by Matthew Adler, Peterson Institute for International Economics
and Claire Brunel, Peterson Institute for International Economics
and Gary Clyde Hufbauer, Peterson Institute for International Economics
and Jeffrey J. Schott, Peterson Institute for International Economics
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The Doha Round is the longest-running trade liberalization negotiation in the postwar era. Despite its longevity, the end is not yet in sight as parties disagree on the depth of liberalization necessary in agriculture and nonagricultural market access (NAMA). This rift is prolonging the Round's completion and hindering the discussion of other important issues on the negotiating agenda, particularly services. To shed light on the debate concerning the benefits from Doha, the authors use three metrics to estimate the potential gains from liberalization in agriculture and NAMA. The metrics are first applied to scale the payoff from specific "modalities" set forth in papers drafted by the chairs of the Doha negotiating groups. Over $65 billion of additional world exports annually and roughly $100 billion in annual world GDP gains can come just from the agriculture and NAMA negotiations. The reason GDP gains are so large is that both imports and exports contribute to economic efficiency and income growth, and world two-way trade gains are more than double export gains alone. The agriculture and NAMA trade and GDP gains are written into the negotiating modalities and thus are the most certain portion of the authors' projected Doha outcome.
The authors then apply the metrics to estimate the benefits that could result from sector initiatives that would lower trade barriers for chemicals, electronic/electrical goods, and environmental goods beyond the tariff cuts outlined in the negotiating modalities. They estimate that the three sector agreements would increase world exports by $57 billion annually and world GDP by $104 billion each year.
Finally, the authors analyze prospective gains from liberalization of services barriers and improvements in trade facilitation. A 10 percent reduction in the tariff equivalent of applied services barriers would increase annual world exports by an estimated $56 billion and boost annual world GDP by an estimated $100 billion. World exports could increase by $340 billion if underperforming countries are brought up to the global average in four key areas of trade facilitation (port efficiency, customs environment, own regulatory environment, and service-sector infrastructure). Gains from meaningful trade facilitation would increase world GDP by roughly $385 billion annually.
Overall, the authors estimate that the boost to global exports from concluding the Doha Round could range between $180 billion and $520 billion annually, depending on the level of ambition. The potential GDP gains are significant, between $300 billion and $700 billion annually, and well balanced between developed and developing countries.
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