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CEP Policy Analysis
The Doha Round: Freer and Fairer Trade?

July 2008
Paper No' CEPPA001:
Full Paper (pdf)

• Given the limited ambition that has been set for the Doha Round since the setback at Cancún in 2003, optimistic estimates of the likely gains from a successful agreement on world trade are around $182 billion, of which $90 billion may accrue to the developing countries. • More than 60% of these gains will come from reform to agriculture, including a substantial cut in tariffs and subsidies. The European Union (EU) and the United States persist with agricultural tariffs, which account for almost 40% of the value of total agricultural output, and high tariffs remain on some products. • The benefits of agricultural reform will not accrue uniformly to developing countries, with large agricultural exporters – notably the G20 group, which includes Brazil, China, India and South Africa – receiving a disproportionate share of the gains, and less developed countries (particularly the net food-importing countries) actually worse off as a result of the reduced subsidies on imported commodities. These adverse consumption effects will have particularly harsh effects on the urban poor.

• Although agriculture has dominated the Round, there is potential for large gains in other areas of the agenda. Tariffs on industrial goods are persistently high in some areas. Reform to labourintensive services, temporary migration schemes and efforts to increase export capacity in developing countries are important issues, which have received insufficient attention. • Developing countries are keen to avoid their mistake in the Uruguay Round, where they exchanged binding commitments to trade liberalisation for poorly defined promises of assistance that did not materialise. A firm programme of assistance with adjustment costs and supply capacity – ‘aid for trade’ – is yet to be agreed. • The African, Caribbean and Pacific (ACP) countries have little to gain from the issues that remain on the agenda. Many of them already receive free market access through preferential schemes. Indeed, further multilateral tariff reductions will only reduce their existing preference margins. These countries could block progress in the Round if they feel they are not benefiting sufficiently.