* Doha deal would be insurance against protectionism
* Full potential gains far from being realised
By Jonathan Lynn
GENEVA, Nov 2 Preventing countries from
backsliding on cuts in tariffs they have undertaken unilaterally
could be the biggest gain from the long-running Doha round to
free up world trade, economists said on Tuesday.
And the modest gains to the world economy from agreeing what
is currently on the table could be improved if negotiators made
progress opening up services that account for 80 percent of rich
economies and a rapidly rising share in developing countries.
Putting a figure on the gains from Doha -- launched nine
years ago this month to open up global commerce and help
developing countries prosper through trade -- is extremely
difficult and estimates vary widely.
In an effort to provide clarity and remind negotiators what
the stakes are, the World Trade Organization invited leading
trade economists to a workshop on recent analyses of Doha.
Speakers compared trade policy to riding a bicycle -- you
keep advancing or you fall off, and agreed the global trading
system umpired by the WTO had helped world trade survive the
economic crisis largely unscathed. But risks remain.
"There has been a constrained protectionist reaction to the
economic crisis of the past few years, but it has not been
tamed," said Jeffrey Schott, senior fellow at the Peterson
Institute for International Economics.
Governments did not respond to the economic crisis by
pushing up import tariffs or subsidies -- the two main areas of
trade policy governed by the WTO.
But during the 2008 food crisis, many states indulged in
beggar-thy-neighbour export restrictions -- largely neglected by
WTO rules, noted David Laborde, a researcher at Washington's
International Food Policy Research Institute (IFPRI).
"The fact that the WTO is putting some rules, or puts light,
on some policies plays a role and this we should defend," he
Laborde argued that Doha represented an insurance policy
against the costs of increased protectionism resulting from a
failure of the negotiations.
An agreement on agriculture and industrial goods -- the two
core areas where negotiations are most advanced -- would boost
annual world real income by $50 billion on current proposals.
If Doha fails, and countries push tariffs to the current
ceilings they have committed to, the losses to world income
would be $350 billion. A Doha deal would limit the losses from
potential tariff hikes, in any new fit of protectionism, to $150
billion, suggesting Doha is worth some $200 billion, he said.
Will Martin, a senior World Bank researcher, said the
current industry and agriculture proposals would boost the world
economy by $121 billion, with three quarters going to rich
countries and one quarter to the developing world.
By contrast, Schott of the Peterson Institute said current
proposals for agriculture and industrial goods would raise world
exports by over $90 billion a year, and world GDP by over $60
billion, which would not persuade leaders to push for a deal.
"It's not ambitious enough... there's not enough on offer to
ensure countries will liberalise existing trade practices in
exchange for Doha offers," he said.
A vital element is services, such as banking and telecoms,
that have been left behind in the talks so far, Schott said.
Liberalising trade in services could boost world GDP by
another $45 billion, excluding the knock-on effect on farming
and manufacturing from better efficiency, and trade facilitation
-- helping developing countries cut red tape and make their
rules more trade-friendly -- could add another $120 billion.
Aaditya Mattoo, a senior researcher at the World Bank, said
the best offers on services liberalisation did not capture the
openness that already existed. "The bottom line is Doha is
playing catch-up with reality and not quite succeeding."
(Editing by Stephanie Nebehay)