## 1. Estimated Global Welfare Gains Through Doha ## Source details **Canonical URL:** [1. Estimated Global Welfare Gains Through Doha](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2011/_111611.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2011/_111611.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2011/_111611.pdf.json) --- ### Introduction and context - The Doha Development Agenda (DDA) was launched in November 2001 with an explicit aim to conclude a broad deal to facilitate development through trade. - The Doha round involves all 153 WTO members and covers nine areas within a “single undertaking” format. - Since 2008, talks have largely stalled, notably over tariff reduction initiatives for specific industrial goods sectors (“sectorals”). - G-20 leaders at their November summit recognized the Doha strategy’s shortcomings and directed trade ministers to explore “fresh, credible approaches to furthering negotiations” on the multilateral trade agenda. - Trade facilitation (TF) has seen considerable progress and agreement appears within reach; TF reforms are estimated to be highly cost efficient. ### What stalled Doha? - Structural and political obstacles: - Changed geopolitical circumstances and increased importance of large emerging markets (EMs) since 2001. - The single-undertaking format requires agreement across nine areas, allowing any issue to be revisited until everything is agreed. - Fundamental disagreement between advanced market countries (AMs) and EMs: - AMs demand higher actual market access for manufactures, especially from some 30 EMs. - Many developing countries have already undertaken sizable unilateral applied tariff reductions, creating a gap between applied policies and bound commitments; cuts in EMs’ bound rates therefore imply modest additional market access for AMs. - EMs emphasize the development aim of the round and expect credit for past unilateral liberalization. - Sectorals (since 2008) became highly contentious: - AMs (the United States in particular) push for additional sectoral liberalization on top of broad-based cuts to secure higher actual market access. - EMs insist sectorals be voluntary as per the Doha declaration; AMs want participation massing at least 90 percent of world trade to mitigate free-riding concerns. - Proposed sectoral candidates discussed include chemicals, industrial machinery, and electrical and electronic products. - Other contentious areas and slow progress: - Agriculture: remaining disagreements include how flexibilities in tariff cuts are exercised and the agricultural special safeguard mechanism (SSM). - Rules negotiations (anti-dumping, industrial subsidies and countervailing measures, fisheries subsidies) show no substantive convergence. - Services offers remain un-ambitious; members’ offers in services negotiations are twice as restrictive as applied policies. - Areas of progress: - Trade facilitation (TF) progress; TF reforms are estimated to be highly cost efficient. ### Why Doha is worthwhile - Two main reasons to conclude Doha: - Direct benefits from actual new market access. - Increased security in trading relationships by updating WTO commitments and multilateral trade rules, thereby locking in past unilateral liberalization and limiting protectionist potential. - Concluding Doha would: - Fortify the global recovery and backstop against protectionist pressures. - Generate growth through multiple channels: sector re-orientation by comparative advantage; rules-based reduction in protection variability encouraging investment; complementarity with domestic reforms (including finance); and enhanced returns for agricultural and low-income country (LIC) development. - Trade facilitation and TF-related technical assistance can help LDCs prepare to benefit from reforms. ### Estimated welfare gains and quantitative findings - Traditional literature estimates (pre-productivity effects): - Trade facilitation and market access packages in agriculture and NAMA typically estimated to yield roughly 1/4 percent of world GDP. - Accounting for firm-level productivity and export entry effects: - Balistreri et al (2011) suggest productivity effects increase estimated gains fourfold. - Extrapolating with this adjustment, a basic Doha package excluding NAMA sectorals and fisheries could yield a global welfare gain up to 1 percent of world GDP. - A conservative quantified range presented: 0.2 to 1 percent of world GDP for global welfare gains from Doha. - Note: general equilibrium effects not accounted for in the extrapolation may