1. The Doha Development Agenda
Yvan Decreux1, Lionel Fontagné2
WTO, November 2, 2010
1: CEPII, ITC
2: CEPII, University Paris 1

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

3. Downloadable
Both studies downloadable here:

4. Subjects covered
Agriculture
NAMA
Services
Trade facilitation

5. Agriculture Domestic support: mostly the US and EFTA Export subsidies
US, EU
Agreement found long ago
Tariffs: EU, EFTA, Japan

6. 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

7. 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

8. 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

9. Inflation issue (illustrated)

10. 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)

11. Tariff reductions Agriculture: tiered formulas NAMA: Swiss formulas
Sensitive products (tariff-rate quotas)
Special products
Tariff escalation issue
Tropical products
NAMA: Swiss formulas
Sensitive products for developing countries
Anti-concentration clause

12. Implementation
Formulas applied to bound tariffs, at the HS6 level (MAcMap-HS6 2004)
Impact on applied tariffs
Aggregated at the sector and region level

13. Other subjects Services Trade facilitation
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

14. 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, ...)

15. 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

16. World welfare

17. Welfare: industrialized regions

18. Welfare: Asia

19. Welfare: Latin America

20. Welfare losses

21. Sources of gains / losses
Allocation efficiency: gains especially generated on high tariffs
Terms of trade: balance of concessions & preference erosion
Capital accumulation

22. Employment in agricultural sectors

23. NAMA exports (selected, bn USD)
China & Hong-Kong
Japan
Korea & Taiwan
Indonesia & Malaysia
Thailand
North Africa
Sub-Saharan Africa
Forestry
0.0
-0.1
Fishing
0.1
-0.0
Primary products
0.8
1.8
1.1
1.2
-0.2
Textile
11.5
0.9
12.4
7.0
0.5
-0.5
Clothing
36.4
0.2
2.2
0.7
-0.8
-0.6
Leather
7.6
2.3
2.1
Paper & editing
-0.3
Chemicals
2.4
5.0
-0.7
0.3
Metals
1.0
Cars & trucks
32.9
7.4
Trains, Planes, Bikes, Boats
Electronic equipment
3.9
-9.3
Machinery
-6.4
2.5
-1.9
Other Manuf
3.1
-0.4
NAMA
66.2
28.6
20.1
6.5
5.8
-1.8

24. NAMA production (selected, bn USD)
EU27
China & Hong-Kong
Japan
Korea & Taiwan US
North Africa
Sub-Saharan Africa
Forestry
0.1
-0.2
-0.1
-0.0
0.0
Fishing
Primary products
6.8
-7.6
-0.7
2.9
0.7
Textile
-4.9
17.6
-1.4
15.5
-12.1
-2.4
-1.0
Clothing
-5.8
35.1
-4.3
1.1
-9.6
-2.0
-0.8
Leather
6.1
9.9
-1.9
0.2
-1.5
Paper & editing
1.0
1.6
Chemicals
-8.2
-0.3
7.8
6.5
-1.2
Metals
3.8
-10.4
0.5
-2.5
5.2
Cars & trucks
-16.3
-9.5
53.1
3.1
0.4
-0.5
Trains, Planes, Bikes, Boats
4.3
-1.3
-1.1
1.7
Electronic equipment
2.3
2.8
-12.0
12.6
Machinery
15.4
-16.2
-8.3
-0.9
Other Manuf
2.4
1.5
NAMA
15.1
13.3
33.5
10.7
19.3
-2.7

25. 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
Minor P. & Tsigas M “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.
USAID “Calculating Tariff Equivalents for Time in Trade”, March

26. 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

27. 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

28. 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