Economic impact of the Round: comparison of recent studies

1
Economic impact of the Round comparison of
recent studies
European Commission
2
Economic impact of the Round comparison of
recent studies

• As the issue is clearly global (at world scale),
  all studies use a similar type of economic tool
• General Equilibrium Model
• (model representing the world economy as a
  network of economic interactions)
• 2 different sources of divergence in the results
• - Different scenarios
• - Different technical assumptions on how
  markets react
• However, from the set of studies available, some
  clear converging conclusions can be drawn.

3
Services and trade facilitation major potential
gains of the round

• For CEPII, agriculture would contribute 25 of
  world income gains, industrial products 32 and
  services 43
• For Hertel and Keeney, adding services to
  merchandise trade liberalisation boosts global
  gains by 80 percent, from 84Bn to more than
  150Bn
• For Swedish National Board of Trade (as for other
  studies), overall gains double when taking trade
  facilitation into account
• For Sub-Saharan Africa, benefits linked to trade
  facilitation could be equivalent to a doubling of
  official development aid for this region

4
Merchandise most of the gains are not in
agriculture
Results for Doha scenarios regarding merchandise
trade liberalisation

• Different DDA outcomes are explained by diverging
  assumptions regarding reduction in protection and
  technical assumptions on how markets react
• World Bank and Carnegie studies are at two
  extremes of the range
• CEPII, Hertel and Keeney, Swedish National Board
  of Trade, IFPRI and others find more balanced
  results

5
Among DCs, gains from agriculture would be very
unevenly distributed

• liberalisation limited to agriculture would lead
  to very unbalanced impacts between countries the
  gains are limited to
• - developed importers that liberalise their
  agricultural trade (EFTA, Korea and Taiwan, and
  to a lesser extent the EU)
• - to few very competitive exporters (Australia,
  New Zealand, Brazil, Argentina, Thailand)
• Countries in South Asia, Sub-Saharan Africa,
  North-Africa, Middle East, Central Asia, and the
  Caribbean are likely to lose if the Round is
  restricted to agricultural trade reform

6
Benefits of poorest countries are limited by a
number of factors

• Erosion of their preferential access to developed
  countries markets
• Adverse terms of trade effects in particular due
  to a rise in food prices
• If no tariff reductions on their part, no gains
  in efficiency and productivity
• However,
• Trade facilitation is key for these countries
  (potential of USD 20bn for SSA)
• Full duty free coverage of their exports (instead
  of 97 as agreed in Hong Kong) would increase
  income gains for LDCs from USD 8bn from USD 1bn