Sunday, December 18, 2005

"WTO Reaches Agreement on Cuts in Agriculture, Cotton Subsidies" just published a story with the following opening paragraphs:
The 149 members of the World Trade Organization approved a proposal aimed at steering global trade negotiations toward a deal on cutting tariffs and agriculture subsidies by the end of next year.

The agreement outlines plans for the U.S. and European Union to scale back their farm subsidies and open their markets to more products from the world's poorest nations in a bid to prevent a collapse in global trade talks. The deal is a first step as negotiators try to reach a new WTO deal next year......

The EU said it would scrap export payments for farm goods by 2013 and the U.S., under pressure from four West African nations, agreed to expedite deep cuts in payments to cotton growers. Both said they would allow in duty-free almost all the textiles, toys and sneakers that 32 of the world's poorest countries can send them. (emphasis added)

This is good news, but perhaps not as good as we might have thought. Yesterday, the Washington Post published an article by Paul Blustein titled, "World Bank Reconsiders Trade's Benefits to Poor". The article states:
The bank estimated three years ago that freeing international trade of all barriers and subsidies would lift 320 million people above the $2 a day poverty line by 2015. Now, however, bank economists project the figure at between 66 million and 95 million people. And even that assumes the WTO negotiators would completely abolish tariffs, quotas and other obstacles to commerce -- a fanciful scenario, calculated only to show what a maximum deal would produce.

Assuming a more plausible outcome in which the WTO members agree to some deep cuts in tariffs and subsidies while stopping short of pure free trade, the reduction in the number of people below the $2-a-day line by 2015 would be only about 6.2 million to 12.1 million people, the bank now reckons. That is less than 1 percent of the people living below the line.

To assist developing countries prepare for negotiating multilateral trade reform under the Doha Development Agenda, the World Bank put up a good website. Empirical analysis of the effects of possible Doha trade reform scenarios appear in two new books produced by the World Bank:
* Agricultural trade reform and the Doha development agenda, and
* Poverty Impacts of a WTO Agreement

These are in addition to the World Bank's Trade website which provides an entry to its overall work on trade and development.

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