Critical mass agreement vs the Doha Round

Among the advan­tages of a CM agree­ment are sim­plic­i­ty (it’s much eas­i­er to deter­mine the scope of the agree­ment and to fig­ure out what the ben­e­fits will be), and focus (coun­tries join because they can see the ben­e­fit of an agree­ment where—by definition—all the major play­ers will par­tic­i­pate).

The con­trast with the labo­ri­ous nego­ti­a­tions required by the WTO’s ‘sin­gle under­tak­ing’ approach could not be sharp­er. One of the rea­sons that devel­oped coun­try gov­ern­ments have found their own agri­cul­tur­al lob­bies reluc­tant to pur­sue the cur­rent Doha round ‘modal­i­ties’ is their uncer­tain­ty about the impact that the 100-page ‘rule book’ will have on their trade oppor­tu­ni­ties.

Projected welfare impacts of a CM agreement on agriculture

We’ll cut to the chase, shall we, in this fourth of my posts on mod­el­ing the impact of a ‘crit­i­cal mass’ agree­ment in agri­cul­ture? Click on the tags at the left-side or at the bot­tom of this arti­cle to find the ear­li­er posts.

A ‘crit­i­cal mass’ agree­ment among 38 coun­tries that account for 80 per­cent of world trade in the 30 top-trad­ed agri­cul­tur­al prod­ucts (all of them food) to elim­i­nate import duties on those prod­ucts would achieve about two thirds of the pro­ject­ed val­ue of the glob­al Doha agree­ment on agri­cul­ture. If the mem­bers of the CM elim­i­nat­ed pro­duc­tion and export sub­si­dies, too (turns out, they won’t have much choice) the glob­al gains would be a third as much again as those pro­ject­ed for the Doha agree­ment.

Click the thumb­nail to see the results in a table. A brief expla­na­tion of the table: the CM-35 sce­nario assumes that 3 of the poten­tial mem­bers of the crit­i­cal mass agree­ment decide not to join. They are Chi­na, India and Indone­sia. As you can see the pro­ject­ed ‘sta­t­ic’ glob­al wel­fare impact is actu­al­ly slight­ly larg­er if they stand-back because Chi­na and India (espe­cial­ly) would ben­e­fit from the oppor­tu­ni­ty to ‘free ride’ on the open mar­kets of the oth­er 35 coun­tries.

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