Figuring Out the Doha Round [1 ed.] 9780881325041, 9780881325034

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Figuring Out the Doha Round Gary Clyde Hufbauer, Jeffrey J. Schott, and Woan Foong Wong

PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS Washington, DC June 2010 © Peterson Institute for International Economics | www.piie.com

Gary Clyde Hufbauer, Reginald Jones Senior Fellow since 1992, was formerly the Maurice Greenberg Chair and Director of Studies at the Council on Foreign Relations (1996–98), the Marcus Wallenberg Professor of International Finance Diplomacy at Georgetown University (1985–92), senior fellow at the Institute (1981–85), deputy director of the International Law Institute at Georgetown University (1979–81), deputy assistant secretary for international trade and investment policy of the US Treasury (1977–79), and director of the international tax staff at the Treasury (1974–76). Hufbauer has written numerous books on international trade, investment, and tax issues, including Global Warming and the World Trading System (2009), Economic Sanctions Reconsidered, 3rd edition (2007), US Taxation of Foreign Income (2007), and US-China Trade Disputes: Rising Tide, Rising Stakes (2006).

honors in a BA in mathematical economics and a bachelor of music in music composition. Her honors thesis was awarded first prize at the 2009 Federal Reserve Bank of Cleveland and Akron University Economics Poster Competition. In recognition of her work, she received the 2009 Comfort Starr Prize in Economics from Oberlin College.

Jeffrey J. Schott, senior fellow, joined the Peterson Institute in 1983. He was also a visiting lecturer at Princeton University (1994), adjunct professor at Georgetown University (1986–88), senior associate at the Carnegie Endowment for International Peace (1982– 83), and an official of the US Treasury Department in international trade and energy policy (1974–82). During the Tokyo Round of multilateral trade negotiations, he was a member of the US delegation that negotiated the GATT Subsidies Code. Since January 2003, he has been a member of the Trade and Environment Policy Advisory Committee of the US government. He is also a member of the Advisory Committee on International Economic Policy of the US Department of State. He is the author, coauthor, or editor of several books on trade, including Reengaging Egypt: Options for US-Egypt Economic Relations (2010), Economic Sanctions Reconsidered, 3rd edition (2007), NAFTA Revisited: Achievements and Challenges (2005), and The WTO after Seattle (2000).

Copyright © 2010 by the Peter G. Peterson Institute for International Economics. All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by information storage or retrieval system, without permission from the Institute.

Woan Foong Wong has been a research analyst at the Peterson Institute since July 2009. Prior to this position, she held research assistantships at Williams College and Oberlin College with Professors Kenneth N. Kuttner and Alberto Ortiz, respectively. She also served at the Center for Public Policy Studies, a think tank in Malaysia. She graduated in 2009 with two degrees from Oberlin College and Oberlin Conservatory of Music: high

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Library of Congress Cataloging-inPublication Data Hufbauer, Gary Clyde. Figuring out the Doha Round / Gary Clyde Hufbauer, Jeffrey J. Schott, and Woan Foong Wong. p. cm. ISBN 978-0-88132-503-4 1. Commercial policy. 2. International trade. 3. Tariff. 4. World Trade Organization. 5. Doha Development Agenda (2001-) I. Schott, Jeffrey J., 1949– II. Wong, Woan Foong. III. Title. HF1411.H837 2010 382’.92--dc22 2010015395

The views expressed in this publication are those of the authors. This publication is part of the overall program of the Institute, as endorsed by its Board of Directors, but does not necessarily reflect the views of individual members of the Board or the Advisory Committee. © Peterson Institute for International Economics | www.piie.com

Contents

Preface

vii

Acknowledgments

xi

1

2

3

Overview

1

United States European Union Japan Brazil, India, and China Comparing Gains for Developed and Developing Countries Appendix 1A

8 9 11 12 13 14

Agriculture and Nonagricultural Market Access

17

Topping up the Doha Package

81

Results for Agriculture Results for Nonagricultural Market Access Appendix 2A

18 30 37



Services Chemicals Information Technology and Electronics/Electrical Goods Environmental Goods Trade Facilitation

81 86 90 96 101

4

Conclusion

105

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Appendix A

Methodology for Reciprocity Measure and GDP Gains

109

Appendix B

Services

117

Appendix C

Chemicals

129

Appendix D

Information Technology and Electronics/Electrical Goods 139

Appendix E

Environmental Goods

177

Appendix F

Trade Facilitation

189

Appendix G

Measuring Trade Distortions

205

References

209

Index

215

Tables Table 1.1 Table 1.2 Table 1.3 Table 1A.1 Table 2.1 Table 2.2 Table 2.3 Table 2.4 Table 2.5 Table 2.6 Table 2A.1 Table 2A.2 Table 2A.3 Table 2A.4 Table 2A.5 Table 2A.6 Table 2A.7 Table 2A.8

Trade gains for sample countries Total trade gains, with exports to the world Impact of trade gains on GDP Comparison between sample and G-20 countries, 2008 Tariffs in agriculture Bound and applied tariff rates in agriculture imposed by Brazil, China, and India on imports from the group of 15 developing countries in the sample Gains in agriculture and NAMA expressed in terms of the reciprocity measure Tariffs in nonagricultural market access Bound and applied tariff rates in NAMA imposed by Brazil, China, and India on imports from the group of 15 developing countries in the sample GDP impacts of trade gains in agriculture and NAMA Weighted average of bound duties, pre- and post-Doha Cuts in bound tariffs Bound versus applied “water levels,” pre- and post-Doha Trade-weighted average bound, MFN, and applied tariff rates, 2001, 2006, and post–Doha Round Weighted average of applied tariffs, pre- and post-Doha Cuts in applied tariffs Reciprocity measure gains from domestic support concessions Reciprocity measure gains from concessions in export subsidies

iv © Peterson Institute for International Economics | www.piie.com

6 8 10 14 19 24 26 30 33 35 37 41 43 47 51 55 57 59

Table 2A.9 Table 2A.10 Table 2A.11 Table 2A.12 Table 2A.13 Table 2A.14 Table 2A.15 Table 2A.16 Table 2A.17 Table 3.1 Table 3.2 Table 3.3 Table 3.4 Table 3.5 Table A.1 Table A.2 Table B.1 Table B.2 Table B.3 Table B.4 Table C.1 Table C.2 Table C.3 Table C.4

Reciprocity measure gains from expansion of tariff 61 rate quotas Overall gains in agriculture and NAMA expressed in 62 terms of the reciprocity measure Share of concessions given and received (measured 65 by reciprocity measure) by developed and developing countries Calculated increase in trade due to tariff and nontariff 66 barrier cuts Calculations of a single trade elasticity for trade 68 impact calculations Increase in trade due to tariff and nontariff barrier cuts 69 Trade effects of China choosing various NAMA 75 flexibility options Trade effects of Brazil choosing various NAMA 77 flexibility options Trade effects of India choosing various NAMA 79 flexibility options Impact of services trade negotiations 84 Impact of sector initiative in chemicals 88 Impact of sector initiative in Information 92 Technology Agreement (ITA) goods Impact of sector initiative in electronics and electrical 94 goods Impact of sector initiative in environmental goods 98 Trade growth, GDP growth, and openness ratio 113 comparisons from regression and computable general equilibrium (CGE) models Alternative ratios of GDP growth and trade growth 115 from regression and computable general equilibrium (CGE) models Restrictiveness indices for services policies: Uruguay 123 Round commitments, current Doha Round offers, and applied levels Tariff equivalents of services barriers 125 Estimated 2007 bilateral services trade 126 Impact on trade of a 10 percent cut in the tariff 127 equivalents of services barriers Average applied tariffs on chemicals 131 Estimated increase in chemicals trade from NAMA 133 modality tariff cuts Estimated increase in chemicals trade from modality 135 and sector tariff cuts Additional increase in chemicals trade from sector 137 tariff cuts above modality tariff cuts v

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Table D.1 Table D.2 Table D.3 Table D.4 Table D.5 Table D.6 Table D.7 Table D.8 Table D.9 Table D.10 Table E.1 Table E.2 Table E.3 Table E.4 Table E.5 Table F.1 Table F.2 Table F.3 Table F.4 Table G.1

Goods covered by the Information Technology 141 Agreement (ITA) Goods to be included in an electronics/electrical 148 goods sector initiative Average applied tariffs on ITA goods 160 Estimated increase in ITA goods trade from NAMA 162 modality tariff cuts Estimated increase in ITA goods trade from modality 164 and sector tariff cuts Additional increase in ITA goods trade from sector 166 tariff cuts above modality tariff cuts Average applied tariffs on electronics/electrical goods 168 Estimated increase in electronics/electrical goods 170 trade from NAMA modality tariff cuts Estimated increase in electronics/electrical goods 172 trade from sector tariff cuts Additional increase in electronics/electrical goods 174 trade from sector tariff cuts above modality tariff cuts List of environmental goods 178 Average applied tariffs on environmental goods 180 Estimated increase in environmental goods trade 182 from NAMA modality tariff cuts Estimated increase in environmental goods trade 184 from modality and sector tariff cuts Additional increase in environmental goods trade from 186 sector tariff cuts above modality tariff cuts Brief summary of Doha Round trade facilitation 193 proposals Trade gains from improved trade facilitation: 201 Simulation results from Wilson, Mann, and Otsuki (2005) Trade and GDP gains from trade facilitation 202 improvements Elements excluded from the “narrow definition” 203 of trade facilitation Global GDP gains from agriculture and NAMA tariff 207 cuts: Estimates of Laborde, Martin, and van der Mensbrugghe in dollars and as a percentage of this study’s estimate of $36 billion without flexibilities

Boxes Box 1.1 Box 1.2 Box 2.1 Box 2.2

How we estimate trade and GDP gains Doha Round box score Methodology for calculating agriculture concessions Methodology for calculating concessions in nonagricultural market access

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4 11 20 31

Preface

For several decades, trade pundits have regularly predicted the demise of the General Agreement on Tariffs and Trade (GATT) and the failure of multilateral trade talks. Recall Lester Thurow’s less than prescient declaration that “the GATT is dead.” At that time, the Uruguay Round of GATT negotiations was in deep trouble but, five years later, countries agreed to a big package of trade reforms—including the establishment of the World Trade Organization (WTO). We now face a similar situation with the current WTO negotiations, the Doha Round. After eight years of inconclusive meetings, the trade talks are at a tipping point: A global trade deal is still possible with renewed political commitment to trade reform, but continued drift could result in the first outright failure of a multilateral trade negotiation in the postwar era. To assess what needs to be done to break the negotiating impasse, this study undertakes a detailed analysis of the trade and GDP gains that could result from current proposals “on the table” in Geneva to liberalize tariffs and cut farm subsidies. The authors also report reciprocity calculations, which roughly track the mercantilistic mindset of most negotiators. The analysis demonstrates that the potential gains are significant but not sufficient to garner the requisite political support needed to close a Doha deal. Accordingly, the authors calculate additional gains that could be harvested if tariffs on manufactured goods are cut further, barriers to services trade are liberalized, and other customs and regulatory reforms are enacted to facilitate trade. “Topping up” the current Doha package in this manner could yield substantially higher trade and GDP gains for both developed and developing countries. The authors conclude that the Doha vii © Peterson Institute for International Economics | www.piie.com

Round is worth saving and that the major trading nations should increase their offers to liberalize barriers to trade in goods and services. The study revises and updates the analysis initially reported by the authors in an Institute working paper, “What’s on the Table? The Doha Round as of August 2009.” That paper attracted numerous comments from public policy experts and academic scholars, which the authors have substantially reflected in this study. This study continues the Institute’s long-standing research program on the multilateral trading system. The principal authors, Gary Hufbauer and Jeffrey Schott, were US trade negotiators during the GATT’s Tokyo Round and have been applying this practical experience to policy commentary on the world trading system for the past 25 years. In 1985, they wrote Trading for Growth, which became a blueprint for launching the Uruguay Round of GATT negotiations the following year. When those talks bogged down, Schott produced Completing the Uruguay Round (1990), which provided recommendations for overcoming key obstacles. He then analyzed the results in The Uruguay Round: An Assessment (1994). Since the advent of the WTO era, the Institute has produced several studies for advancing the process of multilateral trade liberalization, starting with The Trading System after the Uruguay Round by John Whalley and Colleen Hamilton (1995) and The World Trading System: Challenges Ahead edited by Schott in 1996 to inform the first WTO ministerial meeting in Singapore. The Institute also produced analyses of negotiations on telecommunications and financial services—including Unfinished Business: Telecommunications after the Uruguay Round by Hufbauer and Erika Wada (1997) and Financial Services Liberalization in the WTO by Wendy Dobson and Pierre Jacquet (1998)—that took place during the WTO’s initial three years. At the second WTO ministerial in 1998, marking the 50th anniversary of the multilateral trading system, I presented an assessment of “Fifty Years of the GATT/WTO: Lessons from the Past for Strategies for the Future.” The following year the Institute was asked to organize a major conference on the first day of the ill-fated WTO ministerial meeting in Seattle. The conference examined key issues on the WTO agenda but the Seattle Round was derailed by violent demonstrations. However, the Institute subsequently reflected on the outcome of the Seattle meeting in a widely cited study, The WTO after Seattle (2000), that provided valuable input into the subsequent launch of the Doha Round in late 2001. During the course of the Doha Round, the Institute held numerous meetings to discuss progress in the negotiations, hosted top trade officials from major trading countries and the heads of the WTO, and published Kimberly Elliott’s book, Delivering on Doha: Farm Trade and the Poor (2006), as well as policy briefs and working papers on the key issues blocking progress in the talks. This study assesses the current state of play on Doha and attempts to point the way forward to a successful conclusion. We are viii © Peterson Institute for International Economics | www.piie.com

indebted to the WTO Secretariat for providing the extensive dataset for our calculations and to WTO Director-General Pascal Lamy for encouraging this independent analysis. The Peter G. Peterson Institute for International Economics is a private, nonprofit institution for the study and discussion of international economic policy. Its purpose is to analyze important issues in that area and to develop and communicate practical new approaches for dealing with them. The Institute is completely nonpartisan. The Institute is funded by a highly diversified group of philanthropic foundations, private corporations, and interested individuals. About 35 percent of the Institute’s resources in our latest fiscal year was provided by contributors outside the United States. The Institute’s Board of Directors bears overall responsibilities for the Institute and gives general guidance and approval to its research program, including the identification of topics that are likely to become important over the medium run (one to three years) and that should be addressed by the Institute. The director, working closely with the staff and outside Advisory Committee, is responsible for the development of particular projects and makes the final decision to publish an individual study. The Institute hopes that its studies and other activities will contribute to building a stronger foundation for international economic policy around the world. We invite readers of these publications to let us know how they think we can best accomplish this objective. C. Fred Bergsten Director April 2010

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PETER G. PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS 1750 Massachusetts Avenue, NW, Washington, DC 20036-1903 (202) 328-9000 Fax: (202) 659-3225 C. Fred Bergsten, Director BOARD OF DIRECTORS * Peter G. Peterson, Chairman * George David, Vice Chairman * Reynold Levy, Chairman, Executive Committee Leszek Balcerowicz Ronnie C. Chan Chen Yuan * Andreas C. Dracopoulos * Jessica Einhorn Mohamed A. El-Erian Stanley Fischer Jacob A. Frenkel Maurice R. Greenberg Herbjorn Hansson Tony Hayward * Carla A. Hills Nobuyuki Idei Karen Katen W. M. Keck II Michael Klein * Caio Koch-Weser Lee Kuan Yew Andrew N. Liveris Sergio Marchionne Donald F. McHenry Mario Monti Paul O’Neill David O’Reilly Hutham Olayan * James W. Owens Samuel J. Palmisano Frank H. Pearl Victor Pinchuk * Joseph E. Robert, Jr. David Rockefeller Lynn Forester de Rothschild Renato Ruggiero * Richard E. Salomon Sheikh Hamad Al-Sayari Edward W. Scott, Jr. Frederick W. Smith Jean-Claude Trichet Laura D’Andrea Tyson Paul A. Volcker Jacob Wallenberg Edward E. Whitacre, Jr. Marina v.N. Whitman Ernesto Zedillo Ex officio * C. Fred Bergsten Nancy Birdsall Richard N. Cooper Barry Eichengreen

ADVISORY COMMITTEE Barry Eichengreen, Chairman Richard Baldwin, Vice Chairman Kristin Forbes, Vice Chairwoman Isher Judge Ahluwalia Robert E. Baldwin Steve Beckman Olivier Blanchard Barry P. Bosworth Menzie Chinn Susan M. Collins Wendy Dobson Jeffrey A. Frankel Daniel Gros Stephan Haggard Gordon H. Hanson Takatoshi Ito John Jackson Peter B. Kenen Anne O. Krueger Paul R. Krugman Justin Yifu Lin Jessica T. Mathews Rachel McCulloch Thierry de Montbrial Sylvia Ostry Jean Pisani-Ferry Eswar S. Prasad Raghuram Rajan Kenneth S. Rogoff Andrew K. Rose Fabrizio Saccomanni Jeffrey D. Sachs Nicholas H. Stern Joseph E. Stiglitz William White Alan Wm. Wolff Daniel Yergin Richard N. Cooper, Chairman Emeritus

* Member of the Executive Committee

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Acknowledgments

This study benefited extensively from the generous assistance of economists at the World Trade Organization, led by Chief Economist Patrick Low, who provided us the dataset required for the country-specific analysis of the tariff liberalization under negotiation in the Doha Round and suggested the innovative methodology for assessing the reciprocity of trade concessions. As usual, C. Fred Bergsten provided comprehensive comments on the entire manuscript, which helped sharpen and clarify the sometimes dense calculations of trade and GDP gains. We also benefited significantly from detailed comments from leading trade scholars such as Richard Baldwin, Alan Deardorff, Simon Evenett, Bernard Hoekman, Robert Z. Lawrence, Aaditya Mattoo, Patrick Messerlin, and Arvind Subramanian. While we did not accept all their suggestions, this study has been greatly improved by constructive criticisms of the methodological approaches. We are indebted to Matthew Adler and Claire Brunel for their excellent work on an earlier version, “What’s on the Table? The Doha Round as of August 2009,” which was published as a Peterson Institute Working Paper. We are particularly grateful for the careful and detailed review of the manuscript by Madona Devasahayam and for her extremely useful suggestions that helped make the presentation of the statistical results more reader friendly. Finally, special thanks are due to Susann Luetjen and Ed Tureen for their valuable and tireless assistance with preparing the manuscript for publication.

xi © Peterson Institute for International Economics | www.piie.com

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Overview

1

The Doha Round of multilateral trade negotiations marked its eighth birthday in November 2009, making it the longest-running negotiation in the postwar era. And the end is not in sight. Members of the World Trade Organization (WTO) continue to disagree about prospective liberalization in the areas of agriculture and nonagricultural market access (NAMA), and this rift has delayed the discussion of other important issues on the negotiating agenda, particularly services. To date, WTO members have elaborated general formulas for cutting tariffs and reducing agricultural subsidies but differ sharply on how countries should limit or exempt certain products from these “formula cuts.” Negotiations on services have barely progressed from the initial offers put on the table years ago, but talks in a few other areas are well advanced, including an agreement on trade facilitation measures and new rules on transparency of regional trading arrangements (already implemented on a provisional basis). Doha participants have different assessments concerning the accomplishments to date. Some see the glass mostly full, with the formulas providing the backbone of liberalization commitments. Others think there is simply not enough on the table and worry that “flexibilities” to exclude products from formula cuts will turn the backbone into a rubber hose and further weaken the commercial value of a deal. To some, the prospective deal is significant; to others, the deal seems a close approximation of the status quo and not worth doing. The Doha Round needs to be completed for two key reasons. The first is to implement the tariff and subsidy reforms embedded in the draft texts developed thus far and to pocket the gains already substantially agreed. As this study will demonstrate, these gains are significant in the aggregate but unimportant for the United States and other key countries. 1 © Peterson Institute for International Economics | www.piie.com

Despite eight years of effort, the overall Doha package is still not ambitious enough and does not adequately balance the interests of the major trading nations and thus is unlikely to garner the political support in national legislatures needed to ratify and implement the deal. The second reason why the Doha Round needs to succeed is to ensure the viability of the rules-based multilateral trading system. If a multilateral deal is put on hold, national governments—pressed by their domestic constituencies—will seek other means to resolve trade and investment problems. Some will pursue protective measures that impede import competition in their markets; others will open new trade and investment opportunities through bilateral and regional trade pacts. In other words, continued drift in the Doha Round negotiations will foster broad-scale neglect of the multilateral trading system, causing irreparable harm to the WTO’s credibility as a negotiating forum, which would, over time, also undermine its valuable dispute settlement mechanism. A failure scenario is especially worrisome given the frailty of the global recovery from the financial crisis and concerns about a “jobless recovery” with prolonged high unemployment in the United States and Europe, all of which exacerbate protectionist pressures. Aware of this possibility, leaders of the Group of 20 (G-20) have repeatedly underscored, at their summit meetings in Washington, London, and Pittsburgh in 2008 and 2009, their commitment to conclude the Doha Round in 2010, citing a successful Round as one means of reviving the global economy. But the lofty summit rhetoric has not resulted in significant changes in national negotiating positions, so the impasse in the WTO talks has not been broken. The 2010 commitment is already a dead letter.1 The key to completing the Doha Round is to achieve meaningful cuts in trade barriers in agriculture, NAMA, and services and to restrain recourse by major trading nations—developed and developing—to the ample “flexibilities” allowed by the negotiating modalities. What counts are the agreements made by the major trading countries in their schedules on specific products and sectors in goods and services. Which are these countries? Overall, we consider participants in the G-20 summit process to have self-selected themselves for this leadership role in the Doha Round.2 To shed light on the debate concerning the benefits from WTO negotiations, in chapter 2 we estimate potential gains from liberalization in agriculture and NAMA resulting from the formula cuts specified in the negotiating modalities drafted by the chairs of the Doha Round negotiating 1. In November 2009, leaders of the Asia-Pacific Economic Cooperation (APEC) forum also pledged to complete the Round in 2010; see Asia-Pacific Economic Cooperation, 2009 Leaders’ Declaration, available at www.apec.org (accessed December 18, 2009). It is worth noting that there is a large overlap between the G-20 and APEC membership. 2. The G-20 summit members should not be confused with the G-20 developing-country caucus, which was created just prior to the Cancún WTO ministerial in 2003 and coordinates the agricultural trade positions of its members in Doha Round talks.

2  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

groups. In chapter 3, we focus on services trade reforms and gains from sector initiatives in chemicals, information technology goods, and environmental goods, as well as trade facilitation measures. In services we calculate prospective gains from a 10 percent reduction by major trading nations in barriers to their imports of services. The 10 percent benchmark, which we recognize is an arbitrary and optimistic goal, would yield large gains for both developed and developing countries. We then estimate the benefits that could result from sector initiatives in chemicals, information technology (IT) goods, and environmental goods that go beyond the liberalization that would result from the formula tariff cuts. We selected these three sectors because in our judgment (informed by soundings in Washington and Geneva) they are among those most often cited by officials from major trading nations to be the subject of new sector initiatives and because sector breakthroughs would make a major contribution to the overall package. These results estimate the gains from elimination or substantial reduction of tariffs in each sector. We recognize that the negotiators are not likely to achieve this level of perfection, though they should be able to achieve a big hunk of the potential gains; our calculations should be seen as the maximum that could be achieved. Finally, we estimate the benefits from enhanced trade facilitation measures, primarily drawing on analyses by John Wilson, Catherine Mann, and Tsunehiro Otsuki (2005). In each of the sections in chapter 3, we calculate both trade gains and GDP gains. Throughout the study, we consider that both exports and imports deliver trade gains. Politicians and unions often take a mercantilist approach to trade: Exports are good and imports are bad. However, imports provide benefits for consumers in three ways: They deliver lower prices, better quality, and greater variety. Consumers are not just individuals; industries are consumers as well, and they benefit from imports in the same ways. For example, greater variety allows industrial firms to “right size” their purchased inputs. Moreover, domestic firms learn from import competition: Often they boost their own productivity and improve the quality of their product lines. Leading exporting firms are often big importers as well. Note that we do not include an assessment of prospective results on rules from the Doha Round negotiating group. Some of this work has already been implemented on a provisional basis (regarding regional trading arrangements). Disciplines on fish subsidies remain a work in progress and should add to the value of the overall package. With respect to antidumping procedures, we believe that the negotiations will leave intact nearly all current practices and rulings by the Appellate Body. Our methodology is summarized in box 1.1 and explained in more detail in the appendices of this study. Table 1.1 summarizes the trade gains we have calculated for the 22 Doha participants in our sample. Our dataset, provided by the WTO Secretariat, covers 7 developed and 15 developing countries.3 In 2008 3. The 7 developed countries are Australia, Canada, the European Union, Japan, Norway,

OVERVIEW  3 © Peterson Institute for International Economics | www.piie.com

Box 1.1     How we estimate trade and GDP gains In order to fully understand the potential value of a Doha Round accord, it is important to go beyond analyzing the tariff cuts. In this study, we strive to do that. First, we examine “what’s on the table” in agriculture and nonagricultural market access (NAMA). Calculating the impact of the tariff cuts is relatively straightforward (as explained throughout the study), but including the effects of subsidy and quota reforms requires additional considerations. We calculate the gains from formula cuts in trade barriers using three metrics: n Reciprocity measure: This metric calculates the change in revenue from

tariff cuts in agriculture and NAMA and the revenue equivalent of concessions on nontariff barriers (NTBs), namely agricultural tariff quotas, domestic support, and export subsidies (see appendix A). Using this metric, concessions received are expressed in terms of tariffs and tariff equivalent costs not paid by exporting countries. Concessions given are expressed in terms of tariffs and tariff-equivalent barriers forgone by importing countries. n Trade gains: This metric indicates the increased trade that results from the

tariff cuts and tariff equivalent of concessions on NTBs calculated in the reciprocity measure. Trade gains are separately stated for exports and imports. n GDP gains: This metric builds on the calculated trade gains by applying a

GDP coefficient to increased exports and imports. The details surrounding the GDP coefficient are explained in appendix A. It is important to emphasize that larger exports and imports both contribute to higher GDP through lower consumer prices, more variety, greater productivity, and improved allocation of resources (Bradford, Grieco, and Hufbauer 2005). We clearly indicate the three metrics in the section headings and italicize them throughout the text.

