1. A Few Thoughts on Trade Policy and Growth Alan V. Deardorff University of Michigan

2. What’s Needed for Growth? Trade? – It is probably necessary – It is surely not sufficient – The Doha Development Agenda Was a desirable attempt Fostered unrealistic expectations May have failed, in part as a result

3. What’s Needed for Growth? Investment? – Even more necessary – Perhaps sufficient, if you include enough Physical capital Human capital Technology Infrastructure Institutions

4. What’s Needed for Growth? Foreign Direct Investment? – Not necessary – But surely a big help If it complements a country’s own resources If it stimulates domestic investment as well

5. Trade Policy Options The Doha Round – Why previous rounds helped little “Special and differential treatment” Free-riding on MFN missed the biggest gains for developing countries – Own protection remained high – Markets for their most likely exports remained closed

6. Trade Policy Options The Doha Round – Stops and starts in the Doha Round negotiations Cancun Ministerial Hong Kong Ministerial Potsdam Meeting of G4: US, EU, Brazil, India Geneva 2008 “last chance”

7. Trade Policy Options The Doha Round – Prospects Under Bush Under Obama

8. Trade Policy Options PTAs – Preferential Trade Agreements – Alternative to multilateral agreements US-Canada FTA – Started 2 nd wave of PTAs – Prompted by difficulties of Uruguay Round Proliferation of PTAs – Prompted by difficulties of Doha Round

9. 9 Source: WTO “Regional” Trade Agreements Notified to WTO

10. Trade Policy Options PTAs – Benefits Trade creation Larger markets FDI

11. Trade Policy Options PTAs – Costs Trade diversion Reduced incentive for multilateral liberalization Inclusion of issues other than trade » Labor standards » Environment » Intellectual property – Large partners may extract most of the benefits

12. Trade Facilitation What it entails – Reduced costs to Crossing borders and reaching markets Paperwork, delays, “facilitation payments” – Improved physical facilities Ports Transport, within and between countries

13. Trade Facilitation Part of Doha Development Agenda – Included as Singapore Issue Along with Investment, Competition, and Government Procurement Resisted by developing countries; guilt by association? – Agreement close as of Summer 2008

14. Trade Facilitation If Doha Round fails – Need to pursue trade facilitation by other means Separate plurilateral agreement Through World Bank and other institutions Resources are crucial!

15. Conclusion Developing countries need for the trade agenda to keep moving forward. Worry is that, in the current economic climate, it will instead move backwards.