somewhat lower the 1 percent estimate. - Specific numeric references from modalities and past rounds: - Current draft Doha modalities envisage cuts of 40 to 50 percent to bound tariffs on industrial products. - The highest average cuts in bound tariffs for industrial products in prior rounds were 38 percent for the Uruguay round (1986-94) and 37 percent for the Kennedy round (1963-67). - Trade facilitation cost-efficiency evidence: - Helble et al (2009) estimate that for each dollar invested in such reforms, trade could increase by 700 dollars. ### Insurance value of Doha and trade-war scenarios - Doha would translate large unilateral tariff cuts of the past into binding commitments, reducing the ability of governments to raise tariffs in the future and thereby boosting security in trading relationships. - In a trade war scenario, tighter Doha commitments vis-à-vis Uruguay round commitments could help avoid a loss in global GDP on the order of 1 percent, assuming that the latter are not violated. - If Uruguay bindings were to be breached in a hypothetical trade war scenario, costs would be much higher in terms of global welfare and damage to the WTO’s credibility. - Stability in trade relations is essential for small firms to overcome fixed costs of entering export markets and become drivers of growth. - Recent past behavior: more than 20 countries routinely increased tariffs on more than 10 percent of products per year; frequency of tariff increases exceeded 10 percent of tariff lines for agriculture in the United States and the European Union for key periods. - Stronger WTO disciplines make countries resist protectionist pressures better; hence Doha’s insurance value is substantive even in normal times. - Table 1: Selected estimated global welfare gains through Doha (percent of GDP and US$ billions) - Direct gains from Doha package: 0.2-1.4 percent — 150-900 US$ billions - NAMA and Agriculture: 0.1-0.4 percent — 50-250 US$ billions — 57-228 (DF), 59-236 (BL), 63-252 (HSABW), 160-640 (LMV) - Services: 0.001 percent — 0-40 (DF) US$ billions, 40-160 (HSABW) US$ billions - Trade facilitation: 0.2-0.6 percent — 100-400 US$ billions — 99-396 (DF), 104-416 (HSABW) - Rules (Fisheries): 0.1 percent — 50 US$ billions (HMM) - NAMA Sectorals: 0.1-0.3 percent — 50-200 US$ billions — 50-200 (HSABW) - Insurance value of Doha in trade war scenarios: 0.2-1.2 percent — 100-750 US$ billions - If tariffs raised to Uruguay round bound rates: 0.3-1.2 percent — 184-736 US$ billions — 184-736 (BL) - If tariffs raised to their highest applied rates during 1995-2006: 0.2-0.7 percent — 108-432 US$ billions — 108-432 (BL) - Notes (as in source): - Most papers use computable general equilibrium (CGE) models; upper bound of ranges results by multiplying estimates by four except for fisheries; fisheries estimates not multiplied by four. - The 0.2 percent of GDP lower end excludes fisheries and NAMA sectorals due to greater uncertainty. - Estimates only cover gains due to increased market access through tariff cuts; LMV justify higher estimate by more detailed trade data. - Zero is assumed as a consensus estimate for services because current services offers would not liberalize applied policies. - Trade facilitation estimates assume countries improve customs procedures halfway towards the sample median. - Fisheries estimate covers value from abolition of fisheries subsidies via reduction of overfishing (75 percent of global fish stocks are over exploited or depleted). - For sectorals, HSABW assume tariffs on chemical, electronic and electrical, and environmental goods are reduced to zero worldwide. - Difference between tariffs being raised to (i) their (higher) Uruguay Round bound levels and (ii) their (lower) Doha round bound levels. - Difference between tariffs being raised to their highest applied levels during 1995-2006, capped by (i) their (higher) Uruguay Round bound levels and (ii) their (lower) Doha round bound levels. ### Distributional effects and country-group impacts - Gains from Doha would be broadly shared among country groups; different countries benefit in different ways due to the extensiveness of the package. - Advanced markets (AMs) gain most in terms of insurance value because developing country tariff bindings stand 15 percentage points above their applied policies on average, compared to a 2.7 point gap for AMs. If Doha were concluded, these gaps would shrink to 8 and 2.1 percentage points, respectively. - Insurance gains for emerging markets (EMs) would come mainly in agriculture, through lower tariff and