Poverty Impacts of a WTO Agreement: Synthesis and Overview

This chapter reports on the findings from a major international research project investigating the poverty impacts of a potential Doha Development Agenda. It combines in a novel way the results from several strands of research. Firstly, it draws on an intensive analysis of the DDA Framework Agreement, with particularly close attention paid to potential reforms in agriculture. The scenarios are built up using newly available tariff line data and their implications for world markets are established using a global modeling framework. These world trade impacts, in turn, form the basis for twelve country case studies of the national poverty impacts of these DDA scenarios. The focus countries include: Bangladesh, Brazil (2 studies), Cameroon, China (2 studies), Indonesia, Mexico, Mozambique, Philippines, Russia, and Zambia. While the diversity of approaches taken in these studies limits the ability to draw broader conclusions, an additional study which provides a 15 country cross-section analysis is aimed at this objective. Finally, a global analysis provides estimates for the world as a whole. A few of the main findings follow: • The liberalization targets under the DDA have to quite ambitious if the round is to have a measurable impact on world markets and hence poverty. • Assuming an ambitious DDA, we find the near-term poverty impacts to be mixed; some countries experience small poverty rises and others more substantial poverty declines. On balance, poverty is reduced under this DDA, and this reduction is more pronounced in the longer run. • Allowing minimal tariff cuts for just a small percentage of special and sensitive products virtually eliminates the global poverty reduction due to the DDA. • Deeper cuts in developing country tariffs would make the DDA more poverty friendly. • Key determinants of the national poverty impacts include: the incomplete transmission of world prices to rural households, barriers to the mobility of workers between sectors of the economy, as well as the incidence of national tax instruments used to replace lost tariff revenue. • In order to generate significant poverty reductions in the near term, complementary domestic reforms are required to enable households to take advantage of new market opportunities made available through the DDA. • Sustained long term poverty reductions depend on stimulating economic growth. Here, the impact of the DDA (and trade policy more generally) on productivity is critical. In order to fully realize their growth potential, trade reforms need to be far reaching, addressing barriers to services trade and investment in addition to merchandise tariffs.