Peter Gallagher

There is lit­tle rea­son to hope that the Doha deal that was on the table in mid-2008—when the patient finally expired—would have deliv­ered ‘hun­dreds of bil­lions of dol­lars’ to the world econ­omy. The wide range of excep­tions (built-in, and ‘spe­cial’) for devel­op­ing coun­tries and the minute sculpt­ing of the mar­ket access rules for the most ‘sen­si­tive’ (i.e. pro­tected) parts of the rich coun­tries’ mar­kets meant that there would be, at best, mod­est gains from mar­ket access (see my more detailed analy­sis of the prob­lems here).

The real­ity of Doha was mod­eled in a pre­scient study for the World Bank in 2005. In the fol­low­ing table, the actual shape of the Doha deal lies some­where between Columns 1 and 2 (but closer to Col­umn 1). Note that most of the gains go to rich countries.

It is cer­tainly impor­tant to cut the ‘bind­ing over­hang’ in cur­rent WTO sched­ules. The oppor­tu­nity the over­hang offers to raise WTO-compliant pro­tec­tion is a moral dan­ger, if noth­ing else, that encour­ages use of the ‘old standby’ pro­tec­tion options. If an ambi­tious sched­ule of cuts could be agreed by the G20 with­out import­ing all of Doha’s poi­so­nous inno­va­tions on excep­tional mea­sures (‘spe­cial’ and ‘sen­si­tive’ prod­ucts, espe­cially) into WTO, it would go a long way to restor­ing con­fi­dence in the global economy.

But if not, a smaller sig­nal with a sim­i­lar effect could quickly be agreed based on the sim­pler approaches adopted in the Uruguay Round in the mid-1990s. Here’s the idea in a nutshell:

Agri­cul­ture

A review of the lat­est WTO data on aver­age bound rates of duty (see graphs based on WTO Tar­iff Pro­files, 2008) sug­gests that the Uruguay Round tar­iff cuts could be agreed by most of the Group of Twenty gov­ern­ments with­out sig­nif­i­cant dis­rup­tion to cur­rent trade poli­cies. In these economies, bound rates of duty in the agri­cul­ture sec­tor are gen­er­ally more than 33% above than the trade-weighted (applied) rate of duty. Only those economies where the bound rate is less than 133% of the applied rate (high­lighted in the graphs—click the thumb­nail above) would see a cut in the over­all applied aver­age duty. The biggest impacts would be in Korea (a 52-point cut in the t/w aver­age rate) and Mex­ico (an 11-point cut). China would see its t/w aver­age cut by 6 per­cent­age points. All agri­cul­tural tar­iff quo­tas should be expanded by the same amount as in the Uruguay Round (or some sub­stan­tial frac­tion; e.g. by 2%).

Non-agriculture:

The lat­est WTO data on bound rates of duty (see graphs) shows that all G-20 coun­tries could meet the Uruguay Round tar­get for tar­iff cuts with­out cut­ting their trade-weighted applied rates of duty.

More details here (an excerpt from a longer paper on the way for­ward for the frame­work of agri­cul­tural trade agreements).