domestic subsidy bindings by AMs. - New subsidy bindings may not translate into cuts in AM applied subsidies immediately because high food prices imply low applied subsidies; bindings could translate to cuts if food prices fall. - New market access: applied tariff rates would be reduced by around 1 percentage point on average across country groups with larger cuts in agriculture; tiered formulas would cut high tariffs disproportionately. - Low-income countries (LICs): largest gains would come through the trade facilitation agreement. Risk: if AM subsidy cuts lead to food price increases, temporary welfare loss for food-importing LICs; longer-term gains from developing country farming system responses and investment. - Social mitigation: net food selling households in most LICs are poorer on average than net food buying households; expansion of agricultural production in LICs will benefit the landless through improved employment opportunities. - Table 2: Pre- and Post-Doha Applied and Bound Tariff Rates (in percent) — selected entries - Total — Applied Rates Faced by WTO Members / Bound Rates Levied by WTO Members (Status Quo / Doha) - All countries: 3.7 / 2.9 — 9.9 / 6.9 — 3.7 / 2.9 — 9.7 / 6.9 - High income countries: 2.5 / 1.7 — 5.2 / 3.8 — 3.6 / 2.9 — 9.6 / 6.7 - Developing - non LDC: 6.9 / 6.2 — 21.8 / 14.4 — 3.9 / 2.9 — 10.0 / 7.3 - LDCs: 11.1 / 11.1 — na / na — 3.3 / 2.4 — 14.5 / 10.6 - Agriculture — Applied / Bound (Status Quo / Doha) - All countries: 14.5 / 11.8 — 40.3 / 29.9 — 14.5 / 11.8 — 40.4 / 29.9 - High income countries: 15.0 / 11.0 — 31.9 / 20.2 — 14.9 / 12.1 — 40.3 / 29.1 - Developing - non LDC: 13.4 / 13.3 — 53.9 / 45.4 — 14.2 / 11.5 — 39.8 / 30.4 - LDCs: 12.5 / 12.5 — 94.1 / 94.1 — 7.4 / 7.1 — 56.8 / 45.7 - NAMA — Applied / Bound (Status Quo / Doha) - All countries: 2.9 / 2.3 — 7.8 / 5.3 — 2.9 / 2.3 — 7.7 / 5.3 - High income countries: 1.7 / 1.1 — 3.5 / 2.7 — 3.0 / 2.4 — 7.9 / 5.5 - Developing - non LDC: 6.4 / 5.6 — 19.1 / 11.8 — 2.9 / 2.1 — 7.2 / 5.1 - LDCs: 10.9 / 10.9 — na / na — 2.8 / 1.8 — 8.9 / 5.9 ### Non-Doha issues and recommended WTO focus - Timely non-Doha issues are increasingly important: proliferation of bilateral and regional trade agreements, concerns over food and energy security, and trade-related climate change issues. - The Fund should continue to support Doha and help unlock political attention, including through surveillance of key stakeholder countries; a partial package conclusion in the near future would help maintain momentum. - Key multilateral issues to be debated at the WTO: - Monitoring of protectionist measures: - Strengthen coverage of less transparent measures (non-tariff barriers, domestic procurement) in Trade Policy Reviews and the multilateral monitoring mechanism introduced in response to the global crisis. - Focus on measures with the highest trade impacts to preserve relevance and secretariat capacity. - Food and energy security: - Current GATT rules authorize temporary export restrictions; Doha envisages improving disciplines on various export restrictions but not on export taxes. - Trade liberalization is sometimes reversed in scarcity, making trade unreliable for food security; multilateral attention is needed. - Energy security will require institutional cooperation between the IEA, OPEC, and the WTO. - Working towards an open regionalism: - Address complex FTA spaghetti-bowl structures and restrictive rules of origin that hamper trade and supply-chain formation. - Encourage harmonization via multilateral rules or best practices (liberal FTA rules of origin, origin accumulation, docking provisions). - Trade-related climate change issues: - Border-tax adjustments may be considered to avoid carbon leakage and level the playing field, but GATT compatibility and measurement of emissions pose challenges; multilateral guidelines and best practices would help. - Government procurement: - Government procurement markets often equal 10-15 percent of GDP; expanding coverage and liberalization (e.g., through accession to the Agreement on Government Procurement) could generate substantial welfare gains. - Allowing for plurilateral agreements: - Plurilateral agreements within the WTO could enable coalitions to pursue deeper liberalization while preserving transparency and openness; results should be made comparable to multilateral outcomes. - Competition policy: - Although dropped from Doha agenda in 2004, competition issues (export cartels, anticompetitive aspects of large mergers) remain important; a plurilateral agreement among a subset of WTO members