Can the G20 get Doha done?

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.

Gains from mer­chan­dise trade lib­er­al­iza­tion (sta­t­ic esti­mates: $2001 bn)
Agri­cul­ture only with the full range of excep­tionsAgri­cul­ture + NAMA with lim­it­ed excep­tions for devel­op­ing coun­triesAgri­cul­ture + Nama with no excep­tions
Low-income coun­tries0.112.517.1
Mid­dle-income coun­tries -0.516.122.7
High-income coun­tries18.179.296.4
TOTAL, World17.796.1119.3
Source: Mod­el­ing by Ander­son, Mar­tin and van der Mens­brug­ghe for the World Bank. See Table 7 here for a con­ve­nient source.

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).

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