. Our interpretation of the reciprocity measure assumes that the incidence of tariffs falls entirely on the sellers (the exporters) and not at all on the buyers (the importers). This interpretation accords with the mercantilist spirit that dominates trade negotiations. In real life, however, a country that protects its domestic markets usually raises the price paid by its own domestic buyers, both for the imported good and its domestic substitutes.

these countries accounted for 73 percent of world exports, 76 percent of world imports, and 88 percent of global GDP (table 1A.1 at the end of this chapter). Fourteen of the countries are G-20 summit participants. These Switzerland, and the United States. The 15 developing nations are Argentina, Brazil, China, Colombia, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, the Philippines, South Africa, Taiwan, Thailand, and Turkey.

  FIGURING OUT THE DOHA ROUND 4  Figuring Out the Doha Round

© Peterson Institute for International Economics | www.piie.com

14 countries account for 91 percent of G-20 exports to the world and 96 percent of G-20 imports from the world (table 1A.1).4 Liberalization from implementing what is already “on the table” in agriculture and NAMA would yield an increase in exports of the 22 countries to the other 21 of $54.4 billion. Trade between these 22 countries (meaning exports of each of the 22 countries to the other 21) would increase by another $37.2 billion from a 10 percent liberalization of services barriers and by a further $50.8 billion from the three sector initiatives. We suspect that table 1.1 and the numbers discussed throughout this chapter will prove disconcerting to many readers: For the 22 countries, import gains across the board are larger than export gains! This, however, is no cause for alarm; the disparity between import and export gains is created by our data methods—not by poor bargaining on the part of the sample countries. Our method only covers prospective tariff and nontariff barrier (NTB) cuts for imports from the world by just the 22 sample countries. This means, for example, that we cover imports by the United States (a sample country) from, say, Vietnam (not a sample country), but we do not include exports by the United States to Vietnam. Therefore, import gains are routinely larger than export gains. Generally, we rely on these unbalanced calculations because they are the most accurate that our data methods can generate. However, we also have made rough calculations to “size up” the export data and portray exports to the world by the 22 countries. When this adjustment is made, import and export gains for the 22 countries are roughly equal (see table 1.2). In turn, we estimate that trade growth using exports by the 22 sample countries to each other and imports by the 22 sample countries from the world would yield global GDP gains of $63.0 billion due to the modalities currently on the table in agriculture and NAMA (table 1.3).5 Bold new initiatives on liberalizing services and freeing trade in selected sectors could increase global GDP by an additional $101.9 billion. Improvements in trade facilitation could yield additional global GDP gains of $117.8 billion, if governments engage in wide-ranging policy and administrative reforms. In sum, the Doha deal “on the table,” topped up with additional liberalization in services and manufactures plus expected gains from trade

4. Most of the 22 sample countries belong to the G-20 summit process. The countries in our sample that are also part of the G-20 are Argentina, Australia, Brazil, Canada, China, the European Union, India, Indonesia, Japan, Korea, Mexico, South Africa, Turkey, and the United States. It is worth noting that G-20 summit participation extends beyond 20 members and now encompasses over 30 countries and supranational bodies (such as the European Union). 5. The global GDP gain numbers were calculated by scaling up the GDP gains of the 22 countries. Since GDP gains for the 22 countries in agriculture and NAMA are $55.5 billion, and since these 22 countries account for 88 percent of global GDP, we estimate that global GDP gains will be roughly $63 billion [($55.5 billion/88)*100 = $63 billion]. This method of scaling up assumes that the GDP gains of the 22 sample countries reasonably represent the GDP gains of excluded countries.

OVERVIEW  5 © Peterson Institute for International Economics | www.piie.com

Table 1.1 Trade gains for sample countries (billions of dollars) “On the table”

Potential gains

Agriculture

Nonagricultural market access (NAMA)

Servicesb

Chemicalsc

From tariff and nontariff barriera cuts

From tariff cuts

From 10 percent liberalization

From sector initiative

Country/region

Imports

Exports

Imports

Exports

Imports

Exports

Imports

Exports

All 22 countries

20.5

14.1

45.6

40.3

49.8

37.2

15.4

12.8

Developed countriesg

19.2

7.6

29.5

17.6

14.5

25.7

4.2

8.1

1.4

6.4

16.1

22.8

35.3

11.5

11.2

4.8

15.3

1.7

11.0

7.5

5.2

9.8

1.4

3.3

Japan

2.4

0.5

2.5

6.7

3.5

2.5

0.2

2.2

United States

Developing countries

h

European Union

1.6

3.3

12.7

2.7

3.1

10.2

2.3

2.1

Brazil

*

2.0

1.0

0.3

2.8

0.6

1.0

0.1

China

0.2

1.1

6.7

13.2

12.0

3.3

4.5

1.3

India

0.2

0.3

0.5

1.4

7.2

0.6

0.8

0.3

a. Nontariff barriers (NTBs) consist of tariff rate quotas, export subsidies, and domestic support. For NTBs, tariff equivalents are estimated. b. Only 21 countries are included in the services calculations; Taiwan is excluded. c. Applied tariffs on all chemicals (as defined by WTO 2008c) are reduced to 0, 2.5, or 5 percent in this simulation. d. Applied tariffs on all electronics and electrical goods (as defined by WTO 2008c) are reduced to zero in this calculation. e. Applied tariffs on all environmental goods (as defined by World Bank 2007) are reduced to zero in this calculation. f. The simulation results from port efficiency and services infrastructure have been excluded here.

facilitation reforms, would raise the value of the Doha package, measured in global GDP gains, to as much as $282.7 billion. Overall, we find the prospective results from what has already been agreed in Doha Round talks to be significant—but probably not sufficient to marshal the necessary political support to close the deal and ensure its ratification by member countries. To pass political muster, Doha offers— primarily by the G-20 countries—need to be “topped up.” We conclude that the “potential” exists for a good outcome in the Doha Round, even if our ambitious targets for comprehensive trade reforms are not fully achieved. The following sections break down these estimates by major trading nation, for trade with the 22 sample countries. The cited export gains are calculated with reference to the 22-country sample but sized up to reflect the prospective gains from larger exports to countries not in the sample (as reported in table 1.2), while the cited import gains are calculated with reference to imports from the world. The cited GDP gains reflect exports to the 22-country sample and imports from the world. The Doha Round box score (box 1.2 on page 11), citing sized-up exports, contrasts trade and GDP gains for the major trading nations from a 152 FIGURING OUT THE DOHA ROUND 6  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Potential gains Electronics and electrical goodsd

Environmental goodse

Trade facilitation

From sector initiative

From sector initiative

From Wilson, Mann, and Otsuki (2005)f

Imports

Exports

Total potential gains

Imports

Exports

Imports

Exports

Imports

Exports

35.4

33.5

6.3

4.5

138.5

86.8

311.6

229.2

6.6

16.3

1.2

3.1

54.5

39.5

129.7

117.9

28.8

17.2

5.1

1.4

84.0

47.3

181.9

111.3

3.0

5.7

0.3

1.4

17.2

16.3

53.5

45.7

*

6.5

*

0.9

5.1

7.5

13.7

26.7

2.6

3.4

0.6

0.6

23.0

10.5

45.9

32.8

3.9

0.1

0.5

*

4.7

2.2

13.9

5.3

11.3

6.7

1.7

0.7

32.0

19.9

68.4

46.2

1.7

0.2

0.8

0.1

9.1

2.6

20.3

5.4

g. Our sample of 22 countries has 7 developed countries. h. Our sample of 22 countries has 15 developing countries. * indicates that the import or export gains in trade for these countries are positive but less than $0.05 billion. Note: The trade gains reflect each country’s increased imports from the world and increased exports to the other 21 countries in the sample. The asymmetry is due to this methodology. Source: Authors’ calculations.

Doha package consisting of only the formula cuts against an expanded Doha package that includes our recommendations. The “world total” is calculated by scaling up the GDP and trade gains according to the sample countries’ share of GDP and trade to the world in 2008. Our summary results, as reported in box 1.2, reveal a large gap between Doha gains that are “on the table” and those that would be derived from an admittedly very optimistic negotiating scenario. The two scenarios chart what we consider the range of feasible outcomes. However, we recognize that negotiators are unlikely to harvest the full yield from our expanded package of trade reforms. But two-thirds or even half a loaf would still be nourishing! The United States, European Union, and China are big winners from an ambitious and balanced Doha package of reforms, so they should take the initiative to accelerate and expand their Doha offers. Even if the end results don’t reach this ambitious target, the additional liberalizations would substantially improve the value and distribution of the Doha package.

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Table 1.2 Total trade gains, with exports to the world (billions of dollars) “On the table”

Potential gains

Agriculture

Nonagricultural market access (NAMA)

Servicesb

Chemicalsc

From tariff and nontariff barriera cuts

From tariff cuts

From 10 percent liberalization

From sector initiative

Country/region

Imports

Exports

Imports

Exports

Imports

Exports

Imports

Exports

All 22 countries

20.5

17.1

45.6

50.6

49.8

55.0

15.4

15.8

Developed countriesg

19.2

9.5

29.5

23.1

14.5

38.9

4.2

10.0

1.4

7.7

16.1

27.5

35.3

16.1

11.2

5.6

15.3

2.8

11.0

10.6

5.2

17.4

1.4

4.7

Japan

2.4

0.5

2.5

7.5

3.5

3.8

0.2

2.3

United States

Developing countries

h

European Union

1.6

3.8

12.7

3.8

3.1

13.1

2.3

2.4

Brazil

*

2.3

1.0

0.4

2.8

0.8

1.0

0.1

China

0.2

1.3

6.7

15.6

12.0

4.4

4.5

1.6

India

0.2

0.4

0.5

1.6

7.2

2.6

0.8

0.4

a. Nontariff barriers (NTBs) consist of tariff rate quotas, export subsidies, and domestic support. For NTBs, tariff equivalents are estimated. b. Only 21 countries are included in the services calculations; Taiwan is excluded. c. Applied tariffs on all chemicals (as defined by the WTO 2008c) are reduced to 0, 2.5, or 5 percent in this simulation. d. Applied tariffs on all electronics and electrical goods (as defined by the WTO 2008c) are reduced to zero in this calculation. e. Applied tariffs on all environmental goods (as defined by the World Bank 2007) are reduced to zero in this calculation. f. The simulation results from port efficiency and services infrastructure have been excluded here. g. Our sample of 22 countries has 7 developed countries. h. Our sample of 22 countries has 15 developing countries.

United States The United States would reap small trade gains from the formula cuts in agriculture and NAMA (export and import gains of $7.6 billion and $14.3 billion, respectively). This result is not surprising since the United States already has free trade agreements or low barriers with many of the other 21 countries. These relatively small gains and the imbalance between the gains from exports and imports explain why the deal on modalities has not attracted active support from protrade constituencies in the United States. To acquire that support, the deal needs to be supplemented, particularly in services, which could add $13.1 billion to export gains and $3.1 billion to import gains. In addition, “topping up” NAMA in several sectors could yield further gains of up to $8.0 billion in exports and $5.5 billion in imports, and trade facilitation reforms at home and abroad could boost US exports and imports by $10.5 billion and $23 billion, respectively. Combined, we estimate US export gains of $39.4 billion and US import 2 FIGURING OUT THE DOHA ROUND 8  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Potential gains Electronics and electrical goodsd

Environmental goodse

Trade facilitation

From sector initiative

From sector initiative

From Wilson, Mann, and Otsuki (2005)f

Imports

Exports

Imports

35.4

49.2

6.3

Exports

Total potential gains

Imports

Exports

Imports

Exports

5.9

138.5

86.8

311.6

280.4

6.6

22.6

1.2

4.1

54.5

39.5

129.7

147.6

28.8

25.8

5.1

1.8

84.0

47.3

181.9

131.8

3.0

8.8

0.3

2.1

17.2

16.3

53.5

62.7

*

7.8

*

1.0

5.1

7.5

13.7

30.6

2.6

4.9

0.6

0.8

23.0

10.5

45.9

39.4

3.9

0.2

0.5

*

4.7

2.2

13.9

6.0

11.3

12.0

1.7

0.9

32.0

19.9

68.4

55.7

1.7

0.2

0.8

0.1

9.1

2.6

20.3

7.7

* indicates that the import or export gains in trade for these countries are positive but less than $0.05 billion. Note: Imports are taken from table 1.1. Trade facilitation exports are also taken from table 1.1. All other exports are calculated by adding the corresponding export results from table 1.1 to an estimate of gains in exports to nonsample countries in each category. This estimate is made by assuming all nonsample countries have pre- and post-Doha applied tariffs equal to the average of the 22 sample countries displayed in tables 2.1, 2.4, and 3.1 to 3.5. A partial equilibrium method, which follows the method used in tables 3.1 to 3.5, is used to determine the impact of the tariff cuts on exports of the 22 countries. The elasticities for the calculations are the same as those employed throughout the study. Source: Authors’ calculations.

gains of $45.9 billion from a more ambitious Doha deal. The resulting GDP gains for the United States would be $36.2 billion.

European Union The European Union stands to gain more from agriculture and NAMA reforms than the United States, because its current barriers are higher. The formula cuts produce EU export gains of $13.4 billion and import gains of $26.3 billion, generating overall GDP gains in agriculture and NAMA of $16.3 billion—the largest gains incurred by any of the six major Doha Round participants: Brazil, China, India, the European Union, Japan, and the United States. EU trade gains from services reform ($17.4 billion and $5.2 billion, respectively, in exports and imports) and from NAMA topups ($15.6 billion and $4.7 billion, respectively) are roughly comparable to the US results. It is interesting to note that the European Union would be, after China, one of the main beneficiaries of a sector agreement in environmental goods (based on the product coverage listed in World Bank GRAPHICS

3

OVERVIEW  9 © Peterson Institute for International Economics | www.piie.com

Impact of trade gains on GDP “On the table” in agriculture and NAMA

Potential gains from a 10-percent reduction in services barriers

Country/region

Percent

Billions of dollars

European Union

0.1

16.3

*

6.9

Japan

0.1

5.6

0.1

2.7

United States

0.1

9.3

*

6.1

Brazil

0.1

1.5

0.1

China

0.3

9.7

India

0.1

1.1

Developed countriesa

0.1

Developing countriesb Sample country totalc World totald

Potential gains from improvements in trade facilitation

Total potential gains

Billions of dollars

Percent

Billions of dollars

*

7.0

0.1

15.4

0.3

45.6

0.1

4.5

0.1

5.8

0.4

18.6

*

5.4

0.1

15.4

0.3

36.2

1.6

0.2

2.6

0.2

3.2

0.7

8.9

0.2

7.1

0.4

12.1

0.7

23.9

1.6

52.7

0.3

3.6

0.2

1.8

0.5

5.4

1.0

11.8

34.0

*

18.5

*

18.2

0.1

43.2

0.3

113.9

0.2

21.5

0.2

21.5

0.3

31.5

0.6

60.4

1.3

134.9

0.1

55.5

0.1

40.0

0.1

49.7

0.2

103.6

0.5

248.8

0.1

63.0

0.1

45.5

0.1

56.4

0.2

117.8

0.5

282.7

Percent

Billions of dollars

Potential gains from sector initiativese Percent

Percent

Billions of dollars

NAMA = nonagricultural market access

GRAPHICS

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10  Figuring Out the Doha Round

Table 1.3

a. Our sample of 22 countries has 7 developed countries. b. Our sample of 22 countries has 15 developing countries. c. Sample country total is the total GDP impact of the 22 sample countries that are covered in this study. d. World total is calculated by scaling up the GDP impact of the 22 sample countries. As an example, since the GDP impact for the 22 countries in agriculture and NAMA is $55.5 billion, and these 22 countries account for 88 percent of world GDP, we estimate that the world total for agriculture and NAMA will be roughly $63 billion [($55.5 billion/88)*100 = $63 billion]. This scalingup estimate assumes that GDP gains of the 22 sample countries reasonably represent the GDP gains of excluded countries. The 88 percent figure is based on 2007 world GDP numbers. e. The sector initiatives included here are chemicals, electronic and electrical goods, and environmental goods. * indicates that the percentage of GDP impact for these countries is positive but less than 0.05 percent. Notes: GDP impact is calculated based on 2007 GDP data using the trade gains from table 1.1. The dollar ratio average used to translate trade gains to GDP gains is from table A.2. Taiwan is excluded from services calculations.

5

Source: Authors’ calculations.

Box 1.2

Doha Round box score Doha “formula cuts” in agriculture and NAMA Trade gains (billions of dollars)

Country/region United States

Exports

Imports

Doha “topped up” reforms in goods, services, and trade facilitation

GDP gains

Percent

Billions of dollars

Trade gains (billions of dollars)

Exports

Imports

GDP gains

Percent

Billions of dollars

7.6

14.2

0.1

9.3

39.4

45.9

0.4

36.2

13.4

26.3

0.1

16.3

62.7

53.5

0.3

45.6

8.1

4.9

0.1

5.6

30.6

13.7

0.3

18.6

Brazil

2.7

1.0

0.1

1.5

6.0

13.9

0.7

8.9

China

16.8

6.9

0.3

9.7

55.7

68.4

1.6

52.7

India

1.9

0.7

0.1

1.1

7.7

20.3

1.0

11.8

Total of 22 Doha participants

67.7

66.1

0.1

55.5

280.4

311.6

0.5

248.8

World totala

92.8

86.9

0.1

63.0

384.1

409.9

0.5

282.7

European Union Japan

a. World total is derived from a simple scaling-up of the sample countries accounting for 73 percent of world exports (2008), 76 percent of world imports (2008), and 88 percent of global GDP (2007). Note: GDP gains result from increases in global imports and exports to other Doha participants. Sources: Tables 1.2 and 1.3.

2007). As a big trading bloc, the European Union would also benefit substantially from trade facilitation reforms, which could boost EU exports and imports by $16.3 billion and $17.2 billion, respectively. Combined, EU benefits would total $62.7 billion on the export side and $53.5 billion on imports, which would boost EU GDP by $45.6 billion.

Japan Japanese trade gains are most notable in NAMA: Exports would increase by $7.5 billion and imports by $2.5 billion. Agricultural reform, by contrast, offers much fewer benefits, mostly on the import side ($0.5 billion in exports and $2.4 billion in imports). In services, Japanese exports increase by $3.8 billion and imports by $3.5 billion. In the three “top-up” sectors, Japan has barely any import gains, but gains can be significant on the export side, notably a $7.8 billion increase in electronics and electrical goods. Somewhat surprisingly, Japan benefits far less than other big traders from trade facilitation, with export gains of $7.5 billion and import gains of $5.1 billion. Combined, Japanese export gains of $30.6 billion are more than double its import gains ($13.7 billion), and a large share of those benefits derive from broad NAMA tariff reforms. The overall GDP gains for Japan GRAPHICS 119 OVERVIEW  © Peterson Institute for International Economics | www.piie.com

($18.6 billion) are smaller than those of the European Union and the United States in absolute numbers; in relative terms, however, Japan is in line with them—0.4 percent of GDP for formula tariff cuts, services, NAMA “top-ups,” and trade facilitation combined.

Brazil, India, and China Brazil’s trade gains are most prominent in exports of agriculture ($2.3 billion) and imports of services ($2.8 billion) and electronics and electrical goods ($3.9 billion). Overall, Brazilian trade gains would be $6.0 billion on exports and $13.9 billion on imports. Formula cuts would boost Brazilian GDP by $1.5 billion; services reforms would yield benefits of $1.6 billion; NAMA top-ups would add $2.6 billion to GDP; and trade facilitation reforms would yield $3.2 billion more. In total, the boost to Brazilian GDP would be $8.9 billion or 0.7 percent of GDP—almost double the impact of the Doha package on developed-country economies. India’s trade gains from both the formula cuts and Doha top-ups are much more muted, with the notable exception of import gains in services ($7.2 billion). Trade facilitation reforms also are important, with export gains of $2.6 billion and import gains of $9.1 billion. All combined, India could garner $7.7 billion and $20.3 billion in export and import gains, respectively. As a result, India could achieve GDP gains greater than Brazil from an ambitious Doha accord ($11.8 billion or 1 percent of GDP). Liberalization of services would generate an increase of $3.6 billion in Indian GDP (0.3 percent) and account for about one-third of India’s GDP gains from an expanded Doha accord. As a result of liberalization undertaken in its WTO accession process, China has low tariff barriers in NAMA relative to other developing countries. China’s agriculture and NAMA trade gains are concentrated on the export side, with gains of $16.8 billion, more than twice as large as its import gains. Conversely, its gains from services reform are predominantly on the import side ($12.0 billion in imports versus $4.4 billion in exports). NAMA top-ups would yield greater balance between China’s export and import gains, especially if additional reforms are made in the electronic and electrical goods sectors. Liberalization in the three sectors would increase Chinese exports and imports by $14.5 billion and $17.5 billion, respectively. China is also, by far, the largest beneficiary of trade facilitation reforms, with export gains of $19.9 billion and import gains of $32.0 billion. Taken together, China would be one of the top beneficiaries of an ambitious Doha accord, with export gains of $55.7 billion and import gains of $68.4 billion. Combined, liberalization of goods and services and trade facilitation reforms would boost Chinese GDP by $52.7 billion or 1.6 percent of GDP.

12  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Comparing Gains for Developed and Developing Countries WTO members expect that a final deal should provide relatively larger benefits for developing countries if Doha is to meet its advertised goal of being a “development round.” Overall, we find this to be the case, as reported in tables 1.2 and 1.3.6 In absolute numbers, trade gains in agriculture are larger for developed countries ($9.5 billion and $19.2 billion in exports and imports, respectively) than for developing countries ($7.7 billion and $1.4 billion, respectively). In NAMA, gains for the two country groups are of similar magnitude, but developing countries gain more on the export side ($27.5 billion for exports versus $16.1 billion for imports), whereas developed countries gain more in imports ($29.5 billion in imports versus $23.1 billion in exports). Still, as shown in table 1.3, GDP gains from agriculture and NAMA formula cuts for developing countries amount to 0.2 percent of GDP ($21.5 billion), more than double the percentage increase for developed countries of 0.1 percent ($34.0 billion). In services, under a 10 percent liberalization scenario, trade gains for developed countries are higher than for developing countries in exports ($38.9 billion versus $16.1 billion for developed and developing countries, respectively) but lower in imports ($14.5 billion versus $35.3 billion, respectively). GDP gains for developing countries reach $21.5 billion (0.2 percent of GDP) compared with $18.5 billion for developed countries (0.05 percent of GDP). In the three NAMA top-ups, the additional increase in trade from sector tariff cuts above the NAMA formula cuts is roughly equal for developing and developed countries on the export side, but developing countries gain more in imports. GDP gains, when all three sectors are liberalized, total $31.5 billion for developing countries (0.3 percent) and $18.2 billion for developed countries (0.05 percent). As for trade facilitation (where the numbers are less rigorous), trade gains for developing countries exceed those for developed countries, both in exports ($47.3 billion versus $39.5 billion for developing and developed countries, respectively) and imports ($84.0 billion versus $54.5 billion for developing and developed countries, respectively). GDP gains for developing countries might be 0.6 percent ($60.4 billion) and for developed countries 0.1 percent ($43.2 billion). In sum, the broader reforms we recommend would validate a core objective of the venture officially called the Doha Development Agenda: Potential trade and GDP gains for developing countries exceed those for developed countries. Compared with the outcome from the formula cuts, which substantially benefit the richer countries, the broader package of reforms in an expanded Doha Round accord would yield results that are both more ambitious and more balanced among WTO participants. 6. Note that these results don’t incorporate “duty-free, quota-free” reforms, which would eliminate tariffs and quotas on least developed countries’ imports.

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14  Figuring Out 6 the FIGURING DohaOUT Round THE DOHA ROUND

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Appendix 1A Table 1A.1 Sample group

Comparison between sample and G-20 countries, 2008 (billions of dollars) Exports to world

Imports from world

G-20

Exports to world

Imports from world

Countries that are in both the sample group and G-20 Argentina

69.8

53.2

Argentina

69.8

53.2

Australia

185.7

211.0

Australia

185.7

211.0

Brazil

199.8

185.3

Brazil

199.8

185.3

Canada

457.3

448.9

Canada

457.3

448.9

China

1,484.1

1,190.0

China

1,484.1

1,190.0

European Union

1,986.3

2,296.5

European Union

1,986.3

2,296.5

India

187.4

300.5

India

187.4

300.5

Indonesia

155.1

137.6

Indonesia

155.1

137.6

Japan

783.1

761.8

Japan

783.1

761.8

Korea

417.5

435.0

Korea

417.5

435.0

Mexico

269.7

304.2

Mexico

269.7

304.2

82.4

104.3

South Africa

82.4

104.3

South Africa

132.3

202.0

132.3

202.0

United States

Turkey

1,300.2

2,166.0

United States

Turkey

1,300.2

2,166.0

Subtotal

7,710.5

8,796.5

Subtotal

7,710.5

8,796.5 (continued on next page)

Table 1A.1 Comparison between sample and G-20 countries, 2008 (billions of dollars) (continued) Sample group

Exports to world

Imports from world

G-20

Exports to world

Imports from world

Other members Colombia

41.4

Malaysia

217.4

187.2

Norway

168.0

89.1

France * Germany * Italy *

606.6

706.7

1,465.2

1,204.8

539.9

556.3

Pakistan

21.8

46.3

Russia

464.0

276.0

Philippines

64.6

76.9

Saudi Arabia

280.2

110.7

United Kingdom *

459.9

2,166.0

Total trade of G-20

8,454.7

9,183.1

Switzerland

189.5

228.4

Taiwan

233.0

229.4

Thailand

173.2

178.5

8,816.7

9,873.6

Total trade of sample group as a share of world trade (percent)

72.5

76.2

Total trade of G-20 as a share of world trade (percent)

69.5

70.9

Subtotal as a share of total trade of sample group (percent)

87.5

89.1

Subtotal as a share of total trade of G-20 (percent)

91.2

95.8

Total trade of sample group

* = these individual member states of the European Union are listed in this table because they are part of the G-20, but their trade numbers are not added to the total since EU trade numbers are already included. Source: IMF, Direction of Trade Statistics, June 2009, for all countries but Taiwan. For Taiwan, UN Comtrade Database through the World Integrated Trade Solution, 2009.

