From Doha to Bali: Why the road should not end now
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This document summarizes the key findings from economic modeling on the potential impacts of a successful Doha Development Round agreement in global agricultural trade and food security. The modeling shows the agreement could significantly reduce bound and applied tariffs for developing countries, increase global agricultural trade volumes by over 5% and values by nearly 7%, and provide welfare gains of over 0.1% of global income. However, if negotiations fail, the global trading system would become less resilient and developing countries could face annual income losses of over $150 billion by 2025 compared to under a successful agreement.
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From Doha to Bali: Why the road should not end now
- 1. From Doha to Bali: Why the road should not end now David Laborde, IFPRI A Post-Bali Food Security Agenda May 6, 2104 Washington, DC More on IFPRI’s Doha page: h3p://www.ifpri.org/book-‐6308/ourwork/researcharea/doha-‐round
- 2. Why should we care? • Global Food Security and a Healthy Global Trading System are two criKcal public goods for a peaceful and sustainable growth; • Food Security and Self Sufficiency are two different and in many cases opposite noKons;
- 3. The DDA: a long and painful process • Why is the Doha Development Agenda Failing? And What Can be Done? (Bouet and Laborde, 2009) • Eight years of Doha trade talks Where Do We Stand? (Bouet and Laborde, 2009) 0 20 40 60 80 100 120 140 160 Agricultural World Trade, USD Blns, annual changes by 2025
- 4. The 2008 Modalities: a working agenda? • Long negoKaKons since 2001 in a stalemate • 21 issues among which Agriculture • Agriculture negoKated over 3 pillars (Market access, DomesKc Support, Export subsidies) • Mix of strict disciplines and flexibiliKes (lower disciplines for Small and Vulnerable Economies, sensiKve and special products) • Specific iniKaKves on some products: e,g, Tropical products • Different visions of what is a “development round” • Keep in mind: Doha is far from free trade and agricultural markets in developing countries nearly untouched • More details available in Laborde and MarKn (2011), several chapters in Unfinished Business (h3p://go.worldbank.org/L8904MG5A0) and Laborde and MarKn (2012) and Laborde (2012).
- 5. Effects on Agricultural Tariffs Region Trade weighted Bound rates on Imports Trade weighted Applied rates on Imports (including preferenDal regimes) Trade weighted Applied rates on exports (including preferenDal regimes) B a s e rate DDA without flexibiliKes DDA with flexibiliKes B a s e rate DDA without flexibiliKes D D A w i t h flexibiliKes Base rate DDA without flexibiliKes D D A w i t h flexibiliKes ALL 40.3 20.7 29.9 14.6 9 11.9 14.6 9 11.9 HIC 30.9 12.1 18.4 15.5 7.5 11.1 15.1 9.3 12.3 LMIC 53 33 45.4 13.3 11.3 13.2 14.3 8.6 11.5 LDCs 94.1 59.3 93.7 12.5 12.2 12.5 7.4 6.5 7.1 As a % of reducKon from the base rate ALL -‐49% -‐26% -‐38% -‐18% -‐38% -‐18% HIC -‐61% -‐40% -‐52% -‐28% -‐38% -‐19% LMIC -‐38% -‐14% -‐15% -‐1% -‐40% -‐20% From Laborde and MarKn (2011, 2012) Regions Bound tariffs on Imports Average Applied tariffs Average Applied Tariffs faced on exports Baseline Formula Formula + Flex Baseline Formula F o r m u l a + Flex Baseline Formula Formula + Flex Brazil 41.8 26.7 34.9 4.8 4.7 4.8 18.8 9.8 13.7 Chile 26.4 17.3 24.8 1.7 1.7 1.7 8.7 5.2 6.4 Mexico 52.9 32.7 41.2 3.9 3.3 3.9 4.2 2.3 3.1 Rest of LAC 58.7 35.6 50.9 9.8 9.4 9.8 13.4 6.7 10.1
- 6. Global consequences, % changes Sector NAMA modaliDes AMA -‐ DomesDc Support AMA -‐ Export Subsidies AMA -‐ Market Access Developed AMA -‐ Market Access Developing Total AMA AMA+NAMA World Trade -‐ Volume Agricultural trade -‐0.16 -‐1.02 -‐0.64 6.22 0.62 5.18 5.02 Non Agricultural trade 3.35 -‐0.00 -‐0.00 -‐0.01 0.00 -‐0.01 3.34 All Goods 2.68 -‐0.01 -‐0.02 0.32 0.03 0.32 3.00 World Trade -‐ Value Agricultural trade 0.39 0.21 -‐0.45 6.21 0.63 6.6 6.99 Non Agricultural trade 3.33 -‐0.02 -‐0.00 0.02 0.00 0.00 3.33 All Goods 2.66 -‐0.05 -‐0.03 0.29 0.03 0.24 2.90 World Welfare 0.08 0.010 -‐0.001 0.067 0.002 0.078 0.158 as a share of AMA and NAMA gains 50.6% 6.3% -‐0.6% 42.4% 1.3% 49.4% 100% as a share of AMA gains 12.8% -‐1.3% 85.9% 2.6% 100% From Laborde (2012), MIRAGE CGE simulaKons
- 7. Sectoral results 7 From Laborde (2012), MIRAGE CGE simulaKons
- 8. Illustration: Effects of the DDA: Ag. Trade and Production From Laborde (2012), MIRAGE CGE simulaKons
- 9. Consequences of a failed agreement: A less resilient system -‐250.0 -‐200.0 -‐150.0 -‐100.0 -‐50.0 0.0 50.0 Developed countries Developing countries Annual Real Income changes, $Blns by 2025 DDA Increase to UR bound tariffs Increase to post DDA bound tariffs Increase to last ten years tariff peaks within UR limits Increase to last ten years tariff peaks within DDA limits See Bouet and Laborde, 2008 “The potenKal cost of a failed Doha Round”
- 10. Bali package and Beyond • Limited achievements in Bali: – Trade FacilitaKon: real potenKal – DomesKc support and co3on case: nothing new – Export restricKons: no moratorium – Food Security: OpportuniKes and Challenges • But an impressive commitment of countries to negoKate and keep alive the DDA • More informaKon in Diaz-‐Bonilla and David Laborde, 2014.