The Doha Development Agenda

Yvan Decreux1, Lionel Fontagné2

WTO, November 2, 2010

1: CEPII, ITC
2: CEPII, University Paris 1
 July 2008 package
Based on two different studies
1. Decreux, Y. & Fontagné, L. (2009). Economic Impact of
potential outcome of the DDA, CEPII Research Report 2009-01
More comprehensive: includes trade facilitation

2. Decreux, Y. (2009). Effets d’un accord commercial multilatéral

sur la base des propositions de décembre 2008, Report for the
French Government
More recent:
• Includes precisions added in the December 08 package (anti-
concentration clause and other elements related to sensitive products)
• Some technical improvements
• More sector details in agriculture
 Downloadable
Both studies downloadable here:
https://sites.google.com/site/ydecreux/
 Subjects covered
• Agriculture
• NAMA
• Services
• Trade facilitation
 Agriculture
• Domestic support: mostly the US and EFTA
• Export subsidies
– US, EU
– Agreement found long ago
• Tariffs: EU, EFTA, Japan
 NAMA
• Tariffs only
• Most efforts to be made by developing
countries (despite special and differential
treatment)
• But many are exempt of actual tariff
reductions: Small and Vulnerable Economies,
LDCs
 Export subsidies
• Not really damaging in a deterministic world
(stable prices and production), except for
countries strongly specialised in agriculture
• The world is not deterministic, especially in
agriculture
• Export subsidies (and tariffs) used to moderate
internal instability, to the expense of other
countries
• Early agreement to phase out all export subsidies
by 2013
 Modelling
• Based on the Mirage model (CEPII) + MAcMap
data (ITC, CEPII)
• Some data missing (historical AMS for
instance) → relied on INRA work (J-C Bureau,
J-P Butault) for static impact
• Inflation and growth: all commitments (except
de minimis) expressed in LCU
Inflation issue (illustrated)
 Inflation issue (continued)
• Not taking it into account leads to
– Overestimate the effect of export subsidy
suppression
– Underestimate the effect of domestic support
reduction
• Overall, broadly neutral on agricultural
production as a whole for the EU, but
significant differences at the product level
(milk, sugar)
 Tariff reductions
• Agriculture: tiered formulas
– Sensitive products (tariff-rate quotas)
– Special products
– Tariff escalation issue
– Tropical products
• NAMA: Swiss formulas
– Sensitive products for developing countries
– Anti-concentration clause
 Implementation
• Formulas applied to bound tariffs, at the HS6
level (MAcMap-HS6 2004)
• Impact on applied tariffs
• Aggregated at the sector and region level
 Other subjects
• Services
– Developed and emerging countries, on a free basis
– Much less quantified at this stage
• Trade facilitation
– Potential source of significant gains
– Not really a negotiation issue
 Mirage
• Computable General Equilibrium Model of the
World economy
• Sequential dynamics setting
– Capital accumulation
– Exogenous labour, population and TFP growth
• Exogenous labour supply & unemployment
• Based on GTAP, MAcMap and other data
sources (ILO, IMF, ...)
 Scenarios
• Goods: December 08 proposals
• Services:
– Study 1: 3% cut for country participating in the
specific negotiations on services
– Study 2: 10% cut of the estimated ad-valorem
equivalent of barriers to services trade, all
countries except Sub-Saharan Africa and Rest of
the World (mostly non-WTO members) → really
optimistic
World welfare
Welfare: industrialized regions
Welfare: Asia
Welfare: Latin America
Welfare losses
 Sources of gains / losses
• Allocation efficiency: gains especially
generated on high tariffs
• Terms of trade: balance of concessions &
preference erosion
• Capital accumulation
Employment in agricultural sectors
NAMA exports (selected, bn USD)
NAMA production (selected, bn USD)
 Trade facilitation
• Based on estimates of time spent to export and import, by
Minor and Tsigas
• Time spent at the port supposed to partially converge to
the median performance, for all countries over that median
• No reduction of transport cost assumed
• Expressed as an iceberg cost

1. Minor P. & Tsigas M. 2008. “Impacts of Better Trade Facilitation in

Developing Countries, Analysis with a New GTAP Database for the Value
of Time in Trade”, GTAP 11th Conference, Helsinki.
2. USAID 2007. “Calculating Tariff Equivalents for Time in Trade”, March
 Trade facilitation impact
• Adds almost 100 bn USD gain per year (from
68 bn to 167 bn)
• Especially favorable to developing countries,
in particular Sub-Saharan Africa
• Lack of a clear commitment by all partners to
let trade facilitation benefits be an outcome of
Doha negotiations
 Limitations of the methodology
• Actual impacts of export subsidies not properly
measured in a deterministic framework
• Preference erosion may be overestimated: rules
of origin actually reduce current preference
benefits + importance of the EU in Sub-Saharan
Africa tend to decrease more quickly than
projected
• Impact on poverty and inequality not assessed
• Possible impact of trade competition on
productivity not accounted for
 Conclusion
• Balanced proposal, employment in agriculture
rises in developing countries
• Concern on preference erosion
• Conservative estimates: benefits expected to
be at least as large as the ones mentioned
• Current situation corresponds to a non-
cooperative equilibrium