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The potential cost of a failed Doha Round:

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  • Bouet, Antoine
  • Laborde, David

Abstract

"In times of economic turmoil, countries might decide to increase current tariff rates to protect domestic industries or raise revenues in order to finance domestic programs. Using the highest applied or bound rate imposed by countries from 1995 to 2008 as an indicator, this study presents several scenarios regarding the economic costs of a failed Doha Round and a subsequent rush into protectionism. For example, in a scenario where the applied tariffs of major economies would go all the way up to currently bound tariff rates, world trade would decrease by 7.7 percent. In a more modest scenario where countries would raise tariffs to maximum rates applied during the past 13 years, world trade would decrease by 3.2 percent. These increases in duties would reduce world welfare by US$353 billion under the first scenario, and by US$134 billion under the more modest scenario. While such an increase in duties would particularly impact agricultural exports (–6.9 percent), especially in developing countries (–11.5 percent), exports of industrial goods could also face a substantial reduction: 2 percent in developed countries and 4.8 percent in developing countries. This study concludes there would be a potential loss of US$1,064 billion in world trade if world leaders were to fail to conclude the Doha Development Round of trade negotiations in the next few weeks and if countries were to implement subsequently protectionist policies, as occurred after the end of the Uruguay Round. The failure of the negotiations would prevent a US$336 billion increase in world trade that would have come from a reduction in tariffs and domestic support, while a worldwide resort to protectionism would contract world trade by US$728 billion." from text

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series Issue briefs with number 56.

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Date of creation: 2008
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Handle: RePEc:fpr:issbrf:56

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Keywords: Agricultural policies; WTO Doha round; International trade; exports; tariffs; Protectionism;

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References

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  1. Jakob B. Madsen, 2001. "Trade Barriers and the Collapse of World Trade During the Great Depression," Southern Economic Journal, Southern Economic Association, vol. 67(4), pages 848-868, April.
  2. Decreux, Yvan & Valin, Hugo, 2007. "MIRAGE, Updated Version of the Model for Trade Policy Analysis: Focus on Agriculture and Dynamics," Working Papers 7284, TRADEAG - Agricultural Trade Agreements.
  3. Will Martin & Patrick Messerlin, 2007. "Why is it so difficult? Trade liberalization under the Doha Agenda," Oxford Review of Economic Policy, Oxford University Press, vol. 23(3), pages 347-366, Autumn.
  4. Gary Clyde Hufbauer & Jeffrey J. Schott, 2009. "Buy American: Bad for Jobs, Worse for Reputation," Policy Briefs PB09-2, Peterson Institute for International Economics.
  5. Jean, Sebastien & Laborde, David & Martin, Will, 2008. "Choosing sensitive agricultural products in trade negotiations:," IFPRI discussion papers 788, International Food Policy Research Institute (IFPRI).
  6. Antoine Bou�t & Simon Mevel & David Orden, 2007. "More or Less Ambition in the Doha Round: Winners and Losers from Trade Liberalisation with a Development Perspective," The World Economy, Wiley Blackwell, vol. 30(8), pages 1253-1280, 08.
  7. Bouet, Antoine & Decreux, Yvan & Fontagne, Lionel & Jean, Sebastien & Laborde, David, 2005. "A Consistent Picture of Applied Protection Across the World," Working Papers 18859, TRADEAG - Agricultural Trade Agreements.
  8. Boumellassa, Houssein & Debucquet, David Laborde & Mitaritonna, Cristina, 2009. "A picture of tariff protection across the World in 2004: MAcMap-HS6, Version 2," IFPRI discussion papers 903, International Food Policy Research Institute (IFPRI).
  9. Berisha-Krasniqi, Valdete & Bouet, Antoine & Laborde, David & Mevel, Simon, 2008. "The development promise: Can the doha development agenda deliver for least developed countries?," Research briefs 14, International Food Policy Research Institute (IFPRI).
  10. Yvan Decreux & Lionel Fontagné, 2006. "A Quantitative Assessment of the Outcome of the Doha Development Agenda," Working Papers 2006-10, CEPII research center.
  11. Tower, Edward, 1975. "The Optimum Quota and Retaliation," Review of Economic Studies, Wiley Blackwell, vol. 42(4), pages 623-30, October.
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Citations

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Cited by:
  1. Diana Popa, 2012. "The Collapse of the Doha Round and a Possible Completion of Negotiations," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 15(43), pages 165-188, March.
  2. Sebastian Saez, 2009. "Managing Trade Policy During the Economic Crisis," World Bank Other Operational Studies 11113, The World Bank.
  3. Hoekman, Bernard & Martin, Will & Mattoo, Aaditya, 2009. "Conclude Doha : it matters !," Policy Research Working Paper Series 5135, The World Bank.
  4. Patrick A. Messerlin, 2011. "World trade regime, World Trade Organization and large-schale crises," STUDIES IN TRADE AND INVESTMENT, in: Trade-led growth: A sound strategy for Asia, chapter 2 United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  5. Popa, Diana, 2011. "Runda Doha: început fără sfârşit
    [Doha Round: the endless beginning]
    ," MPRA Paper 28764, University Library of Munich, Germany, revised 09 Feb 2011.
  6. Antoine Bouët & David Laborde, 2010. "Why is the Doha Development Agenda Failing? And What Can Be Done? A Computable General Equilibrium–Game Theoretical Approach," The World Economy, Wiley Blackwell, vol. 33(11), pages 1486-1516, November.
  7. Wolfe, Robert, 2010. "Endogenous Learning and Consensual Understanding in Multilateral Negotiations: Arguing and Bargaining in the WTO," Working Papers 90885, Canadian Agricultural Trade Policy Research Network.
  8. Christophe Gouel & Cristina Mitaritonna & Maria Priscila Ramos, 2010. "The Art of Exceptions: Sensitive Products in the Doha Negotiations," Working Papers 2010-20, CEPII research center.
  9. Shamim Shakur & Allan N Rae, 2012. "The impact of comprehensive tariff reductions in multilateral trade: further results from computable general equilibrium simulations," Economics Bulletin, AccessEcon, vol. 32(1), pages 182-189.
  10. Willenbockel, Dirk, 2009. "From overhang to hangover: consequences of protectionist responses to the global crisis for low-income countries," MPRA Paper 16100, University Library of Munich, Germany.
  11. Yvan Decreux & Lionel Fontagné, 2011. "Economic Impact of Potential Outcome of the DDA," Working Papers 2011-23, CEPII research center.

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