1 / 29

The Potential Cost of the Doha Round Failure

The Potential Cost of the Doha Round Failure. Antoine Bouet – David Laborde ( a.bouet@cgiar.org ; d.laborde@cgiar.org ) WTO November 2 nd 2010 – Geneva. Overview. Motivation Scenarios design Methodology Results Conclusions IFPRI discussion paper + IFPRI Policy Brief

ciro
Télécharger la présentation

The Potential Cost of the Doha Round Failure

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Potential Cost of the Doha Round Failure Antoine Bouet – David Laborde (a.bouet@cgiar.org; d.laborde@cgiar.org ) WTO November 2nd 2010 – Geneva

  2. Overview • Motivation • Scenarios design • Methodology • Results • Conclusions IFPRI discussion paper + IFPRI Policy Brief http://www.ifpri.org/publication/potential-cost-failed-doha-round-0

  3. Motivation

  4. What is all about? Effects of finalizing the DDA negotiations Total cost the DDA failure Potential effects of not reaching an agreement

  5. How to assess the gains of the DDA? • Traditional approach: • Assessing the trade liberalization scenario negotiated versus the status-quo • Combination of tariff scenario building and economic modeling (mainly through CGE assessment) • In the last years, assessment of the gains (upper part of the iceberg) have melted away • Better data • Ongoing process of : • regional liberalization (FTA between members, Side effects of the Custom Unions negotiations in Africa) • and/or unilateral liberalization (India in 2004)

  6. Missing gains? (or the quest for big numbers?) • Models are incomplete (Dynamic gains of trade liberalization…) • Model improvement: see Will Martin’s comments on Consistent Aggregation • Rethinking the assumption of status-quo • New Scenario design • We will focus on this last issue

  7. But, keep in mind that Quantitative Assessments using CGE obey some rules: • Equilibrium models • Most of them assume “constant employment of factors” (capital and labour) : Modelers like to model what they understand. • Technology is exogenous • Therefore, engines of growth are out of the story we look at: We are doomed to show you small GDP figures! • They are driven by Efficiency gains (most of the case second order effects): allocative effects • Interests of the CGE: • comparingscenarios and their design • Look at winners and losers • A “small” figure is not a pro/against trade liberalization argument in itself

  8. Value of this research • For policy makers: • Provide new lights on the gains at stake in the current DDA • Analysis of a “what if” scenario. • Applied research: • Rethinking the relevant baseline • Providing figures and order of magnitude for effects already discussed in the literature • Assessing partially the value of the binding process

  9. 1. Dynamics of trade policy • Status-quo is not a feature of trade policies • Trade liberalization like a bicycle or • Failure of the DDA: Signal of the end of cooperative policy • WTO as a litigation arena and not as a place for negotiation

  10. 2. Not a “business as usual” period • Risk of rising protectionism • Tariffs – Domestic support • Financial crisis • Analogy with the 1929 crisis and its trade policy aftermaths • H-S tariff act • Society of Nations was calling for a tariff truce as the G-20 now • Fighting deflation, supporting local producers and raising public revenue • Lack of cooperation of governments • Beggar-thy-neighbor policies • Underestimation of the retaliation process • See Food prices crisis policy measures

  11. 3. Rethinking the reference point • Follow-up on previous research (Bouet and Laborde, 2004; Laborde, 2008; Bouet and Laborde 2009) • WTO negotiations as a Nash Bargaining game • Combining Cooperative Game Theory and CGE analysis • Concluded on the emptiness of the core in many negotiation configurations (predicting DDA difficulties in 2004) • But solutions exist

  12. Scenario Design

  13. Two main directions • Assessing DDA scenario is already challenging • Increase in protectionism • Regionalism • Defining realistic “what if” scenario is worst • Very subjective

  14. Description of the scenarios • Baseline: Enforcement of current FTAs and Multilateral commitments • Doha: Exhaustive 2008 July Package modeling • Up to Bound: All tariffs, except preferences covered by bilateral-regionals treaties, are moved to their Bound level. Unbound lines are set to their MFN level increased by the average binding overhang • Up to Max: All tariffs, except preferences covered by bilateral-regionals treaties, are moved to their maximum level reached over the last 13 years. Bound tariffs are still capped by the UR commitments. • FTA HIC: Free trade area on 95% of tariff lines between OECD members • Up to Max+FTA HIC: the Up to Max scenario is completed by a 95% FTA between OECD countries. • Up to Bound&DDA: All tariffs, except preferences covered by bilateral-regionals treaties, are moved to their new Bound level. Unbound lines are set to their MFN level increased by the average binding overhang • Up to Max&DDA: All tariffs, except preferences covered by bilateral-regionals treaties, are moved to their maximum level reached over the last 13 years. Bound tariffs are still capped by the post DDA commitments.

  15. Tariff cut implementation in the DDA scenario Bound level I Binding overhang Applied MFN II Preferential Margins Applied Preferential III

  16. Tariff increase implementation Bound level Max MFN tariff since 1995 Up to Bound Up to Max 2008 applied MFN 2008 Preferential Applied Preferential rates covered by a bilateral treaty are “protected”

  17. The baseline • A baseline is implemented from 2008 to 2025, which depicts the world without a new multilateral agreement. • Concerning trade reform, the following agreements since 2004 have been included in the baseline: • Achievement of the complete FTA for ASEAN, CEMAC, COMESA, SADC ECOWAS; • EU-ACP Economic Partnership Agreements • Implementation of the EU-INDIA, EU-India, EU-ASEAN, US-Colombia, US-Oman, US-Bahrain, US-Morocco, US-Australia, Mercosur-Colombia, China-Chile FTA. • WTO accessions since 2004 are implemented

  18. Results

  19. World Average Tariffs Reference group weighted

  20. Protection faced Reference group weighted

  21. Overview

  22. Real Income (1) Direct gains from the DDA “Insurance” value of the DDA, intermediate case “Insurance” value of the DDA, extreme case Source: Bouet and Laborde, 2009. MIRAGE simulations

  23. Real Income (2)

  24. Real Income (3) %

  25. Sources of the gains/losses: Up to Max scenario

  26. Another example of valuable concessions: the time dimension of Domestic support.Agricultural Production

  27. Conclusions

  28. DDA and Up to Max Exports:+$363 Bn Welfare: +$59 Bn Exports:-$1,171 Bn Welfare: -$193 Bn Exports:-$808 Bn Welfare: -$134 Bn

  29. Additional remarks • Real value of the Binding • WTO has two values as a public good: • Promote cooperative behavior • Limit damages due to retaliations process and may deter it • FDI may change the “dynamics” of trade liberalization • Locking device • Vicious and Virtuous circles

More Related