The millennium round: An economic appraisal

This paper combines both qualitative and quantitative economic analysis which shows that further multilateral trade liberalization through a WTO trade round could yield significant benefits for the global economy. The qualitative analysis restates the economic case for further multilateral trade liberalization, pointing out that trade has served as one of the engines of the global economy and that trade liberalization is a positive-sum game, whereas trade barriers generate significant welfare costs for countries which introduce them. It also highlights the role which trade liberalization can play in raising the growth prospects of the developing countries. The quantitative analysis reports results from a global computable general equilibrium (CGE) model. It is estimated that a 50 per cent across-the-board cut in global protection in all agricultural, industrial and services sectors coupled with a modest reduction in trade costs from a WTO agreement on trade facilitation could lead to annual welfare gains of around $400 billion for the world economy. In addition, a WTO agreement on competition could generate an annual welfare gain of approximately $85 billion. The study also refers to an independent and conservative estimate of a $75 billion annual windfall from a WTO agreement on investment.