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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:	2010/02/01	Document Type:	Policy Research Working Paper
Language:	English	Major Sector:	Industry and trade
Rel. Proj ID:	1W-Market Access Research -- -- P111070;	Region:	The World Region
Report Number:	WPS5200	Sub Sectors:	Other domestic and international trade
SubTopics:	Markets and Market Access; Free Trade; Debt Markets; Trade Policy; International Trade and Trade Rules	TF 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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