GRAPHICS 7 OVERVIEW  15

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38.7

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2

Agriculture and Nonagricultural Market Access

For each of the 22 countries in our sample, the dataset contains three tariff rates: bound rates, most favored nation (MFN) applied rates, and, where applicable, preferential duty rates.1 Our methodology is detailed in boxes 2.1 and 2.2 (on pages 20 and 31). The tables in this chapter report tradeweighted averages of bound and applied tariff rates. However, tradeweighted averages miss an important reform contemplated in the Doha Round—namely downward harmonization of rates. Sharp reductions in tariff peaks are reflected in aggregate numbers on bound and applied tariff rate cuts; however, the reduction of peaks is especially important in agriculture. That is why negotiators worry about “special” and “sensitive” products, categories that often encompass goods with peak tariffs, which importing countries are very reluctant to cut.2

1. The data cover all tariff lines of traded goods in 2006 at the 2-digit level of the HS code. HS stands for the Harmonized Commodity Description and Coding System. The level of detail goes to 8 digits and for some countries to 10 digits. 2. Raj Bhala (2009) outlines the fine distinction between “special” and “sensitive” merchandise. The designation of an agricultural good as a “special” product is a form of special and differential treatment for poor countries but results in another restriction on market access. Labeling products as “special” exempts them—partially or entirely—from any tariff cut under the tiered tariff formula. This avenue is not available for developed countries. However, all WTO members, whether developing or developed, can designate “sensitive” products, which are also exempt—partially or entirely—from any tariff cut. The discipline on resort to “special” and “sensitive” exemptions comes by way of agreed limits on the number of tariff lines entitled to each form of exemption.

17 © Peterson Institute for International Economics | www.piie.com

Results for Agriculture The agricultural negotiations seek to eliminate export subsidies, sharply reduce tariffs and domestic farm subsidies, and expand tariff rate quotas (TRQs). In this study, we do not go into the details of the commitments for each product but rather summarize the overall gains in agriculture for selected countries. Table 2.1 shows the trade-weighted average bound and applied tariff rates, both pre- and post-Doha, for the sample group of 22 countries and for 6 major Doha participants that we discuss in more detail: Brazil, China, India, the European Union, Japan, and the United States. For the group of all 22 countries, bound rates will be decreased from 25 to 18.2 percent. The US average pre-Doha bound rate is quite low, 3 percent, and will be reduced to 1.6 percent. The European Union has a higher average pre-Doha bound rate, 7.8 percent, but commits to a cut of almost half, bringing the post-Doha bound rate down to 4.2 percent. Among the leading developed countries, Japan has the highest average pre-Doha bound rate, 10.7 percent, which will be cut to 4.5 percent, a level similar to the EU post-Doha bound rate. The largest cuts in percentage point terms come from the three developing countries. India has a particularly high average pre-Doha bound rate (167 percent), which will be reduced by 36.6 percentage points to 130.4 percent. This is by far the largest cut in average bound rates, but the post-Doha average is still remarkably high. Brazil commits to cutting its average bound rate by 9.6 percentage points, from an initial level of 40.6 percent to a new level of 31 percent. These large cuts in bound rates for developing countries reflect high pre-Doha bound rates in agriculture and show the workings of the tiered formula for cutting tariffs.3 Tables 2A.1 and 2A.2 at the end of this chapter show details of the preand post-Doha bound rates and the cuts in percentage points, respectively, for bilateral trade between selected country groups and individual countries. Particularly steep reductions can be observed in the rates applied to imports of agricultural goods by the majority of developing countries from least developed countries (LDCs) and from China. Cuts in bound rates may not create new opportunities for trade because the new bound rates may still be higher than the old applied rates. However, bound rates are important because they lock in liberalization and provide insurance against large doses of new protection in the future via unilateral increases in applied rates. Although “lock in” and “insurance” gains are not quantifiable, they are an important benefit of the Doha Round. As a result of substantial unilateral liberalization over the past two decades, many developing countries impose tariffs at levels well below their WTO bound rates. Those countries have the right to raise such tariffs at 3. As detailed in box 2.1, the tiered formula applies larger percentage point cuts to high initial tariffs and smaller cuts to low initial tariffs.

18  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Table 2.1 Tariffs in agriculture (percent) Bound

Applied

Country/region

Pre-Doha

Post-Doha

Pre-Doha

Post-Doha

All 22 countries

25.0

18.2

7.6

5.3

European Union Japan United States Brazil

7.8

4.2

6.0

3.4

10.7

4.5

10.4

4.5

3.0

1.6

1.3

0.7

40.6

31.0

4.1

3.9

China

16.1

14.7

9.6

8.9

India

167.0

130.4

60.2

55.7

Source: Authors’ calculations.

any time without violating their obligations to other WTO members, and they value that flexibility. In effect, countries that apply tariffs below their bound rates can have recourse to a “free safeguard,” namely, a WTO-legal tariff increase equal to (or less than) the difference between the bound and applied rates. When the bound rate comes closer to (or even equal to) the applied rate, the WTO member has less scope for applying “free safeguards” and its trading partners benefit from greater policy security that import barriers will not be easily raised. Column 3 of table 2.1 shows the pre-Doha applied rates (again, tradeweighted averages). As noted above, applied rates are often well below WTO bound rates because of unilateral liberalization. The difference between bound and applied rates, in percentage points, measures the “water” in the tariff schedule. Brazil and India have particularly high water levels. In fact, water levels are usually quite high in agriculture for developing countries (see table 2A.3 for detail). China is an exception as it recently acceded to the WTO and generally bound its tariffs at or close to the levels negotiated in its bilateral accession protocols.4 Table 2A.4 presents the trade-weighted average applied tariff rates for the 15 developing countries in the sample for 2001, 2006, and postDoha. Between the beginning of the Doha negotiations in November 2001 and the end of 2006, some countries engaged in unilateral liberalization and reduced their applied MFN rates, sometimes substantially. China, for example, lowered its trade-weighted average applied MFN rates on agriculture from 49 to 16.1 percent. Korea and Mexico also significantly decreased their trade-weighted average applied MFN rates on agriculture, 4. In the July 2008 draft text on agriculture, recently acceded members (RAMs) would be granted additional time to implement their Doha commitments if those overlap with commitments to be undertaken according to their accession agreements. Very recently acceded countries, namely Macedonia, Saudi Arabia, Tonga, Vietnam, and Ukraine, and small low-income RAMs, namely Albania, Armenia, Georgia, Kyrgyzstan, Moldova, and Mongolia, would be exempt from tariff reductions beyond their accession commitments.

10

FIGURING OUT THE DOHA ROUND Agriculture and Nonagricultural Market Access  19 © Peterson Institute for International Economics | www.piie.com

Box 2.1

Methodology for calculating agriculture concessions

Tariffs and Tariff Quotas In agriculture, the reductions in bound rates follow a tiered formula detailed in table 2B1.1. A “half deviation” is applied to out-of-quota tariffs for sensitive products.1 If the tariff on a sensitive product remains above 100 percent after the tariff cut, the quota for that product is expanded by 0.5 percent of domestic consumption. For in-quota tariffs, the tiered formula is applied (table 2B1.1). Tariff caps of 100 and 150 percent are imposed, respectively, on “nonsensitive” tariff lines for developed countries and on “nonspecial” tariff lines for developing countries and recently acceded member countries (RAMs). For developed countries, 4 percent of the agriculture tariff lines are eligible to be designated as “sensitive.” To compensate for lower tariff cuts in these products, developed countries must expand their tariff quotas by 3.5 percent of domestic consumption. Japan, Norway, and Switzerland get a somewhat different treatment for tariff quota expansion. After the tariff cut, if tariff lines above 100 percent represent less than or up to 2 percent of all tariff lines, the additional 2 percent of “sensitive” tariff lines will have their quotas expanded by 2 percent of domestic consumption. If more than 2 percent of tariff lines still have a tariff rate above 100 percent after the tariff cut, all “sensitive” tariff lines will have a quota expansion of 4 percent of domestic consumption. For new or expanded tariff rate quotas, in-quota tariffs are assumed to be zero. These new or expanded tariff rate quotas are multiplied by the out-ofquota tariff to determine the value of concessions from reduced out-of-quota tariff revenues. For tariff rate quota simulations for the European Union, the United States, Japan, Canada, and Norway, a hypothetical list of “sensitive” products was constructed from agricultural tariff lines for which the countries have provided consumption data. For developing countries, “special” products are assumed to cover the 12 percent of agricultural tariff lines with the highest bound tariffs. For RAMs the figure is 13 percent. For developing countries, an 11 percent tariff cut is assumed to be applied to these “special” products, and for RAMs a 10 percent cut. For developing countries and RAMs, no “sensitive” products are subject to tariff cuts.2 (continued on next page)

1. A “half deviation” means that the reductions required are divided by 2. If a tariff was to be reduced by 20 percentage points according to the tiered formula, then for “sensitive” products it will need to be reduced by only 10 percentage points. 2. The WTO methodology applies a tariff cut to some “special” products but not to “sensitive” products.

20  FIGURING 60 Figuring OUT Out THE the DOHA Doha Round ROUND © Peterson Institute for International Economics | www.piie.com

Box 2.1

Methodology for calculating agriculture concessions (continued)

Domestic Support and Export Subsidies For domestic support and export subsidies, the method consists of calculating tariff rate equivalents in a manner designed to be comparable with the market access concessions detailed above. For domestic support, product-specific limits on the aggregate measure of support (AMS) are calculated based on the modalities for developed and developing countries. We assume that developing countries would choose the methodology that requires the least cuts in their product-specific AMS. If the average of non-product-specific AMS over the last three years exceeds the Doha de minimis level, the surplus is allocated to individual products according to their share of average notified product-specific support over the last three years for which data are available. After applying these modalities, if the sum of product-specific AMS limits is higher than the new final bound total AMS, the latter is allocated to the products according to their share of the average notified product-specific support over the last three years for which data are available. However, if the allocated amount for a product exceeds the product-specific AMS limit, the latter is used as the “new” product-specific limit. The difference between the “new” product-specific AMS limits and the average notified product-specific support over the last three years for which data are available is the cut that the country should apply to its AMS. For each commodity, we determine the cuts in subsidy amounts per unit of production. Dividing per unit subsidy amounts by world unit values, we calculate the tariff rate equivalents. To determine the concessions made by the country, the tariff rate equivalent is multiplied by either imports or exports, depending on whether the country is a net importer or net exporter of the good. If it is a net importer of that good, a country’s concession is allocated to its trading partners according to their shares in the country’s market. If it is a net exporter of that good, a country’s concession is allocated to other competing exporters according to their share in world exports of that commodity (excluding the country making the concession). The same approach is followed for Blue Box payments. Simulations based on this methodology were carried out for the United States, the European Union, Japan, Canada, Norway, Switzerland, Australia, Argentina, Brazil, Colombia, Mexico, Korea, South Africa, Taiwan, and Thailand.

(continued on next page)

Agriculture and Nonagricultural Market GRAPHICS Access  61 21 © Peterson Institute for International Economics | www.piie.com

Box 2.

Methodology for calculating agriculture concessions (continued)

A different methodology is used for export subsidies. Notified outlays are used as an estimate of concessions given by a country. These are calculated as the average amount notified to the WTO during the period 2000 to 2004. Concessions are allocated to other exporting countries according to the WTO member’s share in world exports of that commodity (excluding the country making the concession). This method was used for simulations of export subsidy reductions for Canada, the European Union, Norway, Switzerland, and the United States.

Table 2B. Tiered formula for tariff reductions to improve agriculture market access (percent) Developed countries Tier

Reduction

Developing countries Tier

Reduction

Recently acceded countries Tier

Reduction

0≤20

50

0≤30

33.5

0≤10

0

>20≤50

57

>30≤80

38

>10≤20

25.5

>50≤75

64

>80≤130

43

>20≤50

30

>75

70

>130

47

>50≤75

35

>75

39

Note: A tariff within a certain tier will be reduced by the corresponding reduction amount. For example, a developed country with a tariff of 55 percent will decrease its tariff rate by 64 percent (down to 19.8 percent), while a developing country will decrease the same tariff rate by 38 percent (down to 34.1 percent), and a recently acceded country by 35 percent (down to 35.7 percent). Source: WTO (2008d).

from 79.2 to 14.1 percent and from 34.4 to 23.9 percent, respectively. In other words, key emerging-market countries have been liberalizing farm trade throughout the Doha Round talks. For some of those countries, the additional reduction from Doha commitments would be marginal compared with the unilateral liberalization they have already implemented in recent years. A few countries, by contrast, raised their average tradeweighted applied MFN tariff rates in agriculture between 2001 and 2006 (e.g., Malaysia, Pakistan, and India). We see no reason why countries that have unilaterally reduced tariffs should not receive credit in WTO negotiations, provided they accept a legal obligation to maintain or “lock in” the reforms. In other words, a country should be able to claim a negotiating credit for any increase in imports that is reasonably attributable to its unilateral liberalization. 22  FIGURING 2 Figuring OUT Out THE the DOHA Doha Round ROUND © Peterson Institute for International Economics | www.piie.com

Indeed, we proposed such a process at the start of the Uruguay Round! For example, a country that liberalized imports of a product category, and experienced a rise in imports in that category of $500 million that can be reasonably attributed to the lower tariff, should be able to claim concessions of an equivalent amount in WTO negotiations (Hufbauer and Schott 1985). Unfortunately, this very sound idea has yet to be accepted as a WTO negotiations template. Column 4 of table 2.1 shows prospective post-Doha applied rates. Applied rates are cut only when the pre-Doha applied rate of a specific tariff line exceeds the post-Doha bound rate for that tariff line. For the group of 22 countries, the average trade-weighted applied rate will be reduced from 7.6 to 5.3 percent. Japanese and EU applied rates in agriculture are high compared with other developed countries, and their commitments to reducing applied rates in agriculture are significant (this is the case for imports from both developed and developing countries; table 2A.5). India will undergo much higher cuts in applied tariffs on agricultural imports than China or Brazil, because current Indian applied tariffs are much higher. As for the United States, while US negotiators argue that the Doha Round must achieve “effective market access,” meaning significant cuts in foreign applied tariffs and subsidies, in fact the United States has committed to very little reduction in its own applied rates on agricultural imports. At present, the United States would reduce its weighted average applied rate by just 0.6 percentage points in agricultural goods, which is comparable with the commitments of major developing countries such as Brazil and China. On the other hand, India would reduce its applied rates on agricultural imports by 4.5 percentage points. However, US peak tariffs would be cut substantially due to the harmonizing effect of the formula cuts. Moreover, the United States and the European Union also contribute large cuts in agricultural subsidies (discussed below). The United States generously subsidizes its farmers who grow “field crops” (soybeans, wheat, corn, and cotton) and certain other products. The subsidies fall in two categories. The first covers payments to farmers, which can be either direct payments decoupled from production and price or payments that compensate for adverse price movements. The second category covers price support programs (mostly for dairy and sugar). When the relevant price falls below a certain level, the US Department of Agriculture buys excess production to bolster the price. The US proposal in July 2008 offered to lower the ceiling for its overall trade-distorting domestic support (OTDS) from $48 billion to around $15 billion. Developing countries argued that the offer was insufficient since actual disbursements of subsidies are already well below $15 billion owing to the general rise in commodity prices in recent years. However, the US proposal would constrain an increase in subsidies when prices fall. Moreover, the proposal as it stands, or anything more stringent, will require significant changes in some US farm programs currently in force, but Agriculture and Nonagricultural Market Access  23 © Peterson Institute for International Economics | www.piie.com

Table 2.2

Bound and applied tariff rates in agriculture imposed by Brazil, China, and India on imports from the group of 15 developing countries in the sample (percent) Bound

Country

Pre-Doha

Brazil

Applied

Post-Doha

44.2

35.2

Pre-Doha

Post-Doha

1.4

1.4

China

11.8

10.9

8.4

7.9

India

206.2

169.8

75.5

70.8

Source: Authors’ calculations.

not in the near term because the most politically sensitive concessions are usually back-end loaded—meaning they are implemented after a lengthy transition period.5 In other words, the Doha agreement would not require major changes in the current US farm bill. Instead, in writing the next farm bill in 2012 and 2013, Congress would need to restructure US programs so that they conform to new WTO obligations. Table 2A.6 summarizes the prospective cuts in applied rates in percentage point terms. Neither developed nor developing countries will appreciably decrease their tariffs on LDC agricultural exports. Rates on LDC exports are already low across the board, except in a few developing-country importers such as Brazil and India. China’s applied rates are similar to those of Japan (9.6 and 10.4 percent, respectively, from table 2.1), but China has committed to Doha reductions that are much smaller, less than 1 percentage point compared with Japan’s 6 percentage points. Table 2.2 shows the bound and applied rates in agriculture, pre- and post-Doha, imposed by Brazil, China, and India on imports of the 15 developing countries in the sample. Again, Indian bound and applied rates stand out as extremely high and Indian bound rates would undergo large cuts. Brazil has particularly low applied rates on agricultural imports from the 15 developing countries. This is in part explained by the presence of Argentina in the group of 15 developing countries. Argentina accounts for a large proportion of Brazilian agricultural imports from the group, and much of the trade between Argentina and Brazil is already duty-free under the Mercosur (Southern Cone Common Market).6 The final design element among Doha “modalities” that could further limit the range of products covered by prospective tariff cuts is the proposed Special Safeguard Mechanism (SSM), which would allow developing countries flexibility to protect their rural communities against a 5. Kimberly Ann Elliott, “Last Gasp for Doha,” CGD Global Development: Views from the Center,” Center for Global Development, July 25, 2008. 6. However, there are notable exceptions to duty-free trade in Mercosur, and several of them are in agriculture.

24  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

GRAPHICS

11

surge of imported farm products by imposing temporary safeguard measures in the form of tariffs. Negotiators differ on what conditions should trigger the imposition of such safeguards. According to one proposal, the SSM should cover all agricultural products imported by developing countries, with a single set of triggers, but differentiate between four country groups (developing, recently acceded, small and vulnerable, and least developed), and with a gradual phaseout of the maximum tariff that can be imposed.7 Other proposals have also been tabled, but for now SSM talks are at an impasse. Depending on how it is structured, the SSM could potentially offset much of the expected gains from the agricultural negotiations, so negotiators need to resolve this matter before they can conclude the modalities for agriculture.

Reciprocity Measure Table 2.3 summarizes the total reciprocity measure concessions given and received by each country, in billions of dollars, distinguishing for agriculture between tariff cuts and concessions on nontariff barriers (NTBs), namely export subsidies, domestic support, and tariff rate quotas. Concessions given are tariff and tariff-equivalent revenues forgone on imports and reduced subsidies on agricultural production. Concessions received are reduced tariffs or tariff equivalents on the country’s exports or reduced subsidies in the importing market. These calculations suggest that 44 percent of developed-country reciprocity measure concessions (in both agriculture and NAMA) arise in the agricultural sector (combining tariff cuts with subsidy concessions). On the other hand, only 9 percent of developing-country concessions are made in agriculture. Looking at the country breakdown for the major developed economies, roughly half of EU and Japanese concessions, but only 10 percent of US concessions, come from agriculture. Interestingly, however, the majority of US reciprocity measure gains come from agriculture. Among developing countries, Brazil and China concede little in agriculture, in terms of the reciprocity measure expressed in either dollars or the percent of total concessions. Indian concessions in agriculture represent 30 percent of total Indian concessions, but the reciprocity measure of agricultural concessions is small, only $200 million. Table 2.3 shows that, in agriculture, apart from the European Union, all of the other major trading nations receive more gains from the liberalization of NTBs than from lower tariff rates, in reciprocity measure terms. The United States is the largest beneficiary of NTB liberalization in reciprocity measure terms ($2.4 billion), followed by Brazil ($1.6 billion). The

7. Gary Hufbauer and Matthew Adler, “The Special Safeguard Mechanism: Possible Solutions to the Impasse,” note prepared for the World Bank and presented in Geneva, October 28, 2008.

Agriculture and Nonagricultural Market Access  25 © Peterson Institute for International Economics | www.piie.com

© Peterson Institute for International Economics | www.piie.com

12 26  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round

Table 2.3

Gains in agriculture and NAMA expressed in terms of the reciprocity measure (billions of dollars) Agriculture Total cuts

NAMA

Tariff cuts

Nontariff barrier cuts

a

Tariff cuts only

Country/group

Given

Received

Given

Received

Given

Received

Given

Received

All 22 countries

22.7

15.9

7.4

5.9

15.3

9.9

42.4

37.6

Developed (7)

21.1

8.5

5.9

3.4

15.2

5.1

26.9

16.4

Developing (15)

1.6

7.4

1.5

2.6

0.1

4.8

15.5

21.2

European Union

14.5

1.8

2.1

1.2

12.4

0.6

10.0

7.1

Japan

3.0

0.5

2.5

*

0.5

0.5

2.3

6.2

United States

1.4

3.2

0.4

0.8

1.0

2.4

11.7

2.5

Brazil

*

2.1

*

0.6

0

1.6

1.0

0.2

China

0.2

1.1

0.2

0.5

0

0.6

6.1

12.2

India

0.2

0.3

0.2

0.1

0

0.2

0.5

1.3

NAMA = nonagricultural market access a. Nontariff barriers consist of tariff rate quotas, export subsidies, and domestic support. * indicates that gains in terms of reciprocity measure are positive but less than $0.05 billion. Source: Authors’ calculations.

European Union receives less than $1 billion in NTB cuts but gains $1.2 billion in tariff cuts (the largest tariff gains of all six major trading nations). In reciprocity measure terms, EU and Japanese tariff concessions in agriculture are significantly higher than concessions by other countries (more than $2 billion compared with less than $0.5 billion for the others). EU concessions in NTBs also dwarf those of the other five countries (over $12 billion for the European Union, compared with $1 billion or less for each of the others). Tables 2A.7 through 2A.9 show that EU concessions are large in all three categories of NTBs: tariff rate quotas, export subsidies, and domestic support. However, the magnitude of the figures may be biased by our methodology. To calculate the tariff rate equivalents of NTB concessions, our method uses outlays notified to the WTO over the last three years for which data are available. In the case of the European Union, these were high years and EU concessions are thus calculated on the basis of high outlay levels. This could exaggerate the extent of concessions offered. The European Union also has high trade flows in the products it subsidizes, another factor that contributes to a calculation of high concessions. Finally, after calculating the concessions in domestic support based on the modalities, we checked to ensure that the total does not exceed the agreed OTDS limit. In the case of the European Union, however, the total for subsidies often exceeded the OTDS limit, so another adjustment was needed, on the assumption that the European Union does not in fact exceed its OTDS limit for subsidies to agriculture. US agricultural concessions are larger in NTBs than in tariffs, when calculated in reciprocity measure terms. Nonetheless, US NTB concessions are still small ($1 billion). This can be partly explained by the methodology. Due to high commodity prices in the past few years, US subsidies paid to farmers have been limited. Concessions are calculated from a low base since they are calculated using the last three years of notified outlays. The draft modalities propose the abolition of all export subsidies in agriculture. Aside from the European Union, the effects of eliminating export subsidies are limited (table 2A.8). However, as previously discussed, despite the low impact of this measure, the lock-in effect is not negligible, and its advantages are especially evident in times of crisis. Table 2A.10 gives a breakdown of the gains by partner. The reciprocity measure gains for US agricultural exports to the 21 countries in the sample are over $3 billion. For the most part, those total agricultural gains come from concessions by the European Union (almost $2 billion). Reciprocity measure gains for Brazilian agricultural exports are over $2 billion. In terms of the shares of agricultural concessions, our calculations show that 93 percent will originate from developed countries, while only 7 percent will originate from developing countries (table 2A.11). Therefore, developed countries will do the heavy lifting. The distribution of the reciprocity measure gains is the opposite: Forty-eight percent of the gains in agriculture accrue to the developing countries in the sample and 37 percent to Agriculture and Nonagricultural Market Access  27 © Peterson Institute for International Economics | www.piie.com

the developed countries in the sample.8 Brazil, despite conceding roughly nothing in agriculture, receives 9.4 percent of the gains, meaning Brazilian exports will benefit from lower tariffs and NTBs in partner countries. Brazil benefits from the liberalization of others while keeping its own barriers up. The breakdown by country shows that, among developed economies, the European Union makes the most total concessions, followed by the United States, and then Japan. EU concessions are particularly important in agriculture, which reflects the fact that the European Union has long maintained high tariffs in agriculture, its most sensitive sector. Despite making a large share of overall concessions in agriculture (63.9 percent), the European Union does not capture a large portion of reciprocity measure gains (only 8 percent) (table 2A.11). The United States, which makes 6.2 percent of total agricultural concessions, will receive 13.9 percent of total agricultural gains, in reciprocity measure terms (table 2A.11). These figures include export subsidies, domestic support, and tariff quota expansions. As discussed above, US agricultural tariffs are low, but US domestic subsidies are high. Developing countries are particularly intent on obtaining US commitments to reduce those subsidies, but they have yet to achieve their goal. In political terms, cutting farm support is a highly sensitive proposition for the United States, and only large concessions in NAMA or services will generate the necessary political support in Congress to enact significant cuts in farm support. That said, substantially cutting the “water” in US bindings on farm subsidies is feasible and would constrain future efforts to expand production-based subsidy programs.

