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Economic Impact of Potential Outcome of the DDA

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  • Yvan Decreux
  • Lionel Fontagné

Abstract

Using a dynamic computable general equilibrium model of the world economy (MIRAGE), we simulate the impacts of the most recent drafts circulated in the multilateral trade negotiations arena, augmented by a modest outcome of the negotiation in services. The liberalisation of tariffs is implemented at the product level in order to take into account exceptions, flexibilities as well as the non-linear design of the formulas. A reduction in domestic support and the phasing out of export subsidies are taken into account. We integrate dynamic gains up to 2025. We observe a $US70bn world Gross Domestic Product (GDP) long run gain when agriculture and industry are liberalised, a $US85bn gain when a 3% reduction in protection for services is added to certain services sectors. Calculation of the gains associated with trade facilitation suggests roughly a doubling of the expected gains ($US152bn); port efficiency adds another $US35bn. In total, the $US187bn gains identified here in the scenario combining liberalisation in trade in goods and services with trade facilitation and port efficiency, would accumulate to world GDP every year in the medium term, compared to the situation without agreement. Recent proposals for sectoral initiatives would add a further $US15bn on top of these gains.

Suggested Citation

  • Yvan Decreux & Lionel Fontagné, 2011. "Economic Impact of Potential Outcome of the DDA," Working Papers 2011-23, CEPII research center.
  • Handle: RePEc:cii:cepidt:2011-23
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    References listed on IDEAS

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    1. Bouet, Antoine & Laborde Debucquet, David, 2010. "Eight years of Doha trade talks," IFPRI discussion papers 997, International Food Policy Research Institute (IFPRI).
    2. Bouet, Antoine & Laborde, David, 2008. "The potential cost of a failed Doha Round:," Issue briefs 56, International Food Policy Research Institute (IFPRI).
    3. Jean Fouré & Agnès Bénassy-Quéré & Lionel Fontagné, 2010. "The World Economy in 2050: a Tentative Picture," Working Papers 2010-27, CEPII research center.
    4. Decreux, Yvan & Ramos, Maria Priscila, 2007. "How does tariff-rate quota modelling affect CGE results? An application for MIRAGE," Working Papers 7206, TRADEAG - Agricultural Trade Agreements.
    5. Gouel, Christophe & Mitaritonna, Cristina & Ramos, Maria Priscila, 2011. "Sensitive products in the Doha negotiations: The case of European and Japanese market access," Economic Modelling, Elsevier, vol. 28(6), pages 2395-2403.
    6. Lionel Fontagné & Jean Fouré & Maria Priscila Ramos, 2013. "MIRAGE-e: A General Equilibrium Long-term Path of the World Economy," Working Papers 2013-39, CEPII research center.
    7. Antoine Bouët & Yvan Decreux & Lionel Fontagné & Sébastien Jean & David Laborde, 2008. "Assessing Applied Protection across the World," Review of International Economics, Wiley Blackwell, vol. 16(5), pages 850-863, November.
    8. Yvan Decreux & Hugo Valin, 2007. "MIRAGE, Updated Version of the Model for Trade Policy Analysis: Focus on Agriculture and Dynamics," Working Papers 2007-15, CEPII research center.
    9. Lionel Fontagné & Amélie Guillin & Cristina Mitaritonna, 2011. "Estimations of Tariff Equivalents for the Services Sectors," Working Papers 2011-24, CEPII research center.
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    Citations

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    Cited by:

    1. Diakantoni, Antonia & Escaith, Hubert, 2009. "Mapping the tariff waters," WTO Staff Working Papers ERSD-2009-13, World Trade Organization (WTO), Economic Research and Statistics Division.
    2. Zornitsa Kutlina-Dimitrova & Csilla Lakatos, 2014. "Assessing the economic impacts of the EU-Singapore FTA with a dynamic general equilibrium model," International Economics and Economic Policy, Springer, vol. 11(3), pages 277-291, September.
    3. Hoekman, Bernard & Martin, Will & Mattoo, Aaditya, 2010. "Conclude Doha: it matters!," World Trade Review, Cambridge University Press, vol. 9(03), pages 505-530, July.
    4. Gary Clyde Hufbauer & J. Bradford Jensen & Sherry Stephenson & Julia Muir & Martin Vieiro, 2012. "Framework for the International Services Agreement," Policy Briefs PB12-10, Peterson Institute for International Economics.
    5. Revell, Brian & Saunders, John & Saunders, Caroline, 2014. "Assessing the Environmental Impact of Liberalising Agricultural Trade – With Special Reference to EU-Mercosur," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 169728, Agricultural Economics Society.
    6. Christen, Elisabeth & Francois, Joseph & Hoekman, Bernard, 2012. "CGE modeling of market access in services," Policy Research Working Paper Series 6106, The World Bank.
    7. Chahir Zaki, 2010. "Towards an Explicit Modeling of Trade Facilitation in CGE Models: Evidence from Egypt," Working Papers 515, Economic Research Forum, revised 04 Jan 2010.
    8. Bernard Hoekman, 2013. "Re-Thinking Economic Development in the WTO," RSCAS Working Papers PP2013/09, European University Institute.
    9. Simon Evenett, 2014. "The Doha Round impasse: A graphical account," The Review of International Organizations, Springer, vol. 9(2), pages 143-162, June.
    10. Jean-Christophe Bureau & Sébastien Jean, 2013. "International Agricultural Trade and Negotiations : Coping with a New Landscape," FOODSECURE Working papers 8, LEI Wageningen UR.
    11. Decreux, Yvan & Milner, Chris, 2010. "Some New Insights into the Effects of the EU-South Korea Free Trade Area: The Role of Non Tariff Barriers," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 25, pages 783-817.
    12. Brad J. McDonald & Christian Henn, 2011. "Protectionist Responses to the Crisis; Damage Observed in Product-Level Trade," IMF Working Papers 11/139, International Monetary Fund.
    13. Julien Gooris & Cristina Mitaritonna, 2015. "Which import restrictions matter for trade in services ?," Working Papers 2015-33, CEPII research center.
    14. Lionel Fontagné & Amélie Guillin & Cristina Mitaritonna, 2011. "Estimations of Tariff Equivalents for the Services Sectors," Working Papers 2011-24, CEPII research center.
    15. Mehdi Abbas, 2011. "Mondialisation et développement. Quelle soutenabilité au régime de l'organisation mondiale du commerce ?," Post-Print halshs-00602996, HAL.
    16. Gary Clyde Hufbauer & Jeffrey J. Schott, 2012. "Will the World Trade Organization Enjoy a Bright Future?," Policy Briefs PB12-11, Peterson Institute for International Economics.
    17. Bernard M. Hoekman, 2013. "Multilateral Institutions and African Economic Integration," RSCAS Working Papers 2013/67, European University Institute.

    More about this item

    Keywords

    DOHA; Doha Development Round; CGEM; Trade facilitation; INTERNATIONAL TRADE;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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