could be feasible in the next decade. ### Conclusion and policy recommendations - Overcoming remaining obstacles in Doha requires high-level political attention; the deal is attractive, boosts welfare and security in trade relationships considerably, but is hard to sell domestically in many countries. - The recent G-20 initiative could help build political will; policymakers should better communicate the large benefits of Doha and its insurance value against protectionist risks. - The Fund should continue to support the Doha round and help build political will, including by highlighting the value of an agreement. - Maintain reinforced monitoring of protectionist measures, attention to food and energy security, trade-related climate issues, and fostering an open regionalism as priority matters to be tackled. - Maintaining an active multilateral negotiating forum at the WTO can help forestall reemergence of a 19th century style “Great Powers” trade system and keep trade a reliable route to global integration. *Prepared by Christian Henn and Jean-Baptiste Le Hen, under the guidance of Ranil Salgado (all SPR) and in consultation with the World Trade Organization (WTO).* ### 1. Estimated Global Welfare Gains Through Doha ...................................................................8 ### 1. Estimated Global Welfare Gains Through Doha ### Introduction and context - The Doha Development Agenda (DDA) was launched in November 2001 with an explicit aim to conclude a broad deal to facilitate development through trade. - The Doha round involves all 153 WTO members and covers nine areas within a “single undertaking” format. - Since 2008, talks have largely stalled, notably over tariff reduction initiatives for specific industrial goods sectors (“sectorals”). - G-20 leaders at their November summit recognized the Doha strategy’s shortcomings and directed trade ministers to explore “fresh, credible approaches to furthering negotiations” on the multilateral trade agenda. ### What stalled Doha? - Key structural reasons for the stalemate: - Changed geopolitical circumstances and increased importance of large emerging markets (EMs) since 2001. - The single-undertaking format requires agreement across nine areas, allowing any issue to be revisited until everything is agreed. - Fundamental disagreement between advanced market countries (AMs) and EMs: - AMs demand higher actual market access for manufactures, especially from some 30 EMs. - Many developing countries have already undertaken sizable unilateral applied tariff reductions, creating a gap between applied policies and bound commitments; cuts in EMs’ bound rates therefore imply modest additional market access for AMs. - EMs emphasize the development aim of the round and expect credit for past unilateral liberalization. - Sectorals have become the most contentious since 2008: - AMs (the United States in particular) push for additional sectoral liberalization on top of broad-based cuts to secure higher actual market access. - EMs insist sectorals be voluntary as per the Doha declaration; AMs want participation massing at least 90 percent of world trade to mitigate free-riding concerns. - Proposed sectoral candidates discussed include chemicals, industrial machinery, and electrical and electronic products. - Other contentious areas and slow progress: - Agriculture: remaining disagreements include how flexibilities in tariff cuts are exercised and the agricultural special safeguard mechanism (SSM). - Rules negotiations (anti-dumping, industrial subsidies and countervailing measures, fisheries subsidies) show no substantive convergence. - Services offers remain un-ambitious; members’ offers in services negotiations are twice as restrictive as applied policies (see Figure 1). - Areas of progress: - Trade facilitation (TF) has seen considerable progress and agreement appears within reach; TF reforms are estimated to be highly cost efficient. ### Why Doha is worthwhile - Two main reasons to conclude Doha: - Direct benefits from actual new market access. - Increased security in trading relationships by updating WTO commitments and multilateral trade rules, thereby locking in past unilateral liberalization and limiting protectionist potential. - Concluding Doha would: - Fortify the global recovery and backstop against protectionist pressures. - Generate growth through multiple channels: sector re-orientation by comparative advantage, rules-based reduction in protection variability encouraging investment, complementarity with domestic reforms (including finance), and