Trade Gains Table 2A.12 calculates the increase in trade from tariff cuts in agriculture, using the elasticity of trade to tariff cuts calculated in table 2A.13. In other words, table 2A.12 reflects the trade gains in agriculture that will result from reducing applied tariff rates by the amounts shown in table 2A.6. Table 2A.12 also calculates the increase in trade generated by cuts in tariff quotas, domestic support, or export subsidies, based on the tariff equivalents calculated in our discussion of the reciprocity measure. Table 2A.12 gives bilateral detail of estimated trade gains from tariff cuts and concessions in NTBs. The total increase in agricultural exports of the 22 countries in the sample to the other 21 countries is estimated at $14.1 billion, 5.2 percent of 2006 agricultural exports. The majority of trade gains within the sample (exports of the 22 countries to the rest of the sample), which amount to an increase of 3.3 percent in trade, are due to NTB concessions, and the remaining trade gains, which amount to another 8. The remaining 15 percent of gains accrue to the rest of the world, since those countries also benefit from liberalization by the 22 countries in the sample.

28  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

2 percent of trade, are due to tariff cuts. Gains in agricultural exports to the group of 22 countries (not the world) due to tariff cuts amount to roughly 2.5 percent of exports each for the European Union, Japan, Brazil, and China.9 The comparable figures for the United States and India are 1.3 and 1.1 percent, respectively. Export gains from NTB concessions are more significant, except in the case of EU exports, which gain only 1.2 percent. Overall, EU agricultural exports to the other 21 countries will be boosted by around 4 percent, notably to Japan and India (table 2A.14). Japanese exports will experience the sharpest percentage rise from NTB concessions, 24.9 percent, but this represents an absolute increase in total agricultural exports for Japan of less than $1 billion. The growth percentages for Japanese agricultural exports are very large but the dollar figures are small because Japanese agricultural exports are low. Due to NTB concessions US exports of agricultural products will increase by 3.9 percent to the group of 21 countries. Brazil will also benefit significantly from NTB concessions, with exports rising by 6.1 percent. In total, US agricultural exports will grow by around 5.2 percent. US exports to the European Union will witness the largest growth, 28 percent total, including almost 25.8 percent due to EU NTB concessions. US exports to India will increase by 6 percent. The total increase in agricultural imports of the 22 countries from the world is $20.5 billion, 6.2 percent of 2006 agricultural imports. EU concessions in NTBs will lead to an increase in EU agricultural imports of 16 percent. Cuts in EU agricultural tariffs will increase EU imports by an additional 2.7 percent. The large combined increase in EU imports from the world (18.7 percent) can be explained by high pre-Doha EU levels of protection, which keep imports low, and by large EU concessions in NTBs. EU NTB concessions will notably increase imports from India by almost 10.5 percent. Japanese agricultural imports from the world will increase by 5.7 percent, mostly due to cuts in tariffs (4.7 percent) rather than in NTBs (1 percent). Japan will see greater import increases from the European Union, the United States, Brazil, and China. The United States will experience a smaller increase in agricultural imports, 2.3 percent, with a majority (1.6 percent) arising from NTB concessions. US agricultural imports will grow, particularly from developing countries: a 4.3 percent increase from Brazil, 4.4 percent from China, and 2.9 percent from India. Brazil, China, and India will see small import increases due to tariff cuts, below $0.2 billion for each country. This figure represents a significant percentage increase in agricultural imports for 9. Note that the calculations are not symmetrical: While import numbers have been calculated for imports from the world, the data did not allow us to calculate exports to the world, so table 2A.12 reports exports to the group of 22 countries in the sample.

Agriculture and Nonagricultural Market Access  29 © Peterson Institute for International Economics | www.piie.com

Table 2. Tariffs in nonagricultural market access (NAMA) (percent) Bound Country All 22 countries

Applied

Pre-Doha

Post-Doha

Pre-Doha

Post-Doha

8.6

3.7

2.4

1.8

European Union

2.4

1.2

1.5

0.8

Japan

5.7

1.9

0.9

0.5

United States Brazil

4.2

1.6

1.4

0.7

30.3

12.4

7.0

5.9

China

4.1

2.9

3.5

2.6

India

30.4

11.8

7.8

7.7

Source: Authors’ calculations.

India (3.5 percent from the world, as much as 6 percent from developed countries, and 9.7 percent from Brazil), all from a low base.

Results for Nonagricultural Market Access Products in the NAMA basket account for around 90 percent of world exports. They are the “big boys” in world merchandise trade. Table 2.4 shows the pre-Doha and post-Doha bound tariff rates (tradeweighted averages) in NAMA for the entire group of 22 countries and the 6 major trading nations. The group of 22 countries will cut its average bound rate from 8.6 to 3.7 percent. The United States and Japan have higher average levels of bound rates than the European Union. After the Swiss formula is applied, however, all three countries will have roughly similar average bound rates. Among the developing countries, China commits to small cuts in its average NAMA bound tariffs because, as a recently acceded country to the WTO, it has significantly reduced its bound rates over the past few years. In fact, while the pre-Doha bound rate for China is only 4.1 percent, the comparable figures for Brazil and India are 30.3 and 30.4 percent, respectively. Brazil and India stand out for making substantial concessions in their average NAMA bound tariffs, reductions of roughly 18 percentage points each. These are evenly spread out between different trading partners (see tables 2A.1 and 2A.2 for a breakdown by partner). These tables present bilateral detail of pre-Doha and post-Doha bound rates, with the cuts in bound rates expressed in percentage points. Both the United States and Japan will make important reductions to their bound rates on NAMA imports from LDCs. Column 3 of table 2.4 provides the weighted average of pre-Doha applied duties for NAMA goods. Applied rates in NAMA are cut according to the methodology in box 2.2 only if the current applied rate is higher 30  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

GRAPHICS



Box 2.2

Methodology for calculating concessions in nonagricultural market access (NAMA)

For NAMA, in the case of developed countries, in all tables we follow the scenario agreed in Doha, which assumes a Swiss coefficient of 8, applied to all tariff lines with no exceptions.1 For developing countries, we assume that countries follow the “20 half cut” scenario, one of the five options available to developing countries in Doha NAMA negotiations. This scenario consists of applying a coefficient of 20 to the Swiss formula, with the flexibility of making smaller cuts on 14 percent of its most “sensitive” industrial tariff lines, provided that these tariff lines do not exceed 15 percent of the total value of NAMA imports. In tables 2A.15 through 2A.17 at the end of this chapter, we explore the consequences if China, India, and Brazil select one of the other tariff reduction scenarios.2 We assume that the first set of tariff lines subject to flexibility are those with the highest applied tariffs. If there is added flexibility, we assume it is applied to tariff lines with the highest bound tariff and finally to those with the lowest import share. The formula is generally applied to bound rates; it is used for applied rates only in the case where the current applied rate is higher than the new bound rate. The NAMA reductions are compliant with the “anticoncentration clause,” which restricts developing countries from applying all the flexibility granted (continued on next page)

1. The Swiss formula is a linear mathematical formula that calculates the decrease in duty rates, with the extent of decrease dependent on the original tariff rate. If the original tariff is high, the extent of decrease will be steeper. If the original tariff is low, the extent of decrease will be smaller. In this way, the Swiss formula reduces tariff dispersion. The exact formula is Z = AX / (A + X), where Z is the reduced tariff, X is the initial tariff, and A is the negotiated coefficient. For example, if we assume a Swiss coefficient of 20, an initial tariff of 100 percent will be reduced to 16.6 percent, while an initial tariff of 5 percent will be reduced to 4 percent. 2. The other four scenarios available to developing countries are: (1) “20 no cut” (a Swiss coefficient of 20 with the flexibility to make no cuts in bound rates on 6.5 percent of the country’s most sensitive industrial tariff lines, provided they do not exceed 7.5 percent of the total NAMA import value); (2) “22 half cut” (a Swiss coefficient of 22, which confers tariff reductions less severe than the 20 coefficient and the flexibility of making smaller cuts in 10 percent of its most sensitive industrial products, provided they do not exceed 10 percent of the total NAMA import value); (3) “22 no cut” (a Swiss coefficient of 22 and the flexibility to make no cuts in tariff rates to 5 percent of the country’s most sensitive industrial tariff lines, provided they do not exceed 5 percent of the total NAMA imports); and (4) “25” (a Swiss coefficient of 25 applied to all NAMA tariff lines).

GRAPHICS Agriculture and Nonagricultural Market Access  63 31 © Peterson Institute for International Economics | www.piie.com

Box 2.2

Methodology for calculating concessions in nonagricultural market access (continued)

to them in a single sector, thereby excluding that sector from the liberalization process.3 When a tariff line is unbound, for purposes of these calculations, an artificial bound rate is created at 25 percent above the most favored nation (MFN) applied rate. Finally, some countries had not yet implemented all their commitments by 2005. To omit the accession effect, MFN applied rates are simply set at the level of the final bound rates.

3. The anticoncentration clause states that “full formula tariff reductions shall apply to a minimum of either 20 percent of national tariff lines or 9 percent of the value of imports of the Member in each HS Chapter” (paragraph 7(d) of “Fourth Revision of Draft Modalities for Non-Agricultural Market Access,” TN/MA/W/103/Rev.3, December 6, 2008).

than the post-Doha bound rate. The “water level” in NAMA is much lower than in agriculture (see table 2A.3). Only Brazil and India maintain high water levels. As in agriculture, applied rates are lower than bound rates because of unilateral trade liberalization in NAMA goods since 2001. In fact, table 2A.4 shows that all of the 15 developing countries in the sample decreased their NAMA MFN rates between 2001 and 2006. Some countries that undertook particularly steep liberalization include India, whose MFN rate dropped from 21 to 8 percent, Pakistan from 20.9 to 12.8 percent, and China from 11.2 to 3.6 percent. Compared with other developing countries, China has relatively low tariff barriers to world NAMA imports (3.5 percent as a weighted average, table 2A.5), as a result of the liberalization undertaken when it acceded to the WTO in late 2001. Because its applied rates are already low, China could afford to cut its existing rates to zero without significantly changing its competitive position. Column 4 of table 2.4 shows the post-Doha applied rates. On average, the group of 22 countries would reduce its applied rate from 2.4 to 1.8 percent. The applied rates of each of the 6 major trading nations on NAMA imports are significantly lower than on agricultural imports. However, despite low trade-weighted averages, relatively high tariff peaks still persist on some tariff lines. The United States, the European Union, and Japan arrive at similar levels of applied rates after the cuts (0.7, 0.8, and 0.5 percentage points, respectively). Developing countries start at higher applied rates, but on a percentage point basis, all 6 major trading nations commit to comparable cuts in NAMA applied rates, with Brazil slightly ahead. Table 2A.6 presents the cuts in applied rates broken down by partner. US NAMA exports will benefit from large tariff cuts by Brazil and China. 32  FIGURING 64 Figuring OUT Out THE the DOHA Doha Round ROUND © Peterson Institute for International Economics | www.piie.com

Table 2.5

Bound and applied tariff rates in NAMA imposed by Brazil, China, and India on imports from the group of 5 developing countries in the sample (percent) Bound

Country

Applied

Pre-Doha

Post-Doha

Pre-Doha

Post-Doha

32.2

13.1

7.5

6.3

Brazil China

3.7

2.6

3.0

2.3

India

29.0

11.2

7.9

7.8

NAMA = nonagricultural market access Source: Authors’ calculations

The United States will cut its tariffs on NAMA imports from LDCs by 2.9 percentage points, much higher than on imports from other sources. Of course, this result does not account for the virtual elimination of tariffs on LDC imports that would apply if the Doha agreement on “duty free quota free” treatment for LDC products is concluded. China and Brazil, and to a lesser extent India, will cut tariffs on NAMA imports from the European Union, United States, and Japan more than on other imports. Looking at South-South trade, the progress in lowering NAMA applied rates by Brazil, China, and India on imports from the 15 developing countries is quite small (table 2.5). The lack of progress on liberalizing South-South trade remains a major obstacle to achieving the goals of a development round.

Reciprocity Measure The reciprocity measure of gains from liberalization in the NAMA negotiations are calculated in table 2.3, and the breakdown by trading partner is shown in table 2A.10. China and Brazil stand out in terms of their concessions in NAMA compared with their concessions in agriculture. In terms of concessions received, China will be by far the main beneficiary of NAMA liberalization (over $12 billion in reciprocity measure terms, meaning $12 billion fewer tariffs to pay). The European Union and Japan will also reap significant gains (around $7 billion and $6 billion, respectively, in reciprocity measure terms). The United States reaps about $3 billion in reciprocity measure terms. The modest figure for the United States reflects the fact that several countries covered in the sample have free trade agreements with the United States—namely, Australia, Canada, and Mexico.10 Table 2A.10 shows that developing countries will see the greatest reciprocity measure 10. The European Union likewise has agreements with Norway and Switzerland through the European Free Trade Association (EFTA) and with Mexico, Turkey, and South Africa, but the latter three are small trading partners of the European Union.



FIGURING OUT THE DOHA ROUND Agriculture and Nonagricultural Market Access  33 © Peterson Institute for International Economics | www.piie.com

gains from the European Union and the United States, with China capturing more than $4 billion from each. As can be seen in table 2A.11, it is in NAMA that developing countries account for the lower share of concessions (36 percent) and capture the higher share of gains (57 percent), in reciprocity measure terms. All three key emerging markets studied—China, India, and Brazil—make larger concessions in NAMA than in agriculture, although the numbers are roughly equal for India. India captures higher gains in NAMA than in agriculture.

Trade Gains NAMA trade gains for the group of 22 countries will entail an increase in trade flows among the group (exports from the 22 to the rest of the group) of $40.3 billion. Despite contributing only one-third of concessions, developing countries see an increase in NAMA imports equal to that of the developed countries, 0.7 percent (table 2A.12). Increased exports by developing countries are mostly to the European Union and Japan. US export gains are small, but again, the United States has already liberalized two-way trade with important countries in the sample. We estimate that LDCs will see a 3 percent increase in NAMA exports to the United States. Chinese NAMA exports will see sizable increases to the European Union, Japan, the United States, and Brazil. Indian NAMA exports will grow by roughly 2.8 percent to the European Union and by 2.1 percent to the United States (table 2A.14). The European Union, Japan, and the United States will all see significant increases in their exports to Brazil and China. The statistical analysis in this study does not cover NTBs in NAMA. Progress in cutting NTBs on NAMA goods will emerge, if it does, largely from the sector discussions. This is the main open issue in NAMA. Sector agreements would provide deeper cuts and reforms of NTBs, on either a comprehensive or partial basis. At the Hong Kong ministerial in December 2005, the parties suggested that participation in sector agreements would be voluntary. Fourteen sectors are being considered for sector agreements.11 In chapter 3, we analyze two of these sectors where progress would yield sizable benefits: chemicals and electronic/electrical products. In addition, we study the environmental goods sector, which is being discussed in the negotiating group on rules and where topping up NAMA liberalization could also produce large gains.

11. The 14 sectors are automotive and related parts, bicycles and related parts, chemicals, electronics/electrical products, fish and fish products, forestry products, gems and jewelry products, raw materials, sports equipment, health care, pharmaceutical and medical devices, hand tools, toys, textiles, clothing and footwear, and industrial machinery.

34  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Table 2.6     GDP impacts of trade gains in agriculture and NAMA Country/group

Percent

Billions of  dollars

Developed (7)

Country/group

Percent

Billions of  dollars

Brazil

Agriculture

0.03

12.3

Agriculture

0.07

0.9

NAMA

0.06

21.7

NAMA

0.04

0.6

Total

0.09

34.0

Total

0.11

1.5

Developing (15)

China

Agriculture

0.25

25.4

Agriculture

0.02

0.6

NAMA

0.50

52.1

NAMA

0.28

9.2

Total

0.21

21.5

Total

0.30

9.7

European Union

India

Agriculture

0.05

7.8

Agriculture

0.02

0.2

NAMA

0.05

8.5

NAMA

0.08

0.9

Total

0.10

16.3

Total

0.10

1.1

Japan

All 22 countries

Agriculture

0.03

1.3

Agriculture

0.03

15.9

NAMA

0.10

4.2

NAMA

0.08

39.5

Total

0.13

5.6

Total

0.11

55.5

Agriculture

0.02

2.2

NAMA

0.05

7.1

Total

0.07

9.3

United States

NAMA = nonagricultural market access Note: GDP impacts are calculated using the dollar ratio average from table A.2. Source: Authors’ calculations.

GDP Gains Table 2.6 estimates the GDP impact of the trade gains. The calculations in table 2.6 are based on the trade gains in table 2A.12 for agricultural tariff cuts, agricultural NTB concessions, and NAMA formula tariff cuts. Both imports and exports raise a country’s GDP through a variety of channels; so far as econometric evidence indicates, the positive impact of large imports is about the same as the positive impact from an equivalent rise in exports. We are fully aware that many trade negotiators, business lobbies, and ordinary citizens see things differently. Put crudely, “exports good, imports bad” is an all too common view. However, faithful to sound economics, our GDP metric reflects gains from both increased exports and increased imports. The GDP gains from agriculture and NAMA liberalizations for the European Union are $16.3 billion (0.1 percent), for the United States $9.3 bilGRAPHICS  15 Agriculture and Nonagricultural Market Access  35 © Peterson Institute for International Economics | www.piie.com

lion (0.07 percent), and for China $9.7 billion (0.3 percent). For the United States and China, the gains come primarily from NAMA. The European Union, on the other hand, benefits equally from both agriculture and NAMA. The weighted average of the percent increase in GDP for all 22 countries is 0.11 percent (0.03 percent from agriculture and 0.08 percent from NAMA). The total dollar gain calculated from the formula tariff cuts in agriculture and NAMA, and from NTB concessions, for all 22 countries in the study comes to about $55.4 billion ($15.9 billion from agriculture and $39.5 billion from NAMA). Since the sample countries represent 88 percent of world GDP, we project the annual increase in global GDP from formula tariff liberalization in agriculture and NAMA to be $63.0 billion. This gain would be fully realized after a few years. This figure, however, is probably an underestimate as it does not include gains from the reduction of NTBs in NAMA nor additional liberalization that could arise from sector negotiations and from scheduling deeper cuts in specific products. It does not reflect the possible GDP gains from liberalization of services trade or from trade facilitation, discussed in the next chapter. Finally, as discussed in box 2.2, our calculations are based on a weighting scheme for calculating average tariffs that understates their distortive impact.

Different Negotiating Scenarios Tables 2A.15 to 2A.17 show the trade impact if a major emerging economy chooses a different negotiating scenario for NAMA tariff cuts (see box 2.2 for a description of the various scenarios). What comes out quite clearly is that—in the aggregate—a change in the negotiating scenario would have limited impact on the total trade gains from NAMA tariff cuts but could alter the distribution of tariff and NTB cuts for politically sensitive products.

36  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Appendix 2A

Country/group

Agriculture and Nonagricultural Market Access GRAPHICS 37

© Peterson Institute for International Economics | www.piie.com

Table 2A.1 Weighted average of bound duties, pre- and post-Doha (percent) World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Pre-Doha bound rates All 22 countries 25.0

23.0

30.2

18.7

42.7

20.7

21.4

28.4

21.1

41.1

34.9

NAMA

Agriculture

8.6

8.5

7.2

13.8

12.5

9.0

7.7

10.6

10.7

6.9

7.7

Total

9.4

9.2

8.3

14.0

14.1

9.5

7.7

12.0

13.1

7.6

9.8

Developed (7) Agriculture

8.4

8.5

8.1

8.8

6.1

12.7

4.8

4.5

8.4

7.4

4.0

NAMA

3.9

2.9

3.9

8.2

14.1

2.5

3.1

2.8

2.8

3.6

5.3

Total

4.2

3.2

4.1

8.3

13.8

3.1

3.1

2.9

4.2

3.7

5.2

Developing (15) Agriculture

60.5

49.2

77.3

63.7

81.0

46.0

29.9

53.2

49.9

134.9

72.3

NAMA

17.0

17.7

14.2

22.2

9.6

19.2

11.7

21.0

22.2

19.2

13.3

Total

18.9

19.2

17.3

23.2

14.8

20.0

11.8

24.0

27.3

22.0

19.8

European Union Agriculture

7.8

5.7

7.2

10.4

4.7

...

7.2

4.0

6.7

7.0

5.3

NAMA

2.4

1.8

3.5

2.4

7.2

...

3.4

1.5

1.8

3.5

5.1

Total

2.7

2.0

3.8

3.4

7.0

...

3.4

1.6

3.6

3.5

5.1

(continued on next page)

17

© Peterson Institute for International Economics | www.piie.com

18 38  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round

Table 2A.1 Weighted average of bound duties, pre- and post-Doha (percent) (continued) Country/group

World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

3.6

9.0

9.5

1.6

Pre-Doha bound rates (continued) Japan Agriculture

10.7

9.1

13.9

8.3

1.0

8.3

...

NAMA

5.7

1.5

2.9

14.7

31.7

1.7

...

1.0

1.0

3.2

7.6

Total

6.1

2.6

3.5

14.7

29.3

2.4

...

1.5

3.5

3.5

7.0

3.0

2.3

3.8

3.5

4.0

1.6

3.1

...

3.8

2.7

1.5

United States Agriculture NAMA

4.2

2.7

3.9

9.5

18.0

1.6

1.7

...

3.9

3.0

4.6

Total

4.1

2.6

3.9

9.2

17.9

1.6

1.7

...

3.9

3.0

4.4

40.6

32.9

44.1

41.2

53.0

32.5

14.6

34.9

...

33.5

33.9

Brazil Agriculture NAMA

30.3

28.9

32.2

30.7

34.8

29.6

31.6

28.8

...

32.6

32.2

Total

30.8

29.1

33.1

31.3

35.2

29.7

31.5

28.9

...

32.6

32.3

16.1

17.9

11.8

21.9

36.2

12.8

18.2

17.1

6.2

...

30.6

China Agriculture NAMA

4.1

5.4

3.7

1.7

0.2

6.5

5.5

4.5

1.3

...

2.7

Total

4.6

5.9

4.0

2.2

1.9

6.7

5.6

6.0

2.8

...

5.6

167.0

77.4

206.2

110.1

105.9

104.8

106.9

70.0

113.0

103.0

...

India Agriculture NAMA

30.4

30.8

29.0

31.6

31.7

30.2

32.8

22.9

34.1

26.7

...

Total

32.3

31.1

36.3

31.9

42.6

30.4

32.9

23.4

51.3

27.1

...

(continued on next page)

Table 2A. Weighted average of bound duties pre- and post-Doha (percent) (continued) Country/group

World

Developed ()

Developing (5)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Post-Doha bound rates All 22 countries Agriculture

16.2

23.1

12.8

30.9

12.1

16.3

22.2

15.2

32.4

28.6

3.7

3.8

3.2

5.1

4.3

4.1

3.8

4.6

4.9

3.0

3.5

Total

4.4

4.5

4.2

5.5

5.7

4.5

3.9

6.1

7.3

3.6

5.4

Developed (7)

GRAPHICS Agriculture and Nonagricultural Market  Access  39

© Peterson Institute for International Economics | www.piie.com

18.2

NAMA

Agriculture

3.9

3.6

3.9

4.5

2.9

5.2

2.3

2.1

4.4

3.6

1.9

NAMA

1.6

1.4

1.7

2.6

4.3

1.3

1.6

1.5

1.3

1.6

2.4

Total

1.7

1.5

1.8

2.7

4.2

1.5

1.6

1.5

2.1

1.7

2.3

Developing (15) 48.7

38.9

63.9

50.1

60.1

33.9

23.6

43.1

39.8

112.6

61.0

NAMA

Agriculture

7.5

7.9

6.4

9.0

4.2

8.7

5.8

8.9

10.2

8.1

6.1

Total

9.2

9.4

9.2

10.0

8.2

9.5

5.8

12.1

15.6

10.6

12.1

European Union Agriculture

4.2

2.8

3.9

5.7

2.5

...

3.4

2.0

3.9

3.5

2.5

NAMA

1.2

1.1

1.7

1.1

3.0

...

1.8

0.9

1.0

1.8

2.5

Total

1.4

1.1

1.9

1.7

2.9

...

1.8

1.0

2.1

1.8

2.5

Japan Agriculture

4.5

3.9

5.7

3.5

0.6

4.0

...

1.7

4.2

4.6

0.8

NAMA

1.9

0.7

1.2

4.3

4.4

0.9

...

0.5

0.4

1.5

2.5

Total

2.1

1.2

1.5

4.2

4.1

1.2

...

0.7

1.6

1.7

2.3

(continued on next page)

© Peterson Institute for International Economics | www.piie.com

20 40  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round

Table 2A.1 Weighted average of bound duties, pre- and post-Doha (percent) (continued) Country/groups

World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

1.8

1.3

0.8

Post-Doha bound rates (continued) United States Agriculture

1.6

1.2

2.0

1.7

2.0

0.8

1.5

...

NAMA

1.6

1.3

1.6

2.8

5.3

1.0

1.2

...

1.6

1.4

2.1

Total

1.6

1.3

1.6

2.8

5.2

1.0

1.2

...

1.6

1.4

2.0

31.0

21.9

35.2

32.4

35.8

21.9

9.0

22.0

...

20.8

21.8

Brazil Agriculture NAMA

12.4

12.2

13.1

11.9

12.7

12.4

13.2

12.1

...

13.9

12.5

Total

13.2

12.4

14.9

12.9

13.2

12.8

13.2

12.3

...

13.9

12.7

14.7

16.1

10.9

19.7

32.6

11.1

14.7

15.5

6.0

...

27.7

China Agriculture NAMA

2.9

3.7

2.6

1.3

0.2

4.4

3.8

3.2

1.0

...

2.0

Total

3.4

4.2

3.0

1.7

1.7

4.5

3.8

4.7

2.4

...

4.7

130.4

47.3

169.8

70.1

62.9

66.3

60.9

43.1

61.6

59.0

...

India Agriculture NAMA

11.8

11.6

11.2

12.5

12.9

11.5

13.1

9.0

12.7

10.4

...

Total

13.4

11.8

17.8

12.7

20.2

11.7

13.1

9.4

23.3

10.7

...

… = not applicable NAMA = nonagricultural market access LDCs = least developed countries Note: Rows are tariffs applied to imports; columns are tariffs applied to exports. Source: Authors’ calculations.

