1. Trade Policy and Global Poverty William R. Cline

2. Global Free Trade Impact: Lift 500 million out of poverty in 15 years $200 billion annual long-term income gain for developing countries At least half from removing industrial country protection This is twice annual aid, and it benefits industrial country consumers Half of gains are in agriculture

3. Poverty Intensity of Imports from Developing Countries (%)

4. Growth Elasticity of Poverty Lognormal distribution: elasticity function of inequality (G), ratio of average to poverty income (z) Lower where inequality higher Higher where z higher Asia typically 3 or more Typically lower in Latin America (1 to 2) because high G; and in Africa (1 to 2) because low z

6. Special-regime export growth, 1981-2001 gx* = -6.9 + 1.93 gw (2.5) +0.41 gylag (1.6) +0.079 mfshr (1.97) +7.76 R*lag (2.36) -.0004 y*lag (1.0) +8.83 LOME (2.36) +7.23 CBI (2.39) +1.66 ATPA (0.29) -10.8 SSA (2.36) Adj R2 =.016; # obs. = 1412

7. Total Tariff Equivalent of Agricultural Protection Against Developing Countries (percent tariff equivalent) USCan.EUJapan Tariffs 8.830.432.676.4 Tariff-Equivalent of domestic subsidies 10.216.810.4 3.2 Total Tariff- Equivalent 19.952.346.482.1

8. Aggregate Measure of Protection (AMP, %) US EU JPN Agriculture 19.946.482.0 Textiles, Apparel 10.911.6 9.2 Other Manufactures 2.1 3.2 1.5 Oil, other 0.9 0.6 0.3 All (AMP) 4.0 9.516.6

9. DC agricultural protection and global poverty π=εw {Φ R [θ R γ R -  ] +Φ U θ U γ U } π= proportionate rise in poverty ε= poverty elasticity w= % increase in world price Φ=share of total poor in sector θ=share of food in budget γ= elast. food price wrt world price  =elast. farm income wrt farm price  =elast. farm price wrt world price

10. LDC food trade and comparative advantage CountryPoor (mn) # of countries Bangladesh –food trade deficit & comp. disadv. 991 Others: total37444 Food trade deficit21334 Food comparative disadvantage 11021

13. Decomposition of static welfare gains Benefit: DGC $bn % FT DEV $bn % FT Total $bn % FT Liberalize: DGC4148 5942 100 44 DEV5765 6949 126 55 sum98113 12891 226 99 Global87100141100 228100 Interaction -11-13 13 9 2 1

14. MFN Tariffs (%) AgricTxApOthMfOilRM DCs35.611.6 3.1 0.1 EU32.618.0 4.1 0.0 US 8.812.1 2.8 0.1 JPN76.410.2 1.2 0.0 DGCs30.318.211.50.7 China29.927.915.30.5 India31.531.624.61.1 Korea50.7 7.9 6.90.4 Brazil22.917.615.40.4 Colom14.718.011.90.8 Tanz22.817.320.32.2 S Afr37.819.3 7.80.2

20. Elasticity of output w.r.t. trade/GDP Levine-Revelt ‘92 0.14 Frankel-Rose ‘00 0.33 Alcala-Ciccone ‘01 1.44 Dollar-Kraay ‘01 0.25-0.48 Easterly ‘03 0.14-0.96 Chaudri-Hakura ’00 (mid-tech industry) 0.18 World Bank GEP ‘02 0.8 OECD ‘03 0.2

23. Long-term Impact of Free Trade on Global Poverty Reduction (millions)

24. Reduction in Poverty from Global Free Trade (millions)

25. Blueprint for a Doha Deal DCs: Phased deep tariff cuts or elimination, including in agriculture, textiles and apparel; DCs: Eliminate agricultural subsidies or fully “decouple” from production; Middle-income DGCs: cut protection at least 50-60 percent; longer phase-in. Second track: immediate free entry from LDCs, HIPCs, SSA; 10-year tax holiday on FDI

26. Test for Preference Erosion ($bn gains) “Country” Free trade US, EU freeze P7 Mozambique 0.130.09 Uganda 0.090.07 South Africa 1.330.28 Tanzania 0.290.24 Other sub-Saharan Africa 2.36-0.02 Central America 4.021.78 Bangladesh 0.39-0.20 Total, 7 poor (P7) 8.612.24