Discussion on Poverty and The WTO: Impacts of the Doha Development Agenda
01 Feb '06
10 min read
2. Winters gave a summary of the tariff cuts that it is assumed will be negotiated under the DDA in agriculture and non agriculture market access for developed, developing and least developed countries.
3. Winters warned that if developed countries maintain current tariffs on even a small proportion of tariff lines (2%) under the rubric of special and sensitive products, the world will lose two thirds of the poverty-reducing benefits of the DDA.
4. Winters highlighted the difference between bound and applied rates of tariffs. The bound rate is the rate a country agrees in WTO negotiations, whereas the applied rate is the rate the country actually uses. The bound rate is sometimes many times higher than the applied rate, and so in order to have any effects large cuts in bound tariffs must be negotiated.
5. The presentation then moved to the impact of trade reforms on world exports. Projections based on the ideal scenario of full liberalisation and the more realistic scenario which is DDA liberalisation were compared. For example, the volume of rice exports could be expected to rise 120% with full liberalisation compared to 20% with DDA liberalisation. Figures for apparel exports are 20% vs. 7% - an indication that the DDA round will do less for manufacturing exports.
6. The case study of Mexico demonstrated the importance of estimating price transmission (whether price changes filter through the economy to the prices the poor pay). Poverty is affected by the prices that households receive or pay, not directly by export or import prices on the border. In Mexico, trade liberalisation has the largest impact on areas near the US border where the biggest price changes occur. The smallest price changes occur in the South, in the poorest regions, indicating little impact from trade liberalisation on the poorest. The DDA will provide limited gains in real income. Supplemented by other policies, such as enhanced productivity and price transmission, trade liberalisation could provide increases in incomes to poorer areas.
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