Table 2A.2 Country/group

Cuts in bound tariffs (percentage points) World

Developed ()

Developing (5)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

GRAPHICS Agriculture and Nonagricultural Market Access  2 41

© Peterson Institute for International Economics | www.piie.com

All 22 countries Agriculture

6.8

6.8

7.2

6.0

11.8

8.6

5.1

6.2

5.9

8.7

6.3

NAMA

4.9

4.6

4.0

8.6

8.2

4.8

3.9

5.9

5.8

3.9

4.2

Total

5.0

4.7

4.2

8.5

8.4

5.0

3.9

5.9

5.8

4.0

4.4

Developed (7) Agriculture

4.5

4.8

4.2

4.3

3.2

7.5

2.5

2.4

4.0

3.8

2.2

NAMA

2.3

1.5

2.2

5.6

9.9

1.3

1.4

1.3

1.5

2.0

2.9

Total

2.4

1.7

2.3

5.5

9.6

1.6

1.4

1.4

2.2

2.0

2.9

Developing (15) 11.8

10.3

13.4

13.6

20.9

12.1

6.4

10.1

10.1

22.3

11.3

NAMA

Agriculture

9.6

9.8

7.8

13.2

5.4

10.5

5.9

12.1

12.0

11.1

7.2

Total

9.7

9.8

8.1

13.2

6.5

10.5

5.9

11.9

11.7

11.3

7.7

European Union Agriculture

3.6

2.9

3.3

4.8

2.3

...

3.8

2.0

2.8

3.6

2.8

NAMA

1.2

0.8

1.8

1.2

4.2

...

1.5

0.5

0.8

1.7

2.6

Total

1.3

0.8

1.9

1.7

4.0

...

1.5

0.6

1.5

1.8

2.6

Japan Agriculture

6.2

5.3

8.2

4.9

0.4

4.3

...

1.9

4.8

4.9

0.8

NAMA

3.8

0.8

1.7

10.5

27.2

0.9

...

0.5

0.6

1.7

5.1

Total

4.0

1.5

2.0

10.4

25.2

1.2

...

0.7

1.9

1.8

4.7

(continued on next page)

© Peterson Institute for International Economics | www.piie.com

22 42  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round

Table 2A.2 Country/group

Cuts in bound tariffs (percentage points) (continued) World

Developed ()

Developing (5)

Other

1.5

1.1

1.8

1.8

LDCs

European Union

Japan

United States

Brazil

China

India

1.5

...

2.0

1.4

0.8

United States Agriculture

2.0

0.8

NAMA

2.5

1.4

2.3

6.6

12.8

0.6

0.5

...

2.3

1.6

2.5

Total

2.5

1.4

2.3

6.4

12.7

0.6

0.5

...

2.3

1.6

2.4

9.6

11.0

9.0

8.8

17.3

10.6

5.6

12.9

...

12.7

12.1

Brazil Agriculture NAMA

18.0

16.8

19.1

18.9

22.2

17.2

18.4

16.6

...

18.7

19.7

Total

17.6

16.6

18.3

18.4

22.1

16.9

18.4

16.5

...

18.7

19.6

1.5

1.8

0.9

2.2

3.6

1.7

3.4

1.6

0.3

...

3.0

China Agriculture NAMA

1.2

1.7

1.0

0.4

0.1

2.1

1.7

1.3

0.3

...

0.7

Total

1.2

1.7

1.0

0.4

0.2

2.1

1.7

1.4

0.3

...

0.9

36.6

30.1

36.5

40.0

43.0

38.6

46.1

26.9

51.4

44.0

...

India Agriculture NAMA

18.6

19.2

17.7

19.1

18.9

18.6

19.7

13.9

21.4

16.3

...

Total

18.8

19.2

18.5

19.2

22.4

18.7

19.8

14.1

28.0

16.5

...

… = not applicable NAMA = nonagricultural market access LDCs = least developed countries Note: Rows are cuts on tariffs applied to imports; columns are cuts on tariffs applied to exports. Source: Authors’ calculations.

Table 2A.3 Country/group

Bound versus applied “water levels,” pre- and post-Doha (percentage points) World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Pre-Doha water levels All 22 countries Agriculture

Agriculture and Nonagricultural Market GRAPHICS Access  23 43

© Peterson Institute for International Economics | www.piie.com

17.5

16.3

21.4

12.1

35.9

12.0

7.7

23.9

13.4

32.8

30.7

NAMA

6.2

5.9

4.4

12.0

10.5

5.3

3.7

8.9

9.4

3.2

3.7

Total

6.7

6.4

5.3

12.0

12.0

5.6

3.7

10.2

10.3

3.8

5.8

Developed (7) Agriculture

2.9

3.3

2.3

3.4

5.4

5.9

0.5

1.9

2.1

0.9

0.8

NAMA

2.6

1.8

1.8

7.5

11.9

1.0

0.6

2.1

1.9

0.5

1.2

Total

2.6

1.9

1.8

7.3

11.6

1.3

0.6

2.1

2.0

0.5

1.2

Developing (15) Agriculture

48.5

39.7

62.0

51.2

67.8

31.3

11.3

46.6

38.9

121.8

66.8

NAMA

12.7

12.6

10.1

18.7

8.3

12.1

6.4

18.2

20.3

13.3

9.6

Total

14.2

13.9

12.6

19.5

12.6

12.7

6.4

20.8

23.8

15.9

15.9

European Union Agriculture

1.8

0.6

1.4

3.4

4.5

...

0

0

0.3

1.4

*

NAMA

0.9

0.5

0.9

1.6

7.0

...

0

0

1.1

*

0

Total

0.9

0.5

1.0

1.9

6.8

...

0

0

0.8

*

*

Japan Agriculture

0.3

–*

0.9

0.7

0.2

–*

...

0

0.3

0.4

0.6

NAMA

4.8

0.5

1.5

14.6

31.6

0.1

...

0.3

0.7

0.9

6.7

Total

4.5

0.5

1.5

14.4

29.2

*

...

0.3

0.6

0.9

6.1

(continued on next page)

44  Figuring the Doha Round 24Out FIGURING OUT THE DOHA ROUND

© Peterson Institute for International Economics | www.piie.com

Table 2A.3 Country/group

Bound versus applied “water levels,” pre- and post-Doha (percentage points) (continued) World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Pre-Doha water levels (continued) United States Agriculture

1.7

1.4

2.0

2.4

4.0

0

0

...

0.3

0

0.7

NAMA

2.8

1.7

2.0

8.6

13.8

0.1

0

...

2.8

*

1.3

Total

2.7

1.7

2.0

8.3

13.7

0.1

0

...

2.5

*

1.3

36.5

21.6

42.8

40.3

45.5

20.2

8.7

26.2

...

24.5

27.3

Brazil Agriculture NAMA

23.3

19.4

24.7

30.0

34.4

18.6

19.6

20.7

...

20.2

27.4

Total

23.9

19.5

26.2

30.5

34.7

18.7

19.6

20.8

...

20.3

27.4

6.6

7.5

3.4

7.2

30.8

0.8

0.2

11.2

0.6

...

24.7

China Agriculture NAMA

0.6

0.6

0.7

0.3

0.1

0.6

0.7

0.6

0.2

...

0.8

Total

0.9

0.9

0.8

0.4

1.5

0.6

0.7

1.9

0.4

...

3.3

106.9

40.4

130.7

79.8

76.6

56.0

77.2

40.2

50.4

71.1

...

India Agriculture NAMA

22.5

21.0

21.0

25.4

25.8

20.1

21.3

15.2

27.9

18.2

...

Total

23.7

21.1

25.6

25.6

33.2

20.2

21.3

15.5

32.8

18.5

...

(continued on next page)

Table 2A. Country

Bound versus applied “water levels,” pre-Doha and post-Doha (percentage points) (continued) World

Developed ()

Developing (5)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Post-Doha water levels All 22 countries Agriculture

11.7

16.5

8.2

24.5

6.1

5.0

18.9

9.9

26.8

25.4

1.9

1.8

1.3

3.6

3.4

1.3

0.9

3.4

3.9

0.7

1.3

Total

2.4

2.3

2.1

3.9

4.5

1.5

1.0

4.6

5.3

1.2

3.1

Developed (7)

Agriculture and Nonagricultural Market 25 Access  45 GRAPHICS

© Peterson Institute for International Economics | www.piie.com

12.9

NAMA

Agriculture

1.0

1.1

0.9

1.4

2.5

1.4

0.1

0.9

0.8

0.2

0.3

NAMA

0.9

0.7

0.6

2.3

3.6

0.3

0.1

1.0

0.7

0.1

0.5

Total

0.9

0.7

0.6

2.2

3.5

0.4

0.1

1.0

0.8

0.1

0.5

Developing (15) 38.1

30.8

49.7

39.1

47.4

20.9

7.5

37.6

30.3

101.1

55.7

NAMA

Agriculture

3.7

3.7

2.9

5.7

3.0

2.8

1.7

6.5

8.5

3.0

3.1

Total

5.2

5.0

5.2

6.5

6.2

3.4

1.7

9.4

12.5

5.4

8.9

European Union Agriculture

0.7

0.3

0.5

1.4

2.3

...

0

0

0.1

0.2

*

NAMA

0.4

0.3

0.4

0.7

2.9

...

0

0

0.6

*

0

Total

0.4

0.3

0.4

0.8

2.8

...

0

0

0.4

*

*

Japan *

–*

0.2

0.1

0.1

–*

...

0

0.1

*

0.2

NAMA

Agriculture

1.4

0.1

0.5

4.2

4.4

*

...

0.1

0.2

0.4

2.0

Total

1.3

0.1

0.5

4.1

4.1

*

...

0.1

0.2

0.4

1.8

(continued on next page)

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46  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round 26

Table 2A.3 Country/group

Bound versus applied “water levels,” pre- and post-Doha (percentage points) (continued) World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Post-Doha water levels (continued) United States Agriculture

0.8

0.7

1.0

1.1

2.0

0

0

...

0.2

0

0.4

NAMA

0.9

0.7

0.8

2.5

4.0

*

0

...

1.0

*

0.8

Total

0.9

0.7

0.8

2.5

4.0

*

0

...

0.9

*

0.8

27.1

11.2

33.8

31.5

28.3

10.3

3.2

13.4

...

11.8

15.2

Brazil Agriculture NAMA

6.5

4.3

6.8

11.1

12.4

3.5

3.6

5.3

...

3.4

8.4

Total

7.4

4.5

9.0

12.2

12.7

3.8

3.6

5.5

...

3.5

8.5

5.8

6.7

3.0

6.3

27.2

0.7

0.2

9.9

0.6

...

21.8

China Agriculture NAMA

0.3

0.3

0.3

0.2

0.1

0.3

0.3

0.4

0.1

...

0.3

Total

0.5

0.6

0.4

0.3

1.3

0.3

0.3

1.5

0.3

...

2.6

74.8

17.8

99.0

43.3

34.6

23.9

31.5

20.1

12.9

28.8

...

India Agriculture NAMA

4.1

2.1

3.4

6.3

7.1

1.8

2.1

1.6

6.5

2.1

...

Total

5.0

2.2

7.4

6.5

11.1

1.8

2.2

1.8

7.9

2.3

...

… = not applicable * indicates that the tariff percentage points are positive but less than 0.05. –* indicates that the tariff percentage points are negative but less in magnitude than 0.05. NAMA = nonagricultural market access LDCs = least developed countries

WTO IDB for 2001a

WTO datasetb 2006

GRAPHICS Agriculture and Nonagricultural Market Access  47

© Peterson Institute for International Economics | www.piie.com

Table 2A.4 Trade-weighted average bound, MFN, and applied tariff rates, 2001, 2006, and post–Doha Round (percent)

Country

Bound

MFN

Applied

Bound

Agriculture

31.0

12.5

12.5

31.9

NAMA

32.2

15.1

15.1

32.0

Total

32.1

15.0

15.0

32.0

Agriculture

41.2

12.2

12.2

NAMA

30.3

10.5

10.5

Total

30.8

10.6

MFN

Post–Doha Round Applied

Bound

MFN

Applied

9.7

2.9

21.1

9.6

2.9

11.8

5.1

13.9

9.2

4.3

11.7

5.0

14.1

9.2

4.2

40.6

11.1

4.1

31.0

10.6

3.9

30.3

8.7

7.0

12.4

6.9

5.9

10.6

30.8

8.8

6.9

13.2

7.1

5.8

Argentina

Brazil

China Agriculture

10.1

49.0

49.0

16.1

16.1

9.6

14.7

14.6

8.9

NAMA

4.7

11.2

11.2

4.1

3.6

3.5

2.9

2.6

2.6

Total

4.9

12.7

12.7

4.6

4.1

3.7

3.4

3.1

2.8

Colombia Agriculture

113.8

14.8

14.8

118.6

18.1

10.5

85.5

18.0

10.5

NAMA

35.6

11.0

11.0

35.2

11.1

8.7

14.0

9.5

7.6

Total

42.9

11.4

11.4

43.0

11.8

8.9

20.7

10.3

7.9

(continued on next page)

27

28 FIGURING THE DOHA ROUND 48  Figuring Out the OUT Doha Round

© Peterson Institute for International Economics | www.piie.com

Table 2A.4 Trade-weighted average bound, MFN, and applied tariff rates, 2001, 2006, and post–Doha Round (percent) (continued) WTO datasetb

WTO IDB for 2001a 2006 Country

Post–Doha Round

Bound

MFN

Applied

Bound

MFN

Applied

Bound

MFN

Applied

155.3

58.9

58.9

167.0

61.3

60.2

130.4

56.6

55.7

NAMA

27.4

21.0

21.0

30.4

Total

29.2

21.5

21.5

32.3

8.0

7.8

11.8

7.8

7.7

8.7

8.6

13.4

8.5

8.4

Agriculture

59.0

5.2

5.2

56.2

4.2

3.1

43.1

4.2

3.1

NAMA

36.5

3.7

Total

38.8

3.9

3.7

36.5

3.3

2.5

13.2

3.0

2.3

3.9

38.5

3.4

2.5

16.2

3.1

2.4

85.2

79.2

79.2

84.9

14.1

13.9

70.8

10.9

10.9

NAMA Total

6.1

4.6

4.6

11.8

4.0

4.0

5.9

3.7

3.7

9.2

7.6

7.6

14.7

4.4

4.4

8.5

4.0

4.0

11.3

2.2

2.2

236.8

15.9

13.7

199.2

13.3

12.6

NAMA

7.0

4.5

4.5

10.3

4.2

3.6

4.9

2.4

2.1

Total

7.2

4.4

4.4

22.7

4.8

4.1

15.5

3.0

2.6

India Agriculture

Indonesia

Korea Agriculture

Malaysia Agriculture

(continued on next page)

Round (percent) (continued) WTO datasetb

WTO IDB for 200a 200 Country

Post-Doha Round

Bound

MFN

Applied

Bound

MFN

Applied

Bound

MFN

Applied

Agriculture

37.6

34.4

14.5

56.3

23.9

4.8

43.9

18.1

3.4

NAMA

35.4

13.9

3.5

35.8

11.1

3.6

14.3

9.0

3.0

Total

35.5

15.2

4.2

37.1

11.9

3.7

16.2

9.6

3.0

Agriculture

94.1

14.3

14.3

99.2

15.4

15.2

78.4

15.1

14.9

NAMA

58.9

20.9

20.9

58.5

12.8

12.8

16.7

9.7

9.7

Total

63.4

20.1

20.1

63.7

13.2

13.1

24.7

10.4

10.4

Agriculture

30.0

11.1

11.1

26.3

13.0

11.8

18.9

12.7

11.6

NAMA

11.5

3.4

3.4

17.9

3.3

2.6

7.7

3.0

2.5

Total

13.2

4.1

4.1

18.7

4.2

3.5

8.8

3.9

3.3

Agriculture

51.1

8.3

7.9

53.3

9.5

8.6

40.9

8.9

8.0

NAMA

15.6

6.1

6.0

18.6

6.4

6.3

9.4

4.7

4.6

Total

17.5

6.2

6.1

20.5

6.5

6.4

11.1

4.9

4.8

Mexico

Agriculture and Nonagricultural Access  49 GRAPHICS Market 2

© Peterson Institute for International Economics | www.piie.com

Pakistan

Philippines

South Africa

(continued on next page)

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30 50  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round

Table 2A.4 Trade-weighted average bound, MFN, and applied tariff rates, 2001, 2006, and post–Doha Round (percent) (continued) WTO datasetb

WTO IDB for 2001a 2006 Country

Post–Doha Round

Bound

MFN

Applied

Bound

MFN

Applied

Bound

MFN

Applied

14.4

14.4

14.4

17.6

11.3

11.3

15.4

10.1

10.1

NAMA

3.5

3.5

3.5

1.8

1.6

1.6

1.5

1.1

1.1

Total

3.9

3.9

3.9

2.4

2.0

2.0

2.0

1.4

1.4

Agriculture

49.4

9.9

9.9

47.3

13.8

9.2

38.1

11.1

7.9

NAMA

17.1

5.2

5.2

20.4

4.5

4.0

8.8

3.5

3.1

Total

18.3

5.3

5.3

21.4

4.9

4.2

10.0

3.8

3.3

Agriculture

37.9

15.5

14.3

37.6

16.7

16.6

24.2

12.6

12.5

NAMA

17.2

3.9

1.5

21.2

3.5

3.0

10.6

3.4

2.9

Total

18.0

4.4

2.1

22.0

4.1

3.6

11.2

3.8

3.3

Taiwan Agriculture

Thailand

Turkey

NAMA = nonagricultural market access; MFN = most favored nation a. World Trade Organization, Integrated Data Base, accessed through World Integrated Trade Solution. Tariff year for Thailand is 2004. b. Dataset compiled by the WTO (on file with authors). Notes: Averages based on 2-digit Harmonized System categories and bilateral import values for 2006 reported in the WTO dataset.

Table 2A.5 Weighted average of applied tariffs, pre- and post-Doha (percent) Country/group

World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Pre-Doha applied rates

GRAPHICS 31 51 Agriculture and Nonagricultural Market Access 

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All 22 countries Agriculture

7.6

6.7

8.8

6.7

6.8

8.7

13.7

4.5

7.7

8.3

4.2

NAMA

2.4

2.6

2.8

1.8

1.9

3.7

4.0

1.6

1.3

3.7

4.0

Total

2.7

2.8

3.1

2.0

2.2

3.9

4.0

1.9

2.7

3.8

4.0

Developed (7) Agriculture

5.5

5.2

5.8

5.4

0.6

6.8

4.3

2.6

6.2

6.6

3.2

NAMA

1.4

1.1

2.1

0.7

2.3

1.5

2.5

0.7

0.9

3.1

4.1

Total

1.6

1.3

2.3

1.0

2.2

1.8

2.5

0.9

2.3

3.2

4.0

Developing (15) 12.0

9.5

15.3

12.5

13.2

14.7

18.6

6.6

10.9

13.1

5.5

NAMA

Agriculture

4.4

5.1

4.2

3.4

1.3

7.1

5.3

2.8

1.9

5.9

3.7

Total

4.7

5.3

4.7

3.7

2.2

7.3

5.4

3.2

3.5

6.1

3.9

European Union Agriculture

6.0

5.1

5.8

7.1

0.2

...

7.2

4.0

6.4

5.7

5.3

NAMA

1.5

1.3

2.6

0.7

0.2

...

3.4

1.5

0.6

3.5

5.1

Total

1.7

1.4

2.8

1.5

0.2

...

3.4

1.6

2.7

3.5

5.1

Japan 10.4

9.1

13.0

7.6

0.8

8.3

...

3.6

8.7

9.1

1.0

NAMA

Agriculture

0.9

1.0

1.4

0.2

0.1

1.7

...

0.6

0.3

2.3

0.9

Total

1.6

2.2

2.0

0.3

0.1

2.3

...

1.2

3.0

2.6

0.9

(continued on next page)

52  Figuring the Doha Round 32Out FIGURING OUT THE DOHA ROUND

© Peterson Institute for International Economics | www.piie.com

Table 2A.5 Weighted average of applied tariffs, pre- and post-Doha (percent) (continued) Country/group

World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

3.5

2.7

0.8

Pre-Doha applied rates (continued) United States Agriculture

1.3

0.9

1.8

1.0

0

1.6

3.1

...

NAMA

1.4

1.0

1.9

0.9

4.2

1.5

1.7

...

1.1

3.0

3.3

Total

1.4

1.0

1.9

0.9

4.2

1.5

1.7

...

1.4

3.0

3.2

4.1

11.3

1.4

0.9

7.6

12.3

5.9

8.7

...

9.0

6.6

Brazil Agriculture NAMA

7.0

9.5

7.5

0.8

0.4

11.0

12.0

8.0

...

12.4

4.9

Total

6.9

9.6

7.0

0.8

0.5

11.0

12.0

8.1

...

12.3

4.9

9.6

10.3

8.4

14.7

5.4

12.0

17.9

5.9

5.6

...

5.9

China Agriculture NAMA

3.5

4.8

3.0

1.4

0.1

6.0

4.9

3.9

1.1

...

1.9

Total

3.7

5.0

3.2

1.7

0.3

6.1

4.9

4.1

2.4

...

2.3

60.2

37.0

75.5

30.3

29.3

48.8

29.7

29.8

62.6

32.0

...

India Agriculture NAMA

7.8

9.8

7.9

6.2

6.0

10.1

11.5

7.7

6.2

8.5

...

Total

8.6

10.0

10.7

6.3

9.4

10.2

11.6

8.0

18.5

8.6

...

(continued on next page)

Table 2A.5 Weighted average of applied tariffs pre-Doha and post-Doha (percent) (continued) Country/group

World

Developed ()

Developing (5)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Post-Doha applied rates All 22 countries 5.3

4.5

6.6

4.5

6.4

6.0

11.3

3.3

5.4

5.6

3.2

1.8

2.0

1.8

1.5

0.9

2.9

2.9

1.3

1.0

2.3

2.2

Total

2.0

2.1

2.1

1.7

1.2

3.0

2.9

1.4

2.0

2.3

2.3

Developed (7)

GRAPHICS Agriculture and Nonagricultural Market  Access  53

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Agriculture NAMA

Agriculture

2.9

2.6

3.0

3.1

0.4

3.8

2.1

1.2

3.6

3.4

1.5

NAMA

0.7

0.7

1.1

0.3

0.7

1.0

1.6

0.5

0.5

1.5

1.9

Total

0.8

0.8

1.2

0.5

0.7

1.1

1.6

0.5

1.3

1.6

1.8

Developing (15) 10.6

8.1

14.2

10.9

12.7

13.0

16.0

5.4

9.5

11.4

5.3

NAMA

Agriculture

3.7

4.2

3.5

3.3

1.2

5.9

4.1

2.4

1.7

5.1

3.0

Total

4.0

4.4

4.0

3.5

2.0

6.1

4.1

2.7

3.1

5.3

3.2

European Union Agriculture

3.4

2.5

3.4

4.2

0.1

...

3.4

2.0

3.8

3.3

2.5

NAMA

0.8

0.8

1.3

0.4

0.1

...

1.8

0.9

0.5

1.7

2.5

Total

1.0

0.8

1.5

0.9

0.1

...

1.8

1.0

1.7

1.8

2.5

Japan Agriculture

4.5

3.9

5.6

3.4

0.5

4.0

...

1.7

4.1

4.6

0.6

NAMA

0.5

0.5

0.7

0.1

0.1

0.9

...

0.4

0.2

1.1

0.6

Total

0.8

1.0

1.0

0.1

0.1

1.2

...

0.6

1.4

1.3

0.6

(continued on next page)

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34 54  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round

Table 2A.5 Weighted average of applied tariffs, pre- and post-Doha (percent) (continued) Country/group

World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

1.7

1.3

0.4

Post-Doha applied rates (continued) United States Agriculture

0.7

0.5

1.0

0.5

0

0.8

1.5

...

NAMA

0.7

0.6

0.9

0.3

1.3

1.0

1.2

...

0.6

1.4

1.3

Total

0.7

0.6

0.9

0.3

1.3

0.9

1.2

...

0.7

1.4

1.2

3.9

10.7

1.4

0.9

7.5

11.5

5.8

8.6

...

9.0

6.6

Brazil Agriculture NAMA

5.9

7.9

6.3

0.7

0.3

8.9

9.6

6.8

...

10.5

4.1

Total

5.8

7.9

5.9

0.7

0.4

9.0

9.6

6.9

...

10.5

4.1

8.9

9.4

7.9

13.4

5.4

10.4

14.5

5.6

5.4

...

5.9

China Agriculture NAMA

2.6

3.4

2.3

1.1

0.1

4.1

3.5

2.8

0.8

...

1.7

Total

2.8

3.7

2.6

1.4

0.3

4.2

3.5

3.1

2.2

...

2.1

55.7

29.5

70.8

26.8

28.3

42.4

29.4

23.0

48.7

30.3

...

India Agriculture NAMA

7.7

9.5

7.8

6.1

5.8

9.8

10.9

7.4

6.1

8.3

...

Total

8.4

9.7

10.4

6.2

9.1

9.9

10.9

7.6

15.4

8.4

...

… = not applicable NAMA = nonagricultural market access LDCs = least developed countries Notes: Rows are tariffs applied to imports; columns are tariffs applied to exports. Source: Authors’ calculations.

Table 2A. Country/group

Cuts in applied tariffs (percentage points) World

Developed ()

Other

2.2

2.1

Least developed countries

European Union

Japan

United States

Brazil

China

2.7

2.4

1.2

2.3

2.7

India

All 22 countries Agriculture

GRAPHICS Agriculture and Nonagricultural Market Access  5 55

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Developing (5)

2.2

2.2

0.4

1.0

NAMA

0.6

0.6

0.9

0.3

1.0

0.8

1.1

0.3

0.3

1.4

1.8

Total

0.7

0.7

1.0

0.4

1.0

0.9

1.1

0.4

0.7

1.4

1.7

2.6

2.6

2.8

2.2

0.3

3.0

2.1

1.3

2.7

3.1

1.7

Developed (7) Agriculture NAMA

0.6

0.4

1.1

0.4

1.6

0.5

0.9

0.3

0.4

1.6

2.2

Total

0.7

0.5

1.2

0.5

1.5

0.7

0.9

0.3

0.9

1.6

2.2

1.4

1.5

1.1

1.6

0.5

1.7

2.6

1.1

1.4

1.7

0.3

Developing (15) Agriculture NAMA

0.7

0.9

0.7

0.1

0.2

1.2

1.3

0.4

0.2

0.8

0.7

Total

0.7

0.9

0.7

0.2

0.2

1.2

1.3

0.5

0.4

0.8

0.7

2.5

2.5

2.4

2.8

0.1

...