enhanced returns for agricultural and low-income country (LIC) development. - Trade facilitation and TF-related technical assistance can help LDCs prepare to benefit from reforms. ### Estimated welfare gains and quantitative findings - Traditional literature estimates (pre-productivity effects): - Trade facilitation and market access packages in agriculture and NAMA typically estimated to yield roughly 1/4 percent of world GDP. - Accounting for firm-level productivity and export entry effects: - Balistreri et al (2011) suggest productivity effects increase estimated gains fourfold. - Extrapolating with this adjustment, a basic Doha package excluding NAMA sectorals and fisheries could yield a global welfare gain up to 1 percent of world GDP. - A more conservative quantified range presented: 0.2 to 1 percent of world GDP for global welfare gains from Doha. - Note: general equilibrium effects not accounted for in the extrapolation may somewhat lower the 1 percent estimate. - Specific numeric references from modalities and past rounds: - Current draft Doha modalities envisage cuts of 40 to 50 percent to bound tariffs on industrial products. - The highest average cuts in bound tariffs for industrial products in prior rounds were 38 percent for the Uruguay round (1986-94) and 37 percent for the Kennedy round (1963-67). - Trade facilitation cost-efficiency evidence: - Helble et al (2009) estimate that for each dollar invested in such reforms, trade could increase by 700 dollars. ### Policy implications and recommendations - Continue to pursue a Doha conclusion because: - It would deliver new market access and enhance the security of the multilateral trading system by lowering members’ commitments on tariffs toward lower applied levels. - It would help sustain global economic recovery and limit protectionist pressures. - Simultaneously, devote resources to timely non-Doha issues rather than await a full Doha breakthrough: - Key non-Doha priorities include monitoring protectionist measures, food and energy security, trade-related aspects of climate change, and creation of open regionalism (improving design and transparency of free trade agreements or allowing plurilateral agreements under WTO auspices). - Services liberalization should be part of a post-Doha agenda given limited ambition in current offers and proliferation of regional trade agreements including services chapters. - The WTO should continue to play a central role in monitoring services liberalization, with the Fund contributing expertise on financial services. - High-level political will is essential to unlock progress, including on a potential partial package with focus on least developed countries (LDCs), noting difficulties in assembling packages that also satisfy AM domestic constituencies. *Prepared by Christian Henn and Jean-Baptiste Le Hen, under the guidance of Ranil Salgado (all SPR) and in consultation with the World Trade Organization (WTO).* ### 16. As importantly, the “insurance value” of Doha is high. Doha would boost security ### 16. As importantly, the “insurance value” of Doha is high. Doha would boost security ### Insurance value of Doha and rationale - Doha would translate large unilateral tariff cuts of the past into binding commitments, reducing the ability of governments to raise tariffs in the future and thereby boosting security in trading relationships. - In a trade war scenario, tighter Doha commitments vis-à-vis Uruguay round commitments could help avoid a loss in global GDP on the order of 1 percent (see Table 1), assuming that the latter are not violated. - If Uruguay bindings were to be breached in a hypothetical trade war scenario, costs would be much higher in terms of global welfare and damage to the WTO’s credibility. - Stability in trade relations is essential for small firms to overcome fixed costs of entering export markets and become drivers of growth (Freund, 2000; Melitz, 2003). - Recent past behavior: more than 20 countries routinely increased tariffs on more than 10 percent of products per year; frequency of tariff increases exceeded 10 percent of tariff lines for agriculture in the United States and the European Union for key periods (Bouet and Laborde, 2009). - Stronger WTO disciplines make countries resist protectionist pressures better; hence Doha’s insurance value is substantive even in normal times. ### Table 1: Estimated Global Welfare Gains through Doha (selected rows) - Range of estimates 1/ - Percent of GDP — US$ billions — US$ billions (as presented) - Direct gains from Doha package 2/ : 