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Formulas and flexibility in trade negotiations : sensitive agricultural products in the WTO's Doha agenda
 
Author:Jean, Sebastien; Laborde, David; Martin, Will; Collection Title:Policy Research working paper ; no. WPS 5200
Country:World; Date Stored:2010/02/04
Document Date:2010/02/01Document Type:Policy Research Working Paper
SubTopics:Markets and Market Access; Free Trade; Debt Markets; Trade Policy; International Trade and Trade RulesLanguage:English
Major Sector:Industry and tradeRel. Proj ID:1W-Market Access Research -- -- P111070;
Region:The World RegionReport Number:WPS5200
Sub Sectors:Other domestic and international tradeTF No/Name:TF091541-MARKET ACCESS RESEARCH
Volume No:1 of 1  

Summary: 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.

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