3.8

2.0

2.6

2.4

2.8

European Union Agriculture NAMA

0.7

0.5

1.3

0.3

0.1

...

1.5

0.5

0.2

1.7

2.6

Total

0.8

0.6

1.3

0.6

0.1

...

1.5

0.6

1.0

1.7

2.6

6.0

5.3

7.4

4.2

0.3

4.3

...

1.9

4.6

4.5

0.4

Japan Agriculture NAMA

0.4

0.4

0.7

0.1

*

0.8

...

0.2

0.1

1.2

0.4

Total

0.8

1.1

1.0

0.1

0.1

1.2

...

0.6

1.5

1.3

0.4

(continued on next page)

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56  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round 

Table 2A. Country/group

Cuts in applied tariffs (percentage points) (continued) World

Developed ()

Developing (5)

Other

0.9

0.5

Least developed countries

European Union

Japan

0.8

1.5

United States

Brazil

China

1.9

1.4

India

United States Agriculture

0.6

0.5

0

...

0.4

NAMA

0.7

0.3

1.1

0.6

2.9

0.5

0.5

...

0.5

1.6

2.0

Total

0.7

0.3

1.0

0.6

2.9

0.5

0.5

...

0.7

1.6

2.0

0.2

0.7

*

*

0.1

0.8

0.2

0.1

...

0

*

Brazil Agriculture NAMA

1.2

1.7

1.2

0.1

0.1

2.1

2.4

1.2

...

1.9

0.8

Total

1.1

1.7

1.1

0.1

0.1

2.0

2.4

1.2

...

1.9

0.8

0.7

0.9

0.4

1.3

*

1.6

3.4

0.3

0.2

...

0.1

China Agriculture NAMA

0.9

1.4

0.7

0.3

*

1.9

1.3

1.1

0.2

...

0.2

Total

0.9

1.4

0.6

0.3

*

1.9

1.3

1.0

0.2

...

0.2

4.5

7.5

4.7

3.5

1.0

6.5

0.3

6.8

13.9

1.7

...

India Agriculture NAMA

0.1

0.3

0.1

*

0.1

0.3

0.6

0.3

0.1

0.2

...

Total

0.2

0.3

0.3

*

0.3

0.3

0.6

0.4

3.1

0.2

...

… = not applicable * indicates that the cuts in applied rates are positive but less than 0.05 percentage points. Note: Rows are cuts in tariffs applied to imports; columns are cuts in tariffs applied to exports. Source: Authors’ calculations.

Table 2A.7

Reciprocity measure gains from domestic support concessions (millions of dollars) Concessions given by: Canada

8

235

5,546

Australia

…

41

156

71

1

5

50

*

8

1

Canada

*

…

156

n.a.

2

9

17

*

1

*

European Union

3

27

…

*

35

57

50

*

*

3

Japan

*

*

462

…

n.a.

*

*

*

*

*

Norway

*

*

16

n.a.

…

*

1

*

*

*

Switzerland

*

*

31

n.a.

*

…

2

*

*

*

United States

1

85

635

294

1

10

…

*

18

17

Argentina

1

10

55

n.a.

*

3

77

…

*

1

Concessions given to: World

Agriculture and Nonagricultural Market Access  GRAPHICS5737

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Australia

European Union

Brazil

Japan

Norway

Switzerland

United States

Argentina

Korea

Thailand

511

67

118

556

1

32

85

*

27

373

28

8

15

56

*

2

*

n.a.

n.a.

10

n.a.

2

n.a.

n.a.

n.a.

n.a.

n.a.

China

*

6

380

17

*

1

60

*

1

10

Colombia

*

*

76

n.a.

n.a.

*

6

*

n.a.

*

Bulgaria/Romania/Iceland

India

*

3

119

*

n.a.

*

25

*

*

24

n.a.

n.a.

79

n.a.

*

*

*

*

*

n.a.

Korea

*

*

154

*

n.a.

*

1

*

…

*

Malaysia

*

*

64

n.a.

n.a.

*

*

*

*

*

Mexico

*

2

307

n.a.

n.a.

*

12

*

*

*

Indonesia

(continued on next page)

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8 58  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round

Table 2A.

Reciprocity measure gains from domestic support concessions (millions of dollars) (continued) Concessions given by:

Concessions given to: Pakistan

Australia

Canada

European Union

Japan

Norway

Switzerland

United States

Argentina

Korea

Thailand

*

*

23

n.a.

n.a.

*

7

*

*

13

n.a.

*

56

n.a.

n.a.

*

8

*

*

n.a.

South Africa

*

*

57

n.a.

*

2

11

*

*

*

Taiwan

*

*

102

*

n.a.

*

1

*

n.a.

*

Thailand

*

*

170

15

n.a.

*

5

*

*

…

Turkey

*

1

114

n.a.

n.a.

*

8

*

*

*

Other developing countries

1

14

1,022

7

14

4

86

*

*

14

Least developed countries

*

1

140

*

0

*

45

*

*

*

Non-WTO members

2

17

791

78

3

11

27

0

1

1

Philippines

WTO = World Trade Organization … = not applicable n.a. = not available * indicates that the reciprocity measure gains are positive but less than $0.5 million. Notes: Rows are cuts in the tariff equivalent of domestic support applied to imports; columns are cuts in the tariff equivalent of domestic support applied to exports. Source: Authors’ calculations.

Table 2A.8     Reciprocity measure gains from concessions in export     subsidies (millions of dollars) Concessions given by: Concessions  given to: World

Canada

European Union

Norway

Switzerland

United States

21

2,882

42

151

21

Australia

3

363

5

11

3

Canada

…

184

2

4

1

European Union

8

…

18

43

7

Japan

*

16

*

1

*

Norway

*

14

…

1

*

Switzerland

*

63

2

…

*

United States

1

559

3

11

…

Argentina

1

97

1

9

*

Brazil

*

197

1

8

1

Bulgaria

*

8

*

*

*

China

*

91

1

2

*

Colombia

*

16

*

1

*

Hong Kong

*

23

*

1

*

Iceland

*

*

*

*

*

India

*

43

*

1

*

Indonesia

*

6

*

3

*

Korea

*

11

*

*

*

Malaysia

*

18

*

12

*

Mexico

*

39

*

1

*

New Zealand

4

538

6

17

5

Pakistan

*

7

*

*

*

Philippines

*

6

*

1

*

Romania

*

3

*

*

*

Singapore

*

28

*

1

*

South Africa

*

31

*

1

*

Taiwan

*

6

*

*

*

Thailand

*

138

*

3

*

Turkey

*

14

*

1

* (continued on next page)

GRAPHICS  39 Agriculture and Nonagricultural Market Access  59 © Peterson Institute for International Economics | www.piie.com

Table 2A.8     Reciprocity measure gains from concessions in export     subsidies (millions of dollars) (continued) Concessions given by: Concessions  given to:

Canada

European Union

Norway

Switzerland

United States

Other developing countries

1

263

2

14

1

Least developed countries

*

11

*

1

*

Non-WTO members

1

88

1

3

1

WTO = World Trade Organization … = not applicable * indicates that the reciprocity measure gains are positive but less than $0.5 million. Notes: Rows are countries receiving concessions through elimination of export subsidies on their imports; columns are countries giving concessions through elimination of export subsidies on their exports. Source: Authors’ calculations.

40  FIGURING OUT THE DOHA ROUND 60  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Table 2A.9

Reciprocity measure gains from the expansion of tariff rate quotas (millions of dollars) Concessions given by:

Concessions given to:

Canada

World

European Union

Norway

Switzerland

United States

330

3,979

113

177

408

5

74

2

1

47

Canada

…

125

*

n.a.

10

European Union

97

…

60

93

94

*

1

n.a.

2

*

n.a.

12

…

n.a.

*

Australia

Japan Norway Switzerland

n.a.

160

*

…

3

United States

153

587

*

3

…

Argentina

5

347

*

1

18

Brazil

*

818

3

21

17

Bulgaria/Romania/ Iceland

*

304

2

n.a.

*

China

n.a.

26

*

*

1

Colombia

n.a.

*

n.a.

n.a.

3

*

8

n.a.

*

*

n.a.

*

n.a.

n.a.

*

India Indonesia Korea

n.a.

*

n.a.

n.a.

*

Malaysia

n.a.

*

n.a.

n.a.

n.a.

*

27

n.a.

*

133

n.a.

*

n.a.

*

n.a.

Mexico Pakistan Philippines South Africa

*

*

n.a.

*

*

n.a.

*

n.a.

1

*

Taiwan

*

*

n.a.

n.a.

*

Thailand

8

1

n.a.

1

n.a.

Turkey

*

12

n.a.

*

*

Other developing countries

*

805

10

1

43

n.a.

37

n.a.

*

n.a.

61

289

36

54

39

*

347

*

*

*

Least developed countries Others Non-WTO members

n.a. = not available … = not applicable WTO = World Trade Organization * indicates that the reciprocity measure gains are positive but less than $0.5 million. Notes: Rows are countries receiving concessions; columns are countries giving concessions. Source: Authors’ calculations.

GRAPHICS 41 Agriculture and Nonagricultural Market Access  61

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62 42Figuring FIGURING Out OUT the THE Doha DOHA Round ROUND

Table 2A.10

Overall gains in agriculture and NAMA expressed in terms of the reciprocity measure (billions of dollars) Exporters

Importers

World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

All 22 countries Agriculture total Tariffs

22.7

8.5

7.4

3.2

0.3

1.8

0.5

3.2

2.1

1.1

0.3

7.4

3.4

2.6

0.9

*

1.2

*

0.8

0.6

0.5

0.1

NTBs

15.3

5.1

4.8

2.3

0.2

0.6

0.5

2.4

1.6

0.6

0.2

NAMA

42.4

16.4

21.2

2.2

0.7

7.1

6.2

2.5

0.2

12.2

1.3

Total

65.1

24.9

28.6

5.4

0.9

8.9

6.8

5.6

2.4

13.2

1.6

Developed (7) Agriculture total Tariffs

21.1

7.6

6.9

3.1

0.2

1.6

0.5

2.8

2.0

1.0

0.3

5.9

2.6

2.2

0.8

*

1.0

*

0.4

0.4

0.4

0.1

NTBs

15.2

5.1

4.8

2.3

0.2

0.6

0.5

2.3

1.6

0.6

0.2

NAMA

26.9

6.8

16.4

1.7

0.6

3.0

2.4

1.1

0.2

10.7

1.2

Total

48.0

14.4

23.4

4.8

0.9

4.6

2.9

3.9

2.2

11.7

1.4

Developing (15) Agriculture total Tariffs

1.6

0.8

0.5

0.1

*

0.2

*

0.4

0.1

0.1

*

1.5

0.8

0.4

0.1

*

0.2

*

0.4

0.1

0.1

*

NTBs

0.1

*

0.1

*

*

*

0

*

*

*

*

NAMA

15.5

9.6

4.8

0.5

*

4.1

3.8

1.4

0.1

1.4

0.2

Total

17.0

10.4

5.2

0.6

*

4.3

3.8

1.8

0.2

1.5

0.2

(continued on next page)

dollars) (continued) Exporters Importers

World

Developed (7)

Developing (15)

Other

4.9

2.7

LDCs

European Union

Japan

United States

Brazil

China

India

0.5

1.9

1.7

0.6

0.2

European Union Agriculture total

14.5

4.0

0.2

...

Agriculture and Nonagricultural GRAPHICS Market 43 Access  63

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Tariffs

2.1

0.4

0.9

0.6

*

...

*

0.2

0.3

0.1

*

NTBs

12.4

3.6

4.1

2.1

0.2

...

0.5

1.8

1.4

0.5

0.2

NAMA

10.0

2.4

6.2

0.5

*

...

1.4

0.9

*

4.0

0.7

Total

24.4

6.4

11.2

3.2

0.2

...

1.8

2.9

1.7

4.6

0.9

3.0

1.7

1.0

0.1

0

0.2

...

0.5

0.1

0.3

*

Japan Agriculture total Tariffs

2.5

1.3

1.0

0.1

0

0.2

...

0.3

0.1

0.3

*

NTBs

0.5

0.4

0.1

*

0

0

...

0.3

*

*

0

NAMA

2.3

0.6

1.6

0.1

*

0.4

...

0.1

*

1.3

*

Total

5.3

2.3

2.6

0.2

*

0.7

...

0.7

0.1

1.6

*

1.4

0.4

0.7

0.2

*

0.3

*

...

0.1

0.1

*

United States Agriculture total Tariffs

0.4

0.2

0.2

*

0

0.1

*

...

0.1

*

*

NTBs

1.0

0.3

0.5

0.1

*

0.2

0

...

0.1

0.1

*

NAMA

11.7

2.3

7.2

1.1

0.6

1.5

0.7

...

0.1

4.5

0.4

Total

13.1

2.8

7.9

1.2

0.6

1.8

0.7

...

0.2

4.5

0.4

(continued on next page)

Table 2A.10

Overall gains in agriculture and NAMA expressed in terms of the reciprocity measure (billions of dollars) (continued)

© Peterson Institute for International Economics | www.piie.com

64  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round 44

Exporters Importers

World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Brazil Agriculture total Tariffs

*

*

0

0

0

*

0

0

...

0

0

*

*

0

0

0

*

0

0

...

0

0

NTBs

0

0

0

0

0

0

0

0

...

0

0

NAMA

1.0

0.7

0.3

*

*

0.4

0.1

0.2

...

0.2

*

Total

1.0

0.7

0.3

*

*

0.4

0.1

0.2

...

0.2

*

China Agriculture total Tariffs

0.2

0.1

0.1

*

0

*

*

*

*

...

*

0.2

0.1

0.1

*

0

*

*

*

*

...

*

NTBs

0

0

0

0

0

0

0

0

0

...

0

NAMA

6.1

3.9

1.8

0.1

*

1.6

1.5

0.6

*

...

*

Total

6.3

4.0

1.8

0.2

*

1.7

1.5

0.6

*

...

*

India Agriculture total Tariffs

0.2

0.1

0.2

*

*

*

0

*

0.1

*

...

0.2

0.1

0.2

*

*

*

0

*

0.1

*

...

NTBs

0

0

0

0

0

0

0

0

0

0

...

NAMA

0.5

0.3

0.1

*

*

0.2

0.1

0.1

*

0.1

...

Total

0.7

0.4

0.3

*

*

0.2

0.1

0.1

0.1

0.1

...

… = not applicable NTBs = nontariff barriers NAMA = nonagricultural market access LDCs = least developed countries * indicates that overall gains are positive but less than $0.05 billion. Notes: Rows are imports; columns are exports. The figures in the table have been rounded to one decimal place. As a result, the gains do not always add up exactly to the last decimal place. This also applies to other tables in this study. Source: Authors’ calculations.

Table 2A.

Share of concessions given and received (measured by reciprocity measure) by developed and developing countries (percent) Concessions given

Country/group

Developed ()

Concessions received

Developing (5)

Developed ()

Developing (5)

All 22 countries Agriculture

93

7

37

48

NAMA

64

36

39

57

Total

74

26

38

54

European Union Agriculture

63.9

—

8.0

—

NAMA

23.5

—

16.6

—

Total

37.6

—

13.6

—

Japan 13.3

—

2.3

—

NAMA

Agriculture

5.5

—

14.7

—

Total

8.2

—

10.4

—

United States 6.2

—

13.9

—

NAMA

Agriculture

27.5

—

5.8

—

Total

20.1

—

8.6

—

Brazil Agriculture

—

*

—

9.4

NAMA

—

2.4

—

0.6

Total

—

1.5

—

3.6

China Agriculture

—

0.9

—

4.6

NAMA

—

14.5

—

28.7

Total

—

9.7

—

20.3

India Agriculture

—

1.0

—

1.3

NAMA

—

1.1

—

3.1

Total

—

1.1

—

2.5

NAMA = nonagricultural market access * indicates that the share of concessions given and received are positive but less than 0.05 percent. Source: Authors’ calculations.

GRAPHICS 5 Agriculture and Nonagricultural Market Access  65 © Peterson Institute for International Economics | www.piie.com

66  Figuring Out Doha OUT Round  the FIGURING THE DOHA ROUND

© Peterson Institute for International Economics | www.piie.com

Table 2A.2

Calculated increase in trade due to tariff and nontariff barrier cuts Agriculture Total cuts Imports

Country/group

Billions of dollars

All 22 countries

20.5

Developed (7)

Tariff cuts Exports

Percent

Billions of dollars

6.2

14.1

Imports

Percent

Billions of dollars

5.2

6.7

Nontariff barrier cuts Exports

Percent

Billions of dollars

2.0

5.3

Imports

Percent

Billions of dollars

2.0

13.8

Exports

Percent

Billions of dollars

Percent

4.2

8.8

3.3

19.2

8.5

7.6

5.0

5.4

2.4

3.0

2.0

13.8

6.1

4.6

3.0

Developing (15)

1.4

1.3

6.4

5.6

1.3

1.2

2.2

2.0

0.1

0.1

4.2

3.7

European Union

15.3

18.7

1.7

3.8

2.2

2.7

1.1

2.5

13.1

16.0

0.6

1.2

Japan

2.4

5.7

0.5

27.3

2.0

4.7

*

2.4

0.4

1.0

0.5

24.9

United States

1.6

2.3

3.3

5.2

0.5

0.7

0.8

1.3

1.1

1.6

2.5

3.9

Brazil

*

0.2

2.0

8.3

*

0.2

0.5

2.2

0

0

1.5

6.1

China

0.2

0.6

1.1

6.5

0.2

0.6

0.5

2.8

0

0

0.6

3.7

India

0.2

3.5

0.3

4.8

0.2

3.5

0.1

1.1

0

0

0.2

3.8

(continued on next page)

Table 2A.12

Calculated increase in trade due to tariff and nontariff barrier cuts (continued) Nonagricultural market access Tariff cuts only Imports

GRAPHICS 47 67 Agriculture and Nonagricultural Market Access 

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Country/group

Billions of dollars

All 22 countries

45.6

Developed (7) Developing (15) European Union Japan United States

Exports

Percent

Billions of dollars

Percent

0.7

40.3

1.6

29.5

0.7

17.6

0.6

16.1

0.7

22.8

1.0

11.0

0.8

7.5

0.8

2.5

0.5

6.7

1.2

12.7

0.7

2.7

0.4

Brazil

1.0

1.2

0.3

0.3

China

6.7

1.0

13.2

1.5

India

0.7

0.1

1.4

1.9

* indicates that the increase in trade is positive but less than $0.05 billion. Notes: Agricultural trade calculations reflect both tariff and nontariff barrier (NTB) cuts. Nonagricultural market access trade calculations reflect only tariff cuts. NTBs consist of tariff rate quotas, export subsidies, and domestic support. For NTBs, tariff equivalents are estimated. Source: Authors’ calculations.

Table 2A.13

Calculations of a single trade elasticity for trade impact calculations

Country

Kee, Nicita, and Olarreaga (2004) estimated import elasticity

2006 total merchandise imports (billions of dollars)

Argentina

–1.26

34

*

–0.01

Australia

–1.19

133

0.02

–0.02

Brazil

–1.34

91

0.01

–0.02

Canada

–1.13

350

0.05

–0.05

China

–1.13

791

0.11

–0.12

Colombia

–1.16

26

*

–*

European Union

–1.08

1,698

0.23

–0.25

India

–1.33

185

0.03

–0.03

Indonesia

–1.14

61

0.01

–0.01

Japan

–1.37

579

0.08

–0.11

Korea

–1.10

309

0.04

–0.05

Malaysia

–1.05

131

0.02

–0.02

Mexico

–1.11

256

0.03

–0.04

Norway

–1.11

64

0.01

–0.01

Pakistan

–1.16

30

*

–*

Philippines

–1.07

54

0.01

–0.01

South Africa

–1.16

68

0.01

–0.01

Switzerland

–1.10

141

0.02

–0.02

Taiwan

–1.16

203

0.03

–0.03

Thailand

–1.08

129

0.02

–0.02

Turkey

–1.14

140

0.02

–0.02

United States

–1.30

1,919

0.26

–0.34

7,394

Average

–1.19

Total

Import weight

Elasticity contribution to single trade

* indicates import weight and elasticity are positive but less than 0.005. –* indicates import weight and elasticity are negative but less in magnitude than 0.005. Sources: Kee, Nicita, and Olarreaga (2004); UN Comtrade Database via World Integrated Trade Solution, 2009.

48 FIGURING OUT THE DOHA ROUND 68  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Table 2A.14

World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Increase in billions of dollars All 22 countries

Agriculture and Nonagricultural Market Access  GRAPHICS6949

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Country/group

Increase in trade due to tariff and nontariff barrier cuts

Agriculture total Tariffs

20.5

7.6

6.4

3.2

0.2

1.7

0.5

3.3

2.0

1.1

0.3

6.7

3.0

2.2

0.9

*

1.1

*

0.8

0.5

0.5

0.1

NTBs

13.8

4.6

4.2

2.3

0.2

0.6

0.5

2.5

1.5

0.6

0.2

NAMA

45.6

17.6

22.8

2.4

0.7

7.5

6.7

2.7

0.3

13.2

1.4

Total

66.1

25.2

29.2

5.5

0.9

9.2

7.2

6.0

2.3

14.2

1.7

Developed (7) Agriculture total Tariffs

19.2

6.8

6.1

3.1

0.2

1.5

0.5

3.0

2.0

1.0

0.3

5.4

2.3

1.9

0.8

*

1.0

*

0.5

0.4

0.4

0.1

NTBs

13.8

4.5

4.2

2.3

0.2

0.6

0.5

2.6

1.6

0.6

0.2

NAMA

29.5

7.7

17.8

1.9

0.7

3.3

2.7

1.2

0.2

11.7

1.2

Total

48.7

14.4

23.9

5.0

0.8

4.8

3.3

4.3

2.2

12.7

1.5

Developing (15) Agriculture total Tariffs

1.4

0.8

0.4

0.1

*

0.2

*

0.4

0.1

0.1

*

1.3

0.7

0.3

0.1

*

0.2

*

0.4

0.1

0.1

*

NTBs

0.1

*

*

*

0

*

0

*

*

*

*

NAMA

16.1

9.9

5.0

0.5

*

4.2

3.9

1.5

0.1

1.5

0.2

Total

17.4

10.7

5.3

0.6

*

4.3

3.9

1.8

0.2

1.5

0.2

(continued on next page)

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50 FIGURING OUTDoha THE DOHA ROUND 70  Figuring Out the Round

Table 2A.14 Country/group

Increase in trade due to tariff and nontariff barrier cuts (continued) World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Increase in billions of dollars (continued) European Union Agriculture total Tariffs

15.3

4.3

5.1

2.9

0.2

…

0.6

2.1

1.7

0.6

0.2

2.2

0.4

0.9

0.7

*

…

*

0.2

0.3

0.1

*

NTBs

13.1

3.9

4.2

2.3

0.2

…

0.6

2.0

1.4

0.5

0.2

NAMA

11.0

2.7

6.9

0.5

*

…

1.5

1.1

*

4.4

0.7

Total

26.3

7.0

11.9

3.5

0.2

…

2.1

3.2

1.7

5.0

0.9

Japan Agriculture total Tariffs

2.4

1.4

0.8

0.1

0

0.3

…

0.6

0.1

0.3

*

2.0

1.1

0.7

*

0

0.3

…

0.3

0.1

0.3

*

NTBs

0.4

0.3

*

*

0

0

…

0.3

*

*

0

NAMA

2.5

0.7

1.7

0.1

*

0.5

…

0.1

*

1.4

*

Total

4.9

2.1

2.5

0.1

*

0.7

…

0.7

0.1

1.7

*

United States Agriculture total Tariffs

1.6

0.5

0.7

0.2

0

0.3

*

…

0.1

0.1

*

0.5

0.2

0.2

0.1

0

0.1

*

…

0.1

*

*

NTBs

1.1

0.3

0.5

0.1

0

0.2

0

…

0.1

0.1

*

NAMA

12.7

2.7

7.7

1.2

0.6

1.8

0.8

…

0.1

4.8

0.4

Total

14.2

3.2

8.5

1.4

0.6

2.1

0.8

…

0.3

5.0

0.5

(continued on next page)

Table 2A.14 Country/group

Increase in trade due to tariff and nontariff barrier cuts (continued) World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Percent increase from 2006 trade levels Brazil Agriculture total

*

*

0

0

0

*

0

0

…

0

0

Agriculture and Nonagricultural Market GRAPHICS 51 Access  71

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Tariffs

*

*

0

0

0

*

0

0

…

0

0

NTBs

0

0

0

0

0

0

0

0

…

0

0

NAMA

1.0

0.7

0.3

*

*

0.4

0.1

0.2

…

0.2

*

Total

1.0

0.7

0.3

*

*

0.4

0.1

0.2

…

0.2

*

0.2

0.1

*

*

0

*

*

*

*

…

*

0.2

0.1

*

*

0

*

*

*

*

…

*

0

0

0

0

0

0

0

0

0

…

0

China Agriculture total Tariffs NTBs NAMA

6.7

4.3

2.0

0.2

*

1.8

1.7

0.6

*

…

*

Total

6.9

4.4

2.0

0.2

*

1.8

1.7

0.6

*

…

*

0.2

*

0.1

*

*

*

0

*

*

*

…

0.2

*

0.1

*

*

*

0

*

*

*

…

0

0

0

0

0

0

0

0

0

0

…

India Agriculture total Tariffs NTBs NAMA

0.5

0.3

0.1

*

*

0.2

0.1

0.1

*

0.1

…

Total

0.7

0.4

0.2

*

*

0.2

0.1

0.1

*

0.1

…

(continued on next page)

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52 FIGURING OUTDoha THE DOHA ROUND 72  Figuring Out the Round

Table 2A.14 Country/group

Increase in trade due to tariff and nontariff barrier cuts (continued) World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Percent increase from 2006 trade levels All 22 countries Agriculture total Tariffs

