Formulas and flexibility in trade negotiations: sensitive agricultural products in the WTO's Doha agenda

Sebastien Jean, David Laborde Debucquet and Will Martin

No 5200, Policy Research Working Paper Series from The World Bank

Abstract: Many trade negotiations involve large cuts in high tariffs, with flexibilities allowing much smaller cuts for an agreed number of politically-sensitive products. The effects of these flexibilities on market access opportunities are difficult to predict, creating particular problems for developing countries in assessing whether to support a proposed agreement. Some widely-used ad hoc approaches to identifying likely sensitive products -- such as the highest-bound-tariff rule -- suggest that the impacts of a limited number of such exceptions on average tariffs and on market access are likely to be minor. This paper uses a rigorous specification based on the apparent objectives of policy makers in setting the pre-negotiation tariff. Applying this approach with detailed data allows the authors to assess the implications of sensitive-product provisions for average agricultural tariffs, economic welfare, and market access under the Doha negotiations. The authors conclude that highest-tariff rules are likely to seriously underestimate the impacts on average tariffs, and that treating even 2 percent of tariff lines as sensitive is likely to have a sharply adverse impact on economic welfare. The impacts on market access are also adverse, but much smaller, perhaps reflecting the mercantilist focus of the negotiating process.

Keywords: Free Trade; International Trade and Trade Rules; Markets and Market Access; Debt Markets; Trade Policy (search for similar items in EconPapers)
Date: 2010-02-01
New Economics Papers: this item is included in nep-agr
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Citations: View citations in EconPapers (11)

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