mates—probably dramatically so. They do not include theull benets o services liberalization, an agreement on tradeacilitation, additional gains rom the Aid or Tradeinitiative, and other dynamic gains that cannot be capturedby CGE trade models.Nor do these numbers adequately refect the inverse o adeal. There is an idea, a mistaken one, that in the absenceo a Doha Round agreement the alternative is the
. It is not. As Craword Falconer, New Zealand’sambassador to the WTO and chair o the agriculturenegotiations, has warned, i the Doha Round ails it willrepresent “the rst broken window in the neighborhood”o globalization. The WTO would not collapse overnight,but ailure could ultimately compromise the integrity o the multilateral trading system—with all the hugeembedded value it represents to consumers, businesses,and governments around the world—and diminishopportunities or global economic reorm. The weakestWTO members, those least able to deend their interestsoutside o a rules-based trading system, would then suermost o all.
Agriculture has been the principal stumbling-block ormuch o the Doha Round, but negotiators have madeimportant progress in recent months. Current high oodprices have decreased the levels o countercyclical trade-distorting support to armers and may thereore be obscur-ing some o the medium-term benets o what is on thetable in the agriculture negotiations. Binding commitmentsthat do not aect applied protection today will have realbite i the current unusual situation in world agriculturalmarkets reverts to a pattern that has held true since the1950s: declining terms o trade and price volatility.A recent assessment o the drat modalities on agricultureconcludes that a Doha Round agreement would represent“substantial progress in strengthening the reorms startedin the Uruguay Round,” leading to a “substantial andworthwhile outcome…even i some o the headlinereduction numbers in the modalities were closer to thebottom end o the range.”
For developed countries—whose protectionist arm policies have been a centralocus o the Doha Round negotiations—all exportsubsidies would be abolished; overall trade-distortingdomestic support would be reduced by 50-85 percent;and agricultural taris would be reduced by 50-73percent, with greater reductions or higher taris. Theintroduction o a minimum average tari cut and o newdisciplines on commodity-specic trade-distortingdomestic support are valuable additions.In the ace o rising protectionist sentiments, a Doha Roundagreement would lock-in recent agricultural policy reormsand give impetus to urther such reorms in the uture.Policy processes underway in the European Union regard-ing the uture o the Common Agricultural Policy (CAP)would certainly benet rom pressure rom the WTO, aswould any uture re-opening o the 2008 Farm Bill via thebudget reconciliation process in the U.S. Congress.
Non-agricultural market access (NAMA)
The early emphasis on agriculture in the negotiationsrecently gave way to wrangling over manuacturedproducts. Modeling o the NAMA modalitiescommissioned by the German Marshall Fund o theUnited States ound that the ranges o non-agriculturalgoods tari reductions or developed and developingcountries, combined with the exceptions to the generaltari ormula or some countries, would result in only modest increases in exports and national income.
Industrialists in Europe and the United States have beenvocal in their complaints about such small gains.Once again, this is not an adequate appreciation o what isat stake. Renowned trade economist Patrick Messerlin haswarned that the world trade regime in manuacturing issleepwalking on a tightrope above an abyss.
A huge shareo existing trade is living on borrowed time, with manu-acturers simply taking or granted that industrial taris
Economic Policy Program
“A huge share of existing trade is living on borrowed time, with manufacturerssimply taking for granted that industrial tariffs will remain at their current lowapplied levels.”
Mike Gifford and Raul Montemayor, “An Overview Assessment of the Revised Draft WTOModalities for Agriculture,” International Centre for Trade and Sustainable Development,International Food and Agricultural Trade Policy Council, International Food Policy ResearchInstitute, Geneva, June 2008, p. 8.
Joseph Francois, Laura Baughman, Martina Brockmeier, and Rainer Klepper, “A Quantica
tion of the Economic Effects of the February 2008 Draft NAMA Text: Summary of Results,”
draft paper, German Marshall Fund of the United States, Washington, May 14, 2008.
Patrick A. Messerlin, Walking a Tightrope: World Trade in Manufacturing and the Benets of
Binding, GMF Policy Brief, Washington, June 2008.