6.2

5.0

5.6

7.4

5.8

3.8

27.3

5.2

8.3

6.5

4.8

2.0

2.0

2.0

2.1

0.3

2.5

2.4

1.3

2.2

2.8

1.1

NTBs

4.2

3.0

3.7

5.3

5.5

1.2

24.9

3.9

6.1

3.7

3.8

NAMA

0.7

0.6

1.0

0.3

1.1

0.8

1.2

0.4

0.3

1.5

1.9

Total

0.9

0.8

1.2

0.7

1.4

1.0

1.3

0.8

2.2

1.6

2.1

8.5

10.3

7.8

9.0

10.2

4.5

82.7

9.4

12.0

8.3

7.9

2.4

3.5

2.5

2.3

0.2

2.8

2.3

1.4

2.7

3.3

1.7

Developed (7) Agriculture total Tariffs NTBs

6.1

6.9

5.4

6.7

10.0

1.6

80.4

7.9

9.3

5.0

6.2

NAMA

0.7

0.4

1.2

0.4

1.6

0.6

1.1

0.3

0.4

1.7

2.4

Total

1.1

0.8

1.5

1.0

2.0

0.8

1.3

1.0

3.4

1.8

2.7

Developing (15) Agriculture total Tariffs

1.3

1.4

1.0

1.3

0.4

1.6

2.4

1.2

1.1

1.7

1.1

1.2

1.4

0.9

1.2

0.4

1.6

2.4

1.1

1.1

1.5

0.3

NTBs

0.1

0.1

0.1

0.1

0

*

0

0.1

*

0.2

0.9

NAMA

0.7

0.9

0.7

0.2

0.2

1.2

1.3

0.5

0.2

0.8

0.7

Total

0.7

1.0

0.7

0.2

0.2

1.2

1.3

0.5

0.4

0.8

0.7

(continued on next page)

Table 2A.14 Country/group

Increase in trade due to tariff and nontariff barrier cuts (continued) World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

15.2

17.5

13.5

Percent increase from 2006 trade levels (continued) European Union Agriculture total

18.7

29.2

14.2

13.5

12.8

…

348.9

28.0

Agriculture and Nonagricultural Market GRAPHICS 53 Access  73

© Peterson Institute for International Economics | www.piie.com

Tariffs

2.7

2.7

2.4

3.1

0.1

…

4.3

2.2

2.6

2.5

2.9

NTBs

16.0

26.5

11.7

10.4

12.7

…

344.6

25.8

12.6

15.0

10.5

NAMA

0.8

0.6

1.4

0.3

0.1

…

1.7

0.6

0.2

1.9

2.8

Total

1.7

1.5

2.2

1.9

1.2

…

2.4

1.8

5.6

2.1

3.5

5.7

5.6

5.7

3.5

0

4.5

…

4.5

6.4

5.1

0.5

Japan Agriculture total Tariffs

4.7

4.4

5.4

3.2

0

4.5

…

2.1

4.6

4.7

0.5

NTBs

1.0

1.2

0.3

0.4

0

0

…

2.4

1.8

0.3

0

NAMA

0.5

0.5

0.7

0.1

*

0.9

…

0.3

0.1

1.3

0.4

Total

0.9

1.2

1.0

0.1

0.1

1.2

…

1.1

2.1

1.5

0.4

2.3

1.5

3.1

2.1

0

1.9

1.7

…

4.3

4.4

2.9

United States Agriculture total Tariffs

0.7

0.5

1.0

0.5

0

0.9

1.7

…

2.0

1.6

0.5

NTBs

1.6

1.0

2.1

1.6

0

1.1

0

…

2.3

2.8

2.4

NAMA

0.7

0.4

1.1

0.7

3.1

0.6

0.6

…

0.6

1.7

2.1

Total

0.8

0.4

1.2

0.7

3.0

0.7

0.6

…

1.0

1.7

2.2

(continued on next page)

Table 2A.14

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Figuring Out Doha Round 54 74 FIGURING OUT THEthe DOHA ROUND

Country/group

Increase in trade due to tariff and nontariff barrier cuts (continued) World

Developed (7)

Developing (15)

Other

LDCs

European Union

Japan

United States

Brazil

China

India

Percent increase from 2006 trade levels (continued) Brazil Agriculture total Tariffs NTBs

0.2

0.7

0

0.2

0.7

0

0

0

0

0

0

0.8

0

0

…

0

0

0

0

0.8

0

0

…

0

0

0

0

0

0

0

…

0

0

NAMA

1.2

1.8

1.2

0.1

0.1

2.1

2.5

1.3

…

2.0

0.8

Total

1.2

1.7

1.1

0.1

0.1

2.1

2.5

1.3

…

1.9

0.8

0.6

0.9

0.4

0.1

0

1.6

3.4

0.3

0.2

…

0.1

0.6

0.9

0.4

0.1

0

1.6

3.4

0.3

0.2

…

0.1

0

0

0

0

0

0

0

0

0

…

0

China Agriculture total Tariffs NTBs NAMA

1.0

1.5

0.7

0.3

*

2.0

1.5

1.2

0.2

…

0.2

Total

1.0

1.5

0.7

0.3

*

2.0

1.5

1.1

0.2

…

0.2

3.5

6.0

3.6

0.3

0.9

4.5

0

6.0

9.7

1.5

…

3.5

6.0

3.6

0.3

0.9

4.5

0

6.0

9.7

1.5

…

0

0

0

0

0

0

0

0

0

0

…

India Agriculture total Tariffs NTBs NAMA

0.1

0.3

0.2

*

0.1

0.3

0.6

0.3

0.1

0.2

…

Total

0.2

0.3

0.3

*

0.2

0.3

0.6

0.4

2.2

0.2

…

… = not applicable NAMA = nonagricultural market access NTBs = nontariff barrier cuts LDCs = least developed countries * indicates that the increase is positive but less than $0.05 billion or 0.05 percent. Note: Rows are imports; columns are exports. Source: Authors’ calculations.

Table 2A.15 Trade effects of China choosing various NAMA flexibility options (billions of dollars) 20 half cut

20 no cut

22 no cut

22 half cut

Agriculture and Nonagricultural Market Access  GRAPHICS7555

© Peterson Institute for International Economics | www.piie.com

Country

Change in exports

Change in imports

Change in exports

Change in imports

Change in exports

Change in imports

Change in exports

Change in imports

Australia

0.90

1.12

0.90

1.12

0.90

1.12

0.90

1.12

Canada

0.31

1.57

0.31

1.57

0.31

1.57

0.31

1.57

European Union

8.63

13.24

8.62

13.24

8.53

13.24

8.55

13.24

Japan

6.71

4.51

6.71

4.51

6.60

4.51

6.62

4.51

Norway

0.11

0.28

0.09

0.28

0.09

0.28

0.11

0.28

Switzerland

0.43

1.03

0.43

1.03

0.42

1.03

0.42

1.03

United States

3.52

13.15

3.47

13.15

3.44

13.15

3.49

13.15

Argentina

0.27

0.24

0.27

0.24

0.27

0.24

0.27

0.24

Brazil

0.79

1.05

0.79

1.05

0.79

1.05

0.79

1.05

China

13.63

6.92

13.63

6.65

13.63

6.26

13.63

6.57

0.10

0.24

0.10

0.24

0.10

0.24

0.10

0.24

Colombia India

1.46

0.67

1.46

0.67

1.46

0.67

1.46

0.67

Indonesia

1.08

0.08

1.05

0.08

1.05

0.08

1.08

0.08

Korea

2.75

1.32

2.75

1.32

2.70

1.32

2.70

1.32

Malaysia

0.48

1.45

0.43

1.45

0.43

1.45

0.47

1.45

Mexico

0.17

1.67

0.17

1.67

0.17

1.67

0.17

1.67

Pakistan

0.51

0.58

0.51

0.58

0.51

0.58

0.51

0.58

Philippines

0.42

0.05

0.42

0.05

0.41

0.05

0.42

0.05

(continued on next page)

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76  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round 56

Table 2A.15 Trade effects of China choosing various NAMA flexibility options (billions of dollars) (continued) 20 half cut Country

Change in exports

Change in imports

20 no cut Change in exports

22 no cut

Change in imports

Change in exports

22 half cut

Change in imports

Change in exports

Change in imports

South Africa

0.22

0.74

0.22

0.74

0.22

0.74

0.22

0.74

Taiwan

1.77

1.12

1.78

1.12

1.74

1.12

1.74

1.12

Thailand

1.11

1.01

1.06

1.01

1.05

1.01

1.10

1.01

Turkey

0.25

0.20

0.25

0.20

0.25

0.20

0.25

0.20

45.60

52.22

45.41

51.95

45.05

51.56

45.28

51.87

Total

NAMA = nonagricultural market access Source: Authors’ calculations.

Table 2A.16 Trade effects of Brazil choosing various NAMA flexibility options (billions of dollars) 20 half cut

20 no cut

22 no cut

22 half cut

GRAPHICS7757 Agriculture and Nonagricultural Market Access 

© Peterson Institute for International Economics | www.piie.com

Country

Change in exports

Change in imports

Change in exports

Change in imports

Change in exports

Change in imports

Change in exports

Change in imports

Australia

0.90

1.12

0.90

1.12

0.90

1.12

0.90

1.12

Canada

0.31

1.57

0.32

1.57

0.31

1.57

0.31

1.57

European Union

8.63

13.24

8.69

13.24

8.62

13.24

8.58

13.24

Japan

6.71

4.51

6.73

4.51

6.71

4.51

6.70

4.51

Norway

0.11

0.28

0.11

0.28

0.11

0.28

0.11

0.28

Switzerland

0.43

1.03

0.43

1.03

0.42

1.03

0.42

1.03

United States

3.52

13.15

3.56

13.15

3.52

13.15

3.49

13.15

Argentina

0.27

0.24

0.27

0.24

0.27

0.24

0.27

0.24

Brazil

0.79

1.05

0.79

1.21

0.79

1.00

0.79

0.92

China

13.63

6.92

13.65

6.92

13.62

6.92

13.61

6.92

0.10

0.24

0.10

0.24

0.10

0.24

0.10

0.24

Colombia India

1.46

0.67

1.46

0.67

1.46

0.67

1.46

0.67

Indonesia

1.08

0.08

1.08

0.08

1.08

0.08

1.08

0.08

Korea

2.75

1.32

2.75

1.32

2.74

1.32

2.74

1.32

Malaysia

0.48

1.45

0.48

1.45

0.47

1.45

0.47

1.45

Mexico

0.17

1.67

0.17

1.67

0.17

1.67

0.17

1.67

Pakistan

0.51

0.58

0.51

0.58

0.51

0.58

0.51

0.58

Philippines

0.42

0.05

0.42

0.05

0.42

0.05

0.42

0.05

(continued on next page)

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58 78  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round

Table 2A.16 Trade effects of Brazil choosing various NAMA flexibility options (billions of dollars) (continued) Brazil-20 half cut Country

Change in exports

Change in imports

Brazil-20 no cut Change in exports

Change in imports

Brazil-22 no cut Change in exports

Change in imports

Brazil-22 half cut Change in exports

Change in imports

South Africa

0.22

0.74

0.23

0.74

0.22

0.74

0.22

0.74

Taiwan

1.77

1.12

1.77

1.12

1.77

1.12

1.77

1.12

Thailand

1.11

1.01

1.11

1.01

1.11

1.01

1.11

1.01

Turkey

0.25

0.20

0.26

0.20

0.25

0.20

0.25

0.20

45.60

52.22

45.77

52.39

45.56

52.18

45.48

52.09

Total

NAMA = nonagricultural market access Source: Authors’ calculations.

Table 2A.17 Trade effects of India choosing various NAMA flexibility options (billions of dollars) 22 no cut Change in exports

Country

22 half cut

Change in imports

Change in exports

Change in imports

Australia

0.90

1.12

0.90

1.12

Canada

0.31

1.57

0.31

1.57

European Union

8.51

13.24

8.63

13.24

Japan

6.67

4.51

6.71

4.51

Norway

0.10

0.28

0.11

0.28

Switzerland

0.42

1.03

0.43

1.03

United States

3.48

13.15

3.52

13.15

Argentina

0.27

0.24

0.27

0.24

Brazil

0.79

1.05

0.79

1.05

China

13.59

6.92

13.63

6.92

Colombia

0.10

0.24

0.10

0.24

India

1.46

0.36

1.46

0.67

Indonesia

1.08

0.08

1.08

0.08

Korea

2.74

1.32

2.75

1.32

Malaysia

0.47

1.45

0.48

1.45

Mexico

0.17

1.67

0.17

1.67

Pakistan

0.51

0.58

0.51

0.58

Philippines

0.42

0.05

0.42

0.05

South Africa

0.22

0.74

0.22

0.74

Taiwan

1.77

1.12

1.77

1.12

Thailand

1.11

1.01

1.11

1.01

Turkey

0.25

0.20

0.25

0.20

45.32

51.91

45.60

52.22

Total

NAMA = nonagricultural market access Note: 20 half cut and 20 no cut simulations were not conducted for India. Source: Authors’ calculations.

GRAPHICS Agriculture and Nonagricultural Market Access  79 © Peterson Institute for International Economics | www.piie.com

59

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Topping up the Doha Package

3

In this chapter, we outline the potential gains from liberalization in several areas of market access negotiations: services, chemicals, electronics/electrical goods, environmental goods, and trade facilitation. We believe that meaningful negotiations on these topics can reinvigorate the Doha Round since the potential gains from liberalization in these areas far exceed the benefits currently on the table.

Services Of the three areas of market access negotiations, services could offer the largest gains for both developed and developing countries. How large remains unclear because services negotiations have barely begun, but recent empirical work indicates that the potential gains from meaningful liberalization of services trade barriers substantially outweigh the potential gains from merchandise trade liberalization.1 In 2007 world services exports, as conventionally measured, were valued at roughly $3.3 trillion; merchandise exports (i.e., agriculture and nonagricultural market access [NAMA]) were more than four times larger at $13.6 trillion (WTO 2008a).2 While some services are inherently nontrad1. For example, Brown, Kiyota, and Stern (2005) calculate that the removal of agriculture protection, manufacturing tariffs, and services barriers for the whole world would increase world welfare by $53.9 billion, $701.6 billion, and $1,661.8 billion, respectively. 2. Conventional measures of services trade do not include services furnished locally by the foreign subsidiaries of multinational corporations, for example, by a US subsidiary of a Swiss reinsurance company (a form of commerce that falls under Mode 3 of the GATS).

81 © Peterson Institute for International Economics | www.piie.com

able, part of the imbalance between services and merchandise trade can be explained by the poor quality of data on services, which leads to the underreporting of services trade in official statistics, and another part by high barriers to services trade. Despite the importance of services in modern economies, and despite the mandate to start new negotiations a decade ago to liberalize trade in services, WTO talks have not been fully engaged. To date, most WTO countries have not put offers on the table; some have submitted offers that would not even bind current practices. Most of the more than 100 offers for services liberalization in the Round can be classified as pro forma with limited value (Gootiiz and Mattoo 2009). Some developing countries have insisted that developed countries must offer to liberalize trade in temporary labor services (Mode 4) before developing countries issue counteroffers on other modes of delivery (WTO 2008b). In large measure, services have been relegated to the second division of Doha negotiations for tactical reasons. WTO members agreed informally at the 2005 Hong Kong ministerial that negotiations on services would not go full-bore until decisions were made on modalities for liberalization of agriculture and NAMA.3 This understanding was a huge mistake, indeed counterproductive, for developing countries. Instead of increasing their leverage to gain US and EU concessions in agriculture and NAMA, it effectively reduced domestic political support in Washington and Brussels for the overall Doha deal and thus limited the scope for additional policy reform. There are few useful multilateral precedents in terms of services negotiations. Most of the serious liberalization has been done in bilateral and regional agreements. The Uruguay Round established a framework of rights and obligations in the General Agreement on Trade in Services (GATS) but little was achieved in liberalizing existing barriers. Sector agreements on basic telecommunications and financial services were concluded a few years after the Uruguay Round, and these reduced barriers maintained by the signatory countries. Simply put, the Doha Round is only the second time countries have negotiated services multilaterally. While some bilateral free trade agreements (FTAs) have made significant progress in liberalizing services trade (e.g., the North American Free Trade Agreement and Euro-Mediterranean pact), many bilateral FTAs address services issues superficially or not at all (Martin and Mattoo 2009). Services barriers and trade flows are often opaque. Unlike merchandise trade barriers, services barriers cannot be easily quantified. And, as mentioned earlier, existing data on trade in services are notoriously bad for measuring real flows of traded services, both in overall magnitude and in determining the ultimate source and destination of trade flows. It is clear that regulations like licensing, permits, temporary visas, and nationality requirements for corporate boards impede services trade, but .

3. Contrary to popular belief, this procedural “agreement” is not included in the ministerial declaration.

82  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

by how much is unclear. Unlike agriculture or NAMA, WTO members cannot apply a Swiss formula or any other ready device to cut through the web of trade restrictions on services. There appears to be no substitute for a detailed review of national laws and regulations. This process is burdensome, and in any event regulators are reluctant to tie their hands against future contingencies. As a practical matter, most WTO countries are not asked to engage in detailed services negotiations. The “free pass” for developing countries, so prevalent in the GATT era, is still available to most of them in the Doha services talks. However, middle-income and successful emerging-market countries like Argentina, Brazil, China, India, Indonesia, and Thailand are expected to participate. The current services liberalization offers do have some value: They lock in a portion of the unilateral liberalization that countries have undertaken on their own. And just as in agriculture and NAMA talks, making services trade barriers clear and certain has value to firms doing business.4 Recent work by the World Bank shows that applied services trade barriers are far lower than bound services barriers under Uruguay Round commitments (see Gootiiz and Mattoo 2009). To reach this conclusion, the authors construct an index of services barriers (table B.1 in appendix B). On their 100-point scale, where higher numbers indicate greater levels of restrictions, they find that the actual level of world services barriers is an index of 21 out of 100, compared with an index of 48 for commitments bound in the Uruguay Round under the GATS. Offers on the table in the Doha Round would eliminate some of the “water” between bound and applied services barriers, by bringing the overall bound index down to 42 out of 100. However, the fact remains that, as they stand now, Doha offers create very little new market access in services. Instead, they slightly lower the bound levels inherited at the end of the Uruguay Round. The offers by OECD countries come close to locking in bound levels to actual levels, but they still leave some “water”—the score for actual barriers is 15 out of 100, while the score for Doha offers is 19 out of 100. But current offers from developing countries do little to reduce the “water” between bound and applied barriers. Without a more substantive result in the services negotiations, the Doha Round is unlikely to succeed. The deal does not seem rich enough to attract the degree of political support in major trading nations that would ensure ratification by national legislatures.

Trade and GDP Gains Table 3.1 displays estimates of the impact of a 10 percent reduction in tariff equivalent barriers by the 22 countries. We find that a 10 percent reduction 4. Businesses routinely report that making barriers definitive has value; how much value is uncertain.

Topping up the Doha Package  83 © Peterson Institute for International Economics | www.piie.com

Applied tariff equivalentb

Countrya

Initial

European Uniong

Doha offer

Current tradec

0 percent cut

Exports to 20 partners

Imports from the world

421.3

567.1

Increase after Doha offersd

Total

Exports to 20 partners

Imports from the world

Total

988.4

0

0

0

6.7

6.7

6.0

16.8

16.8

15.1

81.9

150.5

232.4

0

0

0

6.0

6.0

5.4

394.2

378.4

772.6

0

0

0

Brazil

55.5

55.5

50.0

19.0

37.2

56.2

0

0

0

Chinai

67.9

67.9

61.1

84.8

129.3

214.1

0

0

0

India

68.1

68.1

61.3

24.8

77.6

102.4

0

0

0

Other 15

22.4

22.4

20.2

370.4

437.2

807.6

0

0

0

All 21

19.6

19.6

17.6

1396.4

1777.3

3173.7

0

0

0

Japan United Statesh

i

Increase after Doha offers and 0 percent cute Exports to 20 partners European Union

Imports from the world

Impact of sector initiative alone

Total

Exports to 20 partners

Imports from the world

Total

9.8

5.2

15.0

9.8

5.2

15.0

2.5

3.5

5.9

2.5

3.5

5.9

10.2

3.1

13.3

10.2

3.1

13.3

0.6

2.8

3.5

0.6

2.8

3.5

China

3.3

12.0

15.4

3.3

12.0

15.4

Indiai

0.6

7.2

7.9

0.6

7.2

7.9

Other 15

10.2

15.9

26.1

10.2

15.9

26.1

All 21

37.2

49.8

87.0

37.2

49.8

87.0

Japan

GRAPHICS

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84  Figuring Out the Doha Round

Table . Impact of services trade negotiations (trade in billions of US dollars; tariffs in percent)

United States

h

Brazil i

g

5

(continued on next page)

66 Topping up the Doha Package  85

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FIGURING OUT THE DOHA ROUND

Memorandum: GDP impact of new services tradef Countrya

Billions of dollars

Percent

European Uniong

6.9

*

Japan

2.7

0.1

United Statesh

6.1

*

Brazil

1.6

0.1

Chinai

7.1

0.2

India

3.6

0.3

Other 15

12.0

0.2

All 21

40.0

0.1

i

a. The 21 countries are Argentina, Australia, Brazil, Canada, China, Colombia, the European Union, India, Indonesia, Japan, Korea, Malaysia, Mexico, Norway, Pakistan, Philippines, South Africa, Switzerland, Thailand, Turkey, and the United States. Taiwan is excluded. b. Tariff equivalents provided from Wang, Mohan, and Rosen (2009). “Other 15” and “All 21” tariff equivalents are weighted averages (by total services imports). c. Where bilateral services trade data were available from UN Services Trade Database, 2009, OECD (2009), or BEA (2009), 2007 bilateral data were used. Where bilateral data were not available a bilateral services trade flow was estimated by multiplying total services imports by the relevant proportion of bilateral merchandise trade from 2007. d. Gootiiz and Mattoo (2009) find “no new market access” in the current Doha services trade offers. We assume that trade will not increase if the offers are implemented as they now stand. e. An import price elasticity of –1.37 is applied here for every bilateral trade flow. This elasticity is the simple average of the general instrumental variable estimate of the elasticity of US services exports (–1.12) and the elasticity of US services imports (–1.62) from Marquez (2005). The 10 percent cuts are keyed off the 2004 applied tariff equivalents using data from GTAP 7 database. f. GDP impacts are calculated using the dollar ratio average from table A.2. g. Measured as the weighted average of services tariff equivalents for Belgium, France, Germany, Italy, Netherlands, and United Kingdom, using 2008 US exports to each country as weights. h. Set equal to 0.9016 times the level reported for the European Union (6.7 percent). This factor reflects the ratio of Services Trade Restrictiveness Indices (STRI) values reported by the OECD (2.190 for the European Union versus 1.975 for the United States). Wang, Mohan, and Rosen (2009) assume a US tariff equivalent of services barriers of zero. i. Contrary to the values reported by Wang, Mohan, and Rosen (2009), we do not think that China’s barriers to services imports are higher than Indonesia’s, so the reported tariff equivalent barrier attributed to China is lowered to the Indonesian level (67.9 percent). Following similar reasoning, India’s barriers to services imports are lowered to the Pakistan level (68.1 percent). * indicates that the percentage of GDP impact for these countries is positive but less than 0.05 percent. Sources: Tariff equivalent: Wang, Mohan, and Rosen (2009); trade: BEA (2009), UN Services Trade Database, 2009, OECD (2009), UN Comtrade Database, 2009; elasticity: Marquez (2005); authors’ calculations.

in services barriers would increase exports by the sample countries to the rest of the sample by $37.2 billion or 2.7 percent (table 3.1 and table 1.1 in chapter 1). Both US and EU services exports would increase by about $10 billion each. Under the 10 percent scenario, scaled-up exports of services to the world would increase by $55 billion (table 1.2). The estimated global GDP impact of the trade gains (exports and imports) resulting from a 10 percent reduction in services barriers is about $45.5 billion (table 1.3). Bilateral trade relationships are explored in appendix B. Of course, given the current offers, a 10 percent reduction or even a 5 percent reduction in barriers may seem optimistic. Some efforts have been made to improve the current offers. A signaling exercise held during the July 2008 mini-ministerial at the WTO indicated that countries might be willing to budge (Gootiiz and Mattoo 2009). However, the US services industry’s initial reading from the July meeting was that no “meaningful new market access” would be created (Vastine 2008).

Chemicals The Chemical Tariffs Harmonization Agreement (CTHA), formulated in the Uruguay Round, serves as a starting point for Doha negotiators.5 Most tariffs on chemical products for CTHA signatory countries are set at 0, 5.5, or 6.5 percent (WTO 2005). An initiative that broadens the CTHA to more countries and deepens liberalization could produce substantial gains. Currently, Canada, the European Union, Japan, Norway, Singapore, Switzerland, Taiwan, and the United States have participated in Doha Round discussions on a sector initiative for chemicals (WTO 2008c). Chemicals account for more than 10 percent of total merchandise imports by the 22 countries (table 3.2).6 Chemicals are also crucial to US trade, accounting for 16.7 percent of US merchandise exports (to the 21 partner countries) in 2007 and 8.9 percent of total US merchandise imports (from the world) in 2007.7 EU trade also exhibits a concentration in chemicals: 20.9 percent of EU merchandise exports (to the 21 partner countries) and 9.2 percent of total EU merchandise imports in 2007 were in chemicals.8 5. The CTHA signatory countries are Australia, Canada, Ecuador, the European Union, Hong Kong, Japan, Jordan, Korea, Mongolia, New Zealand, Norway, Panama, China, Qatar, Singapore, Switzerland, Taiwan, the United Arab Emirates, and the United States (METI 2009a). 6. Chemical goods imports and total merchandise imports by the 22 countries from the world in 2007 were $862.5 billion and $8,308.3 billion, respectively. 7. US chemical goods exports and total merchandise goods exports in 2007 to the 21 partner countries were $156.6 billion and $935.1 billion, respectively. US chemical goods imports and total merchandise imports in 2007 from the world were $179.3 billion and $2,017.1 billion, respectively. 8. EU chemical goods exports and total merchandise goods exports in 2007 to the 21 partner

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In 2008 the average US applied tariff on chemical products was 2.1 percent, the average EU applied tariff was 2.6 percent, and the average Chinese applied tariff stood at 6.7 percent. The average chemical tariff across the 22 countries in 2008 was 3.3 percent (table 3.2). However, tariff peaks remain a problem, even in CTHA signatory countries.