0.2-1.4 — 150-900 - NAMA and Agriculture 3/ : 0.1-0.4 — 50-250 — 57-228 (DF), 59-236 (BL), 63-252 (HSABW), 160-640 (LMV) - Services 4/ : 0.001 — 0-40 (DF), 40-160 (HSABW) - Trade facilitation 5/ : 0.2-0.6 — 100-400 — 99-396 (DF), 104-416 (HSABW) - Rules (Fisheries) 6/ : 0.1 — 50 (HMM) - NAMA Sectorals 7/ : 0.1-0.3 — 50-200 — 50-200 (HSABW) - Insurance value of Doha in trade war scenarios : 0.2-1.2 — 100-750 - If tariffs raised to Uruguay round bound rates 8/ : 0.3-1.2 — 184-736 — 184-736 (BL) - If tariffs raised to their highest applied rates during 1995-2006 9/ : 0.2-0.7 — 108-432 — 108-432 (BL) Notes (as in source): - 1/ Most papers use computable general equilibrium (CGE) models; upper bound of ranges results by multiplying estimates by four except for fisheries; fisheries estimates not multiplied by four. - 2/ The 0.2 percent of GDP lower end excludes fisheries and NAMA sectorals due to greater uncertainty. - 3/ Estimates only cover gains due to increased market access through tariff cuts; LMV justify higher estimate by more detailed trade data. - 4/ Zero is assumed as a consensus estimate for services because current services offers would not liberalize applied policies. - 5/ Trade facilitation estimates assume countries improve customs procedures halfway towards the sample median. - 6/ Fisheries estimate covers value from abolition of fisheries subsidies via reduction of overfishing (75 percent of global fish stocks are over exploited or depleted). - 7/ For sectorals, HSABW assume tariffs on chemical, electronic and electrical, and environmental goods are reduced to zero worldwide. - 8/ Difference between tariffs being raised to (i) their (higher) Uruguay Round bound levels and (ii) their (lower) Doha round bound levels. - 9/ Difference between tariffs being raised to their highest applied levels during 1995-2006, capped by (i) their (higher) Uruguay Round bound levels and (ii) their (lower) Doha round bound levels. ### Distributional effects and country-group impacts - Gains from Doha would be broadly shared among country groups; different countries benefit in different ways due to the extensiveness of the package. - Advanced markets (AMs) gain most in terms of insurance value because developing country tariff bindings stand 15 percentage points above their applied policies on average, compared to a 2.7 point gap for AMs. If Doha were concluded, these gaps would shrink to 8 and 2.1 percentage points, respectively (Table 2). - Insurance gains for emerging markets (EMs) would come mainly in agriculture, through lower tariff and domestic subsidy bindings by AMs. - New subsidy bindings may not translate into cuts in AM applied subsidies immediately because high food prices imply low applied subsidies; bindings could translate to cuts if food prices fall. - New market access: applied tariff rates would be reduced by around 1 percentage point on average across country groups with larger cuts in agriculture; tiered formulas would cut high tariffs disproportionately (Laborde et al, 2009). - Low-income countries (LICs): largest gains would come through the trade facilitation agreement. Risk: if AM subsidy cuts lead to food price increases, temporary welfare loss for food-importing LICs; longer-term gains from developing country farming system responses and investment. - Social mitigation: net food selling households in most LICs are poorer on average than net food buying households (Aksoy and Isik-Dikmelik, 2008); expansion of agricultural production in LICs will benefit the landless through improved employment opportunities (Ravallion, 1990; Dyer et al, 2005). ### Table 2 (selected figures): Pre- and Post-Doha Applied and Bound Tariff Rates (in percent) - Total — Applied Rates Faced by WTO Members / Bound Rates Levied by WTO Members (Status Quo / Doha) - All countries: 3.7 / 2.9 — 9.9 / 6.9 — 3.7 / 2.9 — 9.7 / 6.9 - High income countries: 2.5 / 1.7 — 5.2 / 3.8 — 3.6 / 2.9 — 9.6 / 6.7 - Developing - non LDC: 6.9 / 6.2 — 21.8 / 14.4 — 3.9 / 2.9 — 10.0 / 7.3 - LDCs: 11.1 / 11.1 — na / na — 3.3 / 2.4 — 14.5 / 10.6 - Agriculture — Applied / Bound (Status Quo / Doha) - All countries: 14.5 / 11.8 — 40.3 / 29.9 — 14.5 / 11.8 — 40.4 / 29.9 - High income countries: 15.0 / 11.0 — 31.9 / 20.2 — 14.9 / 12.1 — 40.3 / 29.1 - Developing - non LDC: 13.4 / 13.3 — 53.9 / 45.4 — 14.2 / 11.5 — 39.8 / 30.4 - LDCs: 12.5 / 12.5 — 94.1 / 94.1 — 7.4 / 7.1 — 56.8 / 45.7 - NAMA — Applied / Bound (Status Quo / Doha) - All countries: 2.9 / 2.3 — 7.8 / 5.3 — 2.9 / 2.3 — 7.7 / 5.3 - High income countries: 1.7 / 1.1 — 3.5 / 2.7 — 3.0 / 2.4 — 7.9 / 5.5 - Developing - non LDC: 6.4 / 5.6 — 19.1 / 11.8 — 2.9 / 2.1 — 7.2 / 5.1 - LDCs: 10.9 / 10.9 — na / na — 2.8 / 1.8 — 8.9 / 5.9 (Source: Martin and Mattoo (2010); country groups defined using World Bank and UN definitions.) ### Non-Doha issues and recommended WTO focus - Timely non-Doha issues are increasingly important: proliferation of bilateral and regional trade agreements, concerns over food and energy security, and trade-related climate change issues. - The Fund should continue to support Doha and help unlock political attention, including through surveillance of key stakeholder countries; a partial package conclusion in the near future would help maintain momentum. - These non-Doha issues are best tackled through multilateral negotiations at the WTO to maintain the WTO as an effective international negotiating forum and to avoid reliance on dispute settlement for matters better left to negotiation. Key multilateral issues to be debated at the WTO: - Monitoring of protectionist measures: - Strengthen coverage of less transparent measures (non-tariff barriers, domestic procurement) in Trade Policy Reviews and the multilateral monitoring mechanism introduced in response to the global crisis. - Focus on measures with the highest trade impacts to preserve relevance and secretariat capacity. - Food and energy security: - Current GATT rules authorize temporary export restrictions; Doha envisages improving disciplines on various export restrictions but not on export taxes. - Trade liberalization is sometimes reversed in scarcity, making trade unreliable for food security; multilateral attention is needed. - Energy security will require institutional cooperation between the IEA, OPEC, and the WTO (Mattoo and Subramanian, 2008). - Working towards an open regionalism: - Address complex FTA spaghetti-bowl structures and restrictive rules of origin that hamper trade and supply-chain formation. - Encourage harmonization via multilateral rules or best practices (liberal FTA rules of origin, origin accumulation, docking provisions). - Failure to provide multilateral guidance risks fragmentation and marginalization of poorest countries. - Trade-related climate change issues: - Border-tax adjustments may be considered to avoid carbon leakage and level the playing field, but GATT compatibility and measurement of emissions pose challenges; multilateral guidelines and best practices would help. - Government procurement: - Government procurement markets often equal 10-15 percent of GDP; expanding coverage and liberalization (e.g., through accession to the Agreement on Government Procurement) could generate substantial welfare gains. - Allowing for plurilateral agreements: - Plurilateral agreements within the WTO could enable coalitions to pursue deeper liberalization while preserving transparency and openness; results should be made comparable to multilateral outcomes. - Competition policy: - Although dropped from Doha agenda in 2004, competition issues (export cartels, anticompetitive aspects of large mergers) remain important; a plurilateral agreement among a subset of WTO members could be feasible in the next decade. ### Conclusion and policy recommendations - Overcoming remaining obstacles in Doha requires high-level political attention; the deal is attractive, boosts welfare and security in trade relationships considerably, but is hard to sell domestically in many countries. - The recent G-20 initiative could help build political will; policymakers should better communicate the large benefits of Doha and its insurance value against protectionist risks. - The Fund should continue to support the Doha round and help build political will, including by highlighting the value of an agreement. - Maintaining the credibility of the multilateral trading system remains crucial even if Doha conclusion is uncertain; failing to address key trade issues multilaterally could set back global integration and damage the WTO as an international forum. - Reinforced monitoring of protectionist measures, attention to food and energy security, trade-related climate issues, and fostering an open regionalism are priority matters to be tackled (some may be discussed at the December 2011 WTO ministerial). - Maintaining an active multilateral negotiating forum at the WTO can help forestall reemergence of a 19th century style “Great Powers” trade system and keep trade a reliable route to global integration. *Italic: IMF staff summary of chapter content.* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2011/_111611.pdf_