Globalization and Markets

Multilateral Trade Liberalization and the WTO framework

The GATT Uruguay Round, concluded by the Marrakech agreement in 1994, has been a corner stone in the global trading system: it has created the World Trade Organization and has started the liberalization of the agriculture sector. In this context, the multilateral approach of agricultural trade liberalization remains the more promising solution to reach a more efficient and a fairer trading system for developing countries.

The Impact of Multilateral Trade Liberalization on Developing Countries

While the launching of the Doha Development Round was a laudable political decision, its economic impacts have not been thoroughly examined. Our research program conducts an in-depth study of negotiation modalities in terms of tariffs and domestic support disciplines. The analysis is updated whenever significant progress is achieved in Geneva.

The project focuses particularly on LDCs, which not only have very special economic features as far as trade issues are concerned but are also very heterogeneous in terms of economic and trade capabilities. Despite the fact that, from the onset of the negotiation process, LDCs have been targeted as the main beneficiaries, it has not been made clear how the Round could address LDCs’ trade and economic interests. Therefore, our research examines how LDCs’ interests are affected by current proposals under the Doha Development Agenda, as well as which modalities introduced by the Duty-Free Quota-Free Initiative (instituted during the Hong Kong Ministerial meeting) will be most effective.

The value of a WTO agreement lies in the creation of a culture of international cooperation, an important asset in strengthening trade relations during periods of economic turmoil. In light of this goal, our research also analyzes the effect of a multilateral agreement under several alternative scenarios—status quo, increased regional integration, and rising protectionism.

The Potential Cost of a Failed Doha Round, an IFPRI brief published in 2008, specifically discusses this latter scenario, using the highest applied or bound rate imposed by countries from 1995–2008 as an indicator to present several scenarios in which a failed Doha Round would cause a rush into protectionism. The study concludes that there would be a potential loss of US$ 1,064 billion in world trade if Doha Development Round negotiations were not concluded and if countries subsequently implemented protectionist policies, as occurred after the end of the Uruguay Round. Similarly, the failure of negotiations would prevent a US$ 336 billion increase in world trade stemming from a reduction in tariffs and domestic support, while a worldwide resort to protectionism would contract world trade by US$ 728 billion.

To perform the project’s Doha modalities analyses, we combine detailed tariff databases of both applied and bound duties (MAcMapHS6) with a General Equilibrium analysis (Mirage). In addition, political economy models of trade policies are used to address complex issues such as sensitive products selection.

Improving WTO Transparency: Shadow Domestic Support Notifications

Discussion Papers

Shadow WTO Agricultural Domestic Support Notifications:
United States
European Union

One of the fundamental achievements of the WTO in 1994 was to create the first multilateral framework for disciplines on domestic farm support, but unfortunately, the process of providing compliance notifications has been lax. Given the dearth of formal notification reports, and the controversies that surround the classification of certain subsidies or assessment of their effects, a major objective of this project has been to develop an up-to-date set of estimated subsidy notifications to add transparency to international agricultural policy deliberations.