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Winners and Losers: Impact of the Doha Round on Developing Countries

Winners and Losers: Impact of the Doha Round on Developing Countries FINDINGS FROM A GLOBAL GENERAL EQUILIBRIUM MODEL. Sandra Polaski Carnegie Endowment for International Peace Director, Trade, Equity and Development Project March 15, 2006. Director, Trade, Equity and Development Project

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Winners and Losers: Impact of the Doha Round on Developing Countries

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  1. Winners and Losers: Impact of the Doha Round on Developing Countries FINDINGS FROM A GLOBAL GENERAL EQUILIBRIUM MODEL Sandra Polaski Carnegie Endowment for International Peace Director, Trade, Equity and Development Project March 15, 2006 Director, Trade, Equity and Development Project February 9, 2006

  2. Overview of model • An applied general equilibrium model of global trade • Uses the latest global trade database (GTAP Version 6.0) • Models labor markets in developing countries in a more realistic way than many models (including unemployment) • Results today are comparative static

  3. Overview of findings • It is possible to achieve a win-win-win outcome in the Doha Round (for high, middle and low-income countries). • Achieving this result will require much greater attention to the defensive needs of developing countries.

  4. Overview of findings, continued • Failure to address these defensive issues risks imposing net income losses on low-income countries. • A win-win-lose result has negative consequences for those countries’ security and economic stability—and creates new risks for U.S. security and global economic stability.

  5. Global Real Income Gains from Trade Scenarios

  6. Table 3.10. Share of Working Population Engaged in Agriculture, 2003

  7. Table 4.3. Destination of Exports under Agricultural Liberalization in the World Bank Model Change from Baseline in Bilateral Trade Flows from World Bank Doha Scenario 7 (Billions of Dollars) Source: Kym Anderson, William J. Martin, and Dominique van der Mensbrugghe, "Market and Welfare Implications of Doha Reform Scenarios," in Agricultural Trade Reform and the Doha Development Agenda, ed. Kym Anderson and William J. Martin (Washington, D.C.: World Bank, 2006), table 2.16. Note: World Bank Scenario 7 is based on tariff reductions from bound rates based on a tiered formula. Resulting average agricultural tariffs are reduced by 50 percent by developed countries and 21 percent by developing countries. Least developed countries do not make tariff reductions. Tiered reductions in domestic support of agriculture are made from bound aggregate measures of support. Export subsidies for agriculture are eliminated.

  8. Recommendations • Careful sequencing of liberalization and much longer phase-in periods for developing countries • Special and differential treatment for developing country agriculture • Development assistance to diversify and modernize agriculture in developing countries

  9. Recommendations, continued • Preferential treatment for least developed countries beyond 97% duty-free quota-free • Extend some preferences to other low-income countries to avoid economic decline • Trade adjustment assistance for the poor in developing countries

  10. Winners and Losers: Impact of the Doha Round on Developing Countries FINDINGS FROM A GLOBAL GENERAL EQUILIBRIUM MODEL Sandra Polaski Carnegie Endowment for International Peace Director, Trade, Equity and Development Project March 15, 2006 Director, Trade, Equity and Development Project February 9, 2006

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