July 22, 2008 — As critical talks resume in Geneva on the Doha Agenda—launched seven years ago in Qatar—ministers are trying to reach an agreement on lowering trade barriers in goods and services.
In a new policy research working paper, World Bank researchers Will Martin and Aaditya Mattoo say that such an agreement implies three key benefits:
• More secure market access in goods and services
• Some new market opening in agriculture and manufacturing
• More resources to deal with the trade problems of poor countries
“If ministers now capitalize on seven years of work and put the Doha process on the road to completion, the global trading system would be strengthened,” said Richard Newfarmer, World Bank Special Representative to the WTO and the United Nations.
Reduced scope for protection
WTO members have offered to significantly reduce the maximum protection allowed in goods and services. These cuts in legally “bound” rates are valuable because they limit the scope for future restrictive measures.
The proposals being discussed would reduce the average bound tariff for agricultural products from 40 to 30 percent, and that for non-agricultural goods from 8 to 5 percent.
The negotiations on trade in services have yielded offers that would reduce the average gap between offers and actual policies by almost half—from 84 percent to 43 percent.
And some new market opening
Today’s legal ceilings are in many cases much higher than applied levels of protection—so even drastic cuts in ceiling rates often result in only modest cuts in applied protection.
There are, however, likely to be some real benefits for developing country exporters: the average farm tariffs they face would fall from 14.2 to 11.5 per cent; and the tariffs on their exports of manufactures from 2.9 to 2.1 per cent.
Disciplines on agricultural subsidies
Agricultural export subsidies—a longstanding concern of developing countries—will be banned. This is important because it rules out the re-emergence of wasteful and price-depressing export subsidies in the future.
The proposed rules on domestic subsidies involve sharp reductions in maximum allowed levels of support—by 70 per cent in the EU and 60 per cent in the USA.
New rules are likely to constrain industrial country subsidies for products such as cotton, peanuts and sugar, which are of particular export importance for many developing countries.
Addressing the trade problems of poor countries
The two key elements in ensuring that the trade reforms benefit the poorest countries are enhanced access to markets and more technical assistance.
The paper finds that the proposed “duty free and quota free” access will add significantly to existing access for least developed countries only if industrial and developing country members do not exclude vital products such as garments.
The “aid for trade” initiative is playing a catalytic role in promoting reform and mobilizing assistance. Trade-related assistance has already increased—according to WTO/OECD figures, to about $24 billion in 2006.
The Enhanced Integrated Framework for Least Developed Countries is also slowly taking shape, with $240 million earmarked in 2007 for technical assistance programs.
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