 2.3 2.1 0.1 0.0
Paper editing 0.1 -0.1 0.0 -0.3 0.0 0.0 -0.0
Chemicals 2.4 0.5 5.0 -0.7 0.8 0.3 0.0
Metals 1.0 -0.1 0.3 -0.8 -0.1 0.3 -0.1
Cars trucks -0.7 32.9 7.4 -0.2 0.8 0.1 -0.1
Trains, Planes, Bikes, Boats 0.1 -0.5 -0.7 -0.3 0.0 0.1 -0.3
Electronic equipment 3.9 -0.6 -9.3 -0.1 0.2 0.0 0.0
Machinery -0.0 -6.4 2.5 -1.9 0.8 0.8 -0.0
Other Manuf 3.1 -0.0 0.1 -0.4 -0.3 0.1 -0.0
NAMA 66.2 28.6 20.1 6.5 5.8 2.3 -1.8
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NAMA production (selected, bn USD)
EU27 China Hong-Kong Japan Korea Taiwan US North Africa Sub-Saharan Africa
Forestry 0.1 -0.2 -0.1 -0.0 0.0 0.0 -0.0
Fishing 0.0 -0.0 -0.1 -0.0 0.0 -0.0 0.0
Primary products 6.8 -7.6 -0.7 -0.2 2.9 0.7 -0.1
Textile -4.9 17.6 -1.4 15.5 -12.1 -2.4 -1.0
Clothing -5.8 35.1 -4.3 1.1 -9.6 -2.0 -0.8
Leather 6.1 9.9 -1.9 0.2 -1.5 -0.2 -0.0
Paper editing 1.0 -0.7 -0.8 -0.2 1.6 -0.2 -0.0
Chemicals 0.0 -8.2 -0.3 7.8 6.5 -1.2 -0.0
Metals 3.8 -10.4 0.5 -2.5 5.2 0.2 -0.1
Cars trucks -16.3 -9.5 53.1 3.1 0.4 -0.5 -0.2
Trains, Planes, Bikes, Boats 4.3 -1.3 -1.0 -1.1 1.7 0.2 -0.3
Electronic equipment 2.3 2.8 -0.2 -12.0 12.6 0.0 0.0
Machinery 15.4 -16.2 -8.3 -0.9 9.9 0.7 -0.1
Other Manuf 2.4 2.3 -0.9 -0.0 1.5 -0.3 -0.1
NAMA 15.1 13.3 33.5 10.7 19.3 -4.9 -2.7
25
Trade facilitation

• Based on estimates of time spent to export and
  import, by Minor and Tsigas
• Time spent at the port supposed to partially
  converge to the median performance, for all
  countries over that median
• No reduction of transport cost assumed
• Expressed as an iceberg cost
• Minor P. Tsigas M. 2008. Impacts of Better
  Trade Facilitation in Developing Countries,
  Analysis with a New GTAP Database for the Value
  of Time in Trade, GTAP 11th Conference,
  Helsinki.
• USAID 2007. Calculating Tariff Equivalents for
  Time in Trade, March

26
Trade facilitation impact

• Adds almost 100 bn USD gain per year (from 68 bn
  to 167 bn)
• Especially favorable to developing countries, in
  particular Sub-Saharan Africa
• Lack of a clear commitment by all partners to let
  trade facilitation benefits be an outcome of Doha
  negotiations

27
Limitations of the methodology

• Actual impacts of export subsidies not properly
  measured in a deterministic framework
• Preference erosion may be overestimated rules of
  origin actually reduce current preference
  benefits importance of the EU in Sub-Saharan
  Africa tend to decrease more quickly than
  projected
• Impact on poverty and inequality not assessed
• Possible impact of trade competition on
  productivity not accounted for

28
Conclusion

• Balanced proposal, employment in agriculture
  rises in developing countries
• Concern on preference erosion
• Conservative estimates benefits expected to be
  at least as large as the ones mentioned
• Current situation corresponds to a
  non-cooperative equilibrium