Trade and GDP Gains Assuming that none of the tariff cut flexibilities that are available to countries would be used on chemical goods, the tariff cuts outlined in NAMA modalities would bring down the US tariff on chemicals to an average of 1.2 percent and lower the average tariff on chemicals in the 22 countries to 2.2 percent.9 These modality tariff cuts would increase the export trade within the 22 countries by $12.3 billion or roughly 1.6 percent from the current level of chemicals trade (table 3.2). Increases in US and EU exports, $2.5 billion and $3.6 billion, respectively, could account for half of the growth.10 What more could be achieved in sector negotiations? The sector scenario that we have modeled envisages, at the HS 6-digit level, reducing all tariffs at or below 2.5 percent, after the modality cuts, to zero; reducing all tariffs above 2.5 percent and equal to or below 5 percent, after the modality cuts, to a new tariff of 2.5 percent; and reducing all tariffs above 5 percent, after the modality cuts, to a new tariff of 5 percent. We estimate that the postmodality and sector cuts would increase chemical exports to the sample countries by $25.1 billion and chemical imports from the world by $30.8 billion, twice the impact from the modality tariff cuts alone (table 3.2). Nearly half this trade increase can be accounted for by increased US and EU exports ($4.6 billion and $6.9 billion, respectively); or, looking at the trade flows from the opposing direction, by increased US and Chinese imports ($4.6 billion and $8 billion, respectively). The US export gain in chemicals ($4.6 billion) represents a 0.5 percent increase in US merchancountries were $219.8 billion and $1,049.2 billion, respectively. EU chemical goods imports and total merchandise imports in 2007 from the world were $179.2 billion and $1,954 billion, respectively. 9. We assume that, if countries are going to participate in certain sector negotiations (e.g., chemicals, electronics/electrical, or environmental goods), they are not going to use any of their tariff cut flexibilities in those sectors. In reality, countries might exclude some sensitive products from sector negotiations and use their tariff cut flexibilities on those same products. 10. The modality impacts described here do not correspond with the impacts for all NAMA products because of different elasticities and the use of tariff cut flexibilities. Specifically, the price elasticity used here is –2.09, while the calculations for all NAMA products used an elasticity of –1.19. We think a larger elasticity value is justified because many chemical products are homogenous. Also, in the full NAMA calculations we assume that tariff cut flexibilities are used on some chemical products; in the sector calculation, we assume no flexibilities are used.

Topping up the Doha Package  87 © Peterson Institute for International Economics | www.piie.com

Average applied tariffb

Countrya

Initial

After modality cuts

Current tradec

After sector cuts

Exports to 2 partners

Imports from the world

Total

179.2

399.0

3.6

2.9

6.5

Exports to 2 partners

Imports from the world

Total

2.6

1.5

1.0

Japan

1.7

0.8

0.4

74.0

50.3

124.2

2.0

0.8

2.8

United States

2.1

1.2

0.6

156.6

179.3

335.9

2.5

2.3

4.8

Brazil

8.0

5.9

3.3

8.7

21.7

30.4

*

0.8

0.8

China

6.7

4.9

3.0

68.1

111.3

179.4

1.2

3.6

4.7

India

8.7

7.0

4.7

14.1

17.7

31.8

0.2

0.5

0.7

Other 16

3.2

2.3

1.4

208.6

303.2

511.7

2.9

4.6

7.5

3.3

2.2

1.3

749.9

862.5

1,612.4

12.3

15.4

27.7

Increase after modality and sector cutsd Exports to 2 partners European Union

Imports from the world

Total

219.8

Increase after modality cutsd

European Union

All 22

GRAPHICS

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88  Figuring Out the Doha Round

Table .2 Impact of sector initiative in chemicals (trade in billions of US dollars; tariffs in percent)

Impact of sector cuts alone Exports to 2 partners

Imports from the world

Total



6.9

4.3

11.2

3.3

1.4

4.7

Japan

4.1

1.0

5.2

2.2

0.2

2.4

United States

4.6

4.6

9.1

2.1

2.3

4.4

Brazil

0.1

1.8

1.9

0.1

1.0

1.1

China

2.5

8.0

10.5

1.3

4.5

5.8

India

0.5

1.3

1.8

0.3

0.8

1.1

Other 16

6.4

9.8

16.1

3.5

5.2

8.7

25.1

30.8

55.9

12.8

15.4

28.2

All 22

(continued on next page)

68

Table 3.2

Impact of sector initiative in chemicals (trade in billions of US dollars; tariffs in percent) (continued)

Countrya

Billions of dollars

Percent

Memorandum: Current total merchandise trade (billions of dollars) Countrya

Exports to 21 partners

Total

1,954.0

3,003.2

2.2

*

European Union

Japan

1.1

*

Japan

628.0

622.2

1,250.2

United States

2.0

*

United States

935.1

2,017.1

2,952.2

Brazil

0.5

*

Brazil

135.5

120.6

256.2

China

2.7

0.1

China

1,097.6

956.0

2,053.6

India

0.5

*

Other 16

4.0

0.1

13.0

*

India

1049.2

Imports from the world

European Union

All 22

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FIGURING OUT THE DOHA ROUND

Memorandum: GDP impact of new chemicals tradee

104.4

218.6

323.1

Other 16

2,322.2

2,419.7

4,741.9

All 22

6,272.0

8,308.3

14,580.3

a. The 22 countries are Argentina, Australia, Brazil, Canada, China, Colombia, the European Union, India, Indonesia, Japan, Korea, Malaysia, Mexico, Norway, Pakistan, Philippines, South Africa, Switzerland, Taiwan, Thailand, Turkey, and the United States. b. Listed tariff rates are the weighted average (weighted by bilateral imports) of the simple average of applied HS 6-digit tariffs on all traded chemical goods in each bilateral relationship. c. Trade data from the following years and bilateral pairs are used: Norway - all countries (2008); Pakistan - all countries (2008); Thailand - all countries (2006); Indonesia - India, Malaysia, Mexico, Pakistan, Philippines, and Taiwan (2005); Indonesia - all other countries (2007); Mexico - Brazil, India, Indonesia, Malaysia, Pakistan, Philippines, and Taiwan (2006); Mexico - all other countries (2007); all other bilateral relationships (2007). d. An import price elasticity of –2.09 is applied here for every tariff line and bilateral trade flow. This elasticity is the simple average of all chemical goods observations in Kee, Nicita, and Olarreaga (2004). e. GDP impacts are calculated using the dollar ratio average from table A.2. HS = Harmonized Schedule * indicates that the percentage of GDP or trade impact for these countries is positive but less than 0.05 percent or $0.05 billion. Note: All HS 6-digit traded tariff lines in HS codes 28 through 39 are included: HS 28 - Inorganic chemicals; HS 29 - Organic chemicals; HS 30 - Pharmaceutical products; HS 31 - Fertilizers; HS 32 - Tanning or dyeing extracts; HS 33 - Essential oils; HS 34 - Soap, lubricating preparations, candles, etc.; HS 35 - Albuminoidal substances, modified starches, glues; HS 36 - Explosives; HS 37 - Photographic or cinematographic goods; HS 38 - Miscellaneous chemical products; HS 39 - Plastics and articles thereof. Sources: UN Comtrade Database via World Integrated Trade Solution, 2009; UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; Kee, Nicita, and Olarreaga (2004); authors’ calculations.

dise exports (to the 21 other countries); the import gains ($4.6 billion) represent a 0.2 percent increase in total US merchandise imports. For the group of 22 countries, the estimated GDP gains resulting from the trade increase attributable specifically to the sector cuts in chemicals are $13.0 billion (table 3.2).11 World exports of chemicals by the 22 sample countries could increase by $15.8 billion based on this sector initiative (table 1.2). Bilateral trade and tariff relationships are detailed in appendix C.

Information Technology and Electronics/Electrical Goods In 1996, at a ministerial conference of the WTO—i.e., not during a multilateral trade round—29 WTO members agreed to the Information Technology Agreement (ITA). The ITA committed signatory countries to reduce tariffs to zero or near zero in computers, software, telecom equipment, semiconductors, semiconductor manufacturing equipment, and scientific instruments by January 2000. The ITA is considered a “remarkably successful agreement” (Mann and Liu 2009). The agreement has grown to over 70 members, including the United States, the European Union (27), Japan, India, Korea, Taiwan, and China (which joined in 2003 as part of its WTO accession). Notable nonsignatories include Brazil, Mexico, and South Africa (WTO 2009a). The Doha Round could supplement the ITA by expanding the country coverage and deepening tariff liberalization under the current agreement. Because of the potential large boost to world trade, expanded product coverage in the ITA is another possible outcome, even though product coverage has been a contentious issue since the beginning of the ITA.12 A proposal by Dreyer and Hindley (2008) to expand the products covered by the ITA would almost double the amount of world trade covered. World exports of current ITA goods in 2007 to the 22 countries surveyed in this study were $1,127 billion; world exports (to the 22 countries) under Dreyer and Hindley’s (2008) product list were $2,028 billion.13 While the Dreyer and Hindley proposal seems unlikely, a sector deal that goes beyond IT products has already been discussed in the Doha

11. GDP gains enumerated here are based only on the trade impact of the sector cuts and not the total gains from both the modality and sector cuts. GDP gains that result from modality cuts are quoted as part of the NAMA calculations earlier. 12. A recent WTO dispute settlement case brought by the United States and Japan (among others) against the European Union concerns whether televisions with multifunctionality (i.e., IT and non-IT functions) should be covered by the agreement (European Commission 2008). 13. The Dreyer and Hindley (2008) proposal is to include an entire HS 4-digit category (with a few exceptions) if at least one HS 6-digit tariff line under the HS 4-digit category is currently included in the ITA.

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Round. Rather than pursuing an IT-only sector initiative, WTO negotiators have actually devised a broader electronics/electrical goods sector initiative, which largely encompasses the ITA along with many new IT products. The proposed product list for the electronics/electrical goods sector deal covers roughly 50 percent more world trade than the ITA.14 It does exclude some of the products that would be most contentious in ITA talks—most notably televisions—yet it is still a step forward from the current ITA. Already, Hong Kong, Japan, Korea, Singapore, Thailand, and the United States have participated in the electronics/electrical goods sector initiative (WTO 2008c). On a related note, an agreement might be negotiated on “digital goods” to facilitate electronic commerce, the electronic delivery of services, and exports of information and communication technology (ICT) products. This is a promising possibility, but one that we do not explore in this study. The ITA is a unique agreement because the product list is not entirely made up of explicitly listed Harmonized System (HS) tariff lines. Realizing that product coverage would be an issue, the negotiators in 1996 included a “positive list” of IT products defined according to functionality so that new products, regardless of where they were placed in a tariff schedule, could be covered. Many new products have been covered by this approach, but leaving product coverage open to interpretation has, in the end, created as much contention (by giving a basis for litigation) as it has prevented. The positive list approach means ITA coverage might not be exactly the same from one country to the next. For our calculations we assume that any product included in the US ITA schedule or by Finger (2007) is an ITA good for all countries. By taking this approach, we assume resolution of one of the outstanding issues with the ITA, namely product convergence, as well as the issues of country coverage and further tariff liberalization.

Trade and GDP Gains Like all NAMA products, ITA goods would be subject to the Swiss formula modality tariff cuts. In other words, even without a sector agreement, there would be some liberalization of ITA trade. Assuming no flexibilities are used, tariff cuts under the Swiss formula would bring the average applied tariff in the 22 countries on ITA goods down to 0.9 percent from the current 1.1 percent (table 3.3). These modality cuts would increase exports by the 22 sample countries to each other by $5.8 billion while increasing their imports from the world by $6 billion. Chinese ITA imports would increase by $1.9 billion or 1 percent.15 14. Recent world exports of electronics/electrical goods (as defined by the WTO December 2008 NAMA modalities) to the 22 countries used in this study were $1,687.7 billion, while recent world exports to the 22 countries of ITA goods (as defined by the US ITA schedule and Finger 2007) were $1,127.1 billion. 15. The modality impacts described here do not correspond with the impacts for all NAMA

Topping up the Doha Package  91 © Peterson Institute for International Economics | www.piie.com

Impact of sector initiative in Information Technology Agreement (ITA) goods (trade in billions of US dollars; tariffs in percent) Average applied tariffb

Countrya European Union Japan

Initial 0.4

After modality cuts

Current tradec

After sector cuts

Exports to 21 partners

0.3

0

166.4

Increase after modality cutsd

Imports from the world

Total

211.3

377.7

1.0

Exports to 21 partners

Imports from the world

Total

0.9

1.8

*

*

0

181.8

67.0

248.9

1.6

*

1.6

United States

0.6

0.4

0

157.3

195.1

352.4

0.7

0.5

1.2

Brazil

9.9

8.8

0

2.7

16.8

19.5

*

0.3

0.3

China

1.7

1.2

0

218.0

193.4

411.3

0.5

1.9

2.4

India

3.4

2.8

0

4.1

21.2

25.2

*

0.2

0.2

Other 16

1.6

1.3

0

321.2

422.3

743.5

2.1

2.2

4.3

1.1

0.9

0

1,051.4

1,127.1

2,178.5

5.8

6.0

11.8

All 22

Increase after modality and sector cutsd Exports to 21 partners European Union

GRAPHICS

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92  Figuring Out the Doha Round

Table 3.3

5.2

Imports from the world

Total

Impact of sector cuts alone Exports to 21 partners

2.1

7.3

4.3

Imports from the world

Total

1.2

5.5

Japan

6.3

*

6.3

4.8

*

4.8

United States

3.3

1.5

4.8

2.6

1.0

3.6

Brazil

*

3.5

3.5

*

3.3

3.3

China

2.8

8.7

11.5

2.3

6.8

9.1

69

India

0.1

1.4

1.5

0.1

1.1

1.3

Other 16

10.0

12.0

22.1

7.9

9.8

17.8

All 22

27.9

29.2

57.1

22.1

23.2

45.3

(continued on next page)

70

Table 3.3

Memorandum: GDP impact of new ITA goods tradee Countrya

Billions of dollars

Memorandum: Current total merchandise trade (billions of dollars)

Percent

European Union

2.5

*

Japan

2.2

0.1

United States

1.7

*

Brazil

1.5

0.1

China

4.2

India

0.6

Other 16 All 22

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Impact of sector initiative in Information Technology Agreement (ITA) goods (trade in billions of US dollars; tariffs in percent) (continued)

Countrya European Union

Exports to 21 partners

Imports from the world

Total

1,049.2

1,954.0

3,003.2

Japan

628.0

622.2

1,250.2

United States

935.1

2,017.1

2,952.2

Brazil

135.5

120.6

256.2

0.1

China

1,097.6

956.0

2,053.6

0.1

India

104.4

218.6

323.1

8.2

0.1

Other 16

2,322.2

2,419.7

4,741.9

20.8

*

All 22

6,272.0

8,308.3

14,580.3

a. The 22 countries are Argentina, Australia, Brazil, Canada, China, Colombia, the European Union, India, Indonesia, Japan, Korea, Malaysia, Mexico, Norway, Pakistan, Philippines, South Africa, Switzerland, Taiwan, Thailand, Turkey, and the United States. b. Listed tariff rates are the weighted average (weighted by bilateral imports) of the simple average of HS 6-digit applied tariffs on all traded IT goods in each bilateral relationship. c. Trade data from the following years and bilateral pairs are used: Norway - all countries (2008); Pakistan - all countries (2008); Thailand - all countries (2006); Indonesia - India, Malaysia, Mexico, Pakistan, Philippines, and Taiwan (2005); Indonesia - all other countries (2007); Mexico - Brazil, India, Indonesia, Malaysia, Pakistan, Philippines, and Taiwan (2006); Mexico - all other countries (2007); all other bilateral relationships (2007). d. An import price elasticity of -2.01 is applied here for every tariff line and bilateral trade flow. This elasticity is the simple average of all existing and new IT goods observations in Kee, Nicita, and Olarreaga (2004). e. GDP impacts are calculated using the dollar ratio average from table A.2. * indicates that the percentage of GDP, trade impact, or applied tariff rate for these countries is positive but less than 0.05 percent or $0.05 billion. Note: See table D.1 for product list. Calculations are made using all traded tariff lines listed in table D.1 at the HS 6-digit level. Sources: UN Comtrade Database via World Integrated Trade Solution, 2009; UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; Kee, Nicita, and Olarreaga (2004); authors’ calculations.

Impact of sector initiative in electronics and electrical goods (trade in billions of US dollars; tariffs in percent) Average applied tariffb

Countrya European Union Japan

Current tradec

After sector cuts

Initial 0.9

0.6

0

175.8

342.0

517.8

1.3

Exports to 21 partners

Imports from the world

Increase after modality cutsd

After modality cuts

Total

Exports to 21 partners

Imports from the world

Total

1.7

3.0

*

*

0

197.6

109.5

307.1

2.3

*

2.3

1.0

0.6

0

198.2

350.9

549.1

0.9

1.4

2.3

Brazil

11.2

9.1

0

5.9

22.8

28.7

*

0.5

0.5

China

6.6

4.6

0

393.7

306.9

700.6

1.9

3.6

5.5

India

6.4

5.7

0

5.4

28.9

34.3

*

0.4

0.4

Other 16

2.8

2.3

0

584.0

526.7

1,110.7

3.1

2.3

5.4

All 22

2.3

1.8

0

1,560.7

1,687.7

3,248.3

9.6

9.9

19.4

United States

Increase after modality and sector cutsd

GRAPHICS

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94  Figuring Out the Doha Round

Table 3.4

Impact of sector cuts alone

Exports to 21 partners

Imports from the world

Total

European Union

7.0

4.7

11.7

Japan

8.8

*

8.8

Imports from the world

Total

5.7

3.0

8.6

6.5

*

6.5

Exports to 21 partners

71

United States

4.4

4.0

8.4

3.4

2.6

6.1

Brazil

0.1

4.4

4.5

0.1

3.9

4.0

China

8.6

14.9

23.5

6.7

11.3

18.0

India

0.2

2.1

2.3

0.2

1.7

1.9

Other 16

14.0

15.3

29.3

10.8

13.0

23.8

All 22

43.1

45.4

88.4

33.5

35.4

68.9

(continued on next page)

72

Table 3.4

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Impact of sector initiative in electronics and electrical goods (trade in billions of US dollars; tariffs in percent) (continued)

Memorandum: GDP impact of new electronic goods tradee Countrya

Billions of dollars

Percent

European Union

4.0

*

Japan

3.0

0.1

United States

2.8

*

Brazil

1.8

0.1

China

8.3

India

0.8

Other 16 All 22

Memorandum: Current total merchandise trade (billions of dollars) Countrya European Union

Exports to 21 partners

Imports from the world

Total

1,049.2

1,954.0

3,003.2

Japan

628.0

622.2

1,250.2

United States

935.1

2,017.1

2,952.2

Brazil

135.5

120.6

256.2

0.3

China

1,097.6

956.0

2,053.6

0.1

India

104.4

218.6

323.1

11.0

0.1

Other 16

2,322.2

2,419.7

4,741.9

31.7

0.1

All 22

6,272.0

8,308.3

14,580.3

a. The 22 countries are Argentina, Australia, Brazil, Canada, China, Colombia, the European Union, India, Indonesia, Japan, Korea, Malaysia, Mexico, Norway, Pakistan, Philippines, South Africa, Switzerland, Taiwan, Thailand, Turkey, and the United States. b. Listed tariff rates are the weighted average (weighted by total bilateral merchandise imports) of the simple average of HS 6-digit applied tariffs on all traded electronics/electrical goods in each bilateral relationship. c. Trade data from the following years and bilateral pairs are used: Norway - all countries (2008); Pakistan - all countries (2008); Thailand - all countries (2006); Indonesia - India, Malaysia, Mexico, Pakistan, Philippines, and Taiwan (2005); Indonesia - all other countries (2007); Mexico - Brazil, India, Indonesia, Malaysia, Pakistan, Philippines, and Taiwan (2006); Mexico - all other countries (2007); all other bilateral relationships (2007). d. An import price elasticity of -2.01 is applied here for every tariff line and bilateral trade flow. This elasticity is the simple average of all IT goods in Kee, Nicita, and Olarreaga (2004). e. GDP impacts are calculated using the dollar ratio average from table A.2. * indicates that the percentage of GDP, trade impact, or applied tariff rate for these countries is positive but less than 0.05 percent or $0.05 billion. Note: See table D.2 for product list. Calculations are made using all traded tariff lines listed in table D.2 at the HS 6-digit level. Sources: UN Comtrade Database via World Integrated Trade Solution, 2009; UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; Kee, Nicita, and Olarreaga (2004); authors’ calculations.

An additional sector initiative in ITA goods, which brings tariffs in the 22 countries down from their current level (an average of 1.1 percent) to zero, would spur substantially more trade. Trade within the 22 countries would increase by $27.9 billion from the modality and sector cuts, with an increase in Chinese imports of $8.7 billion accounting for about a third of the total increase (table 3.3). US gains would be modest, a $3.3 billion gain in exports and a $1.5 billion gain in imports. The increase in potential exports by sample countries to each other and their imports from the world from just the sector cuts on ITA goods is $22.1 billion and $23.2 billion, respectively (table 3.3). This estimation does not include the gains from modality tariff cuts. These trade gains translate into $20.8 billion of GDP gains for the 22 countries. Gains under a sector initiative in electronics/electrical goods would be still larger. Free trade in these goods would increase exports among the 22 countries and imports from the world by an additional $43.1 billion and $45.4 billion, respectively, including the increase from the modality tariff cuts (table 3.4)—these are increases of more than $14 billion each compared with an ITA-only modality and sector initiative. Among the 22 countries, Chinese imports again dominate the increase in trade. Under the sector and modality tariff cuts in electronics/electrical goods, Chinese imports would increase by an estimated $14.9 billion. Chinese exports would increase by $8.6 billion. US total trade gains would almost double those from the ITA-only modality and sector cuts: US exports in electronics and electrical goods would increase by $4.4 billion and imports by $4 billion. The estimated gains in exports among sample countries and imports from the world based on just the sector initiative in electronics/electrical goods are $33.5 billion and $35.4 billion, respectively. World export gains from the sector initiative (not including modality cuts) in electronics/ electrical goods is $49.2 billion (table 1.2). The corresponding GDP gains are $31.7 billion, which is $10.9 billion more than the ITA goods sector initiative alone (tables 3.3 and 3.4). Bilateral trade and tariff relationships under the ITA-only and electronics/electrical goods sector initiatives are detailed in appendix D.

Environmental Goods The Doha declarations call for “the reduction or, as appropriate, elimination of tariff and nontariff barriers to environmental goods and services.” Tariffs on environmental goods will be reduced to some extent under

the price elasticity used here is –2.01, while the calculations for all NAMA products used an elasticity of –1.19. Much the same justification for a larger elasticity applies to ITA as to chemicals. Also, in the full NAMA calculations we assume tariff cut flexibilities are used on some ITA products; in the sector calculation we assume no flexibilities are used.

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the NAMA formula cuts: Additional liberalization could arise from a sui generis sector initiative. To estimate this “additionality” we limit our assessment to the potential trade growth that would result from eliminating tariffs on environmental goods entering bilateral trade between the 22 countries in our study (the same countries used in the agriculture and NAMA analysis). While liberalization of nontariff barriers and services barriers to environmental trade—if pursued—would generate additional gains, we have focused our attention on the area where substantial progress seems most likely, namely merchandise trade.16 Liberalization in environmental goods is more than just a “feel-good” proposition. In 2007 total imports by the 22 countries of environmental goods were $135.6 billion or roughly 1.6 percent of all merchandise imports (table 3.5). For the United States, 1.7 percent of merchandise exports and imports are in the 45 tariff lines identified by the World Bank as environmental goods (table E.1 in appendix E).17 Considering that the United States exported and imported products in roughly 5,000 tariff lines in 2007, the large amount of trade in the few environmental tariff lines is quite exceptional (UNCTAD TRAINS Database, 2009). Negotiations on environmental goods have taken place at the tariff line level rather than the product level—i.e., for 6-digit codes rather than 8- or 10-digit codes. Under any given tariff line (6-digit codes) there could be scores of products (8- or 10-digit codes). The likely outcome in the environmental goods negotiations is that all products under an environmental tariff line will be accorded special treatment, whether or not all of them are “environment-friendly.”18 We follow this approach in our calculations. In terms of product inclusion, a recent unofficial proposal by the Japanese delegation could drastically raise the stakes for the environmental goods negotiations. The proposal seeks to include environment-friendly automobiles (notably, hybrid cars) in the negotiations (METI 2009b). Details are sketchy at this point, but depending on what types of cars are included it could vastly increase the amount of trade covered by the negotiations. We do not include environment-friendly automobiles in our calculations.

16. Kirkpatrick (2006) reviewed the environmental services negotiations and found limited progress at that time. Little new ground has been broken since 2006. 17. In 2007 US exports of environmental goods (to the 21 partner countries) were $17 billion; US environmental goods imports from the world were $33.7 billion. All US merchandise exports (to the 21 partner countries) in 2007 were $935.1 billion; total US merchandise imports were $2,017.1 billion (table 3.5). 18. Tariffs are internationally consistent only at the HS 6-digit level; “overinclusiveness”— i.e., including all products under an environmental tariff line—has been adopted to avoid contentious disagreements over product definitions. The United States supports overinclusiveness in negotiating environmental goods (Howse and van Bork 2006).

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Impact of sector initiative in environmental goods (trade in billions of US dollars; tariffs in percent) Average applied tariffb

Countrya

Initial

After modality cuts

Current tradec

After sector cuts

Exports to 2 partners

Imports from the world

Increase after modality cutsd

Total

Exports to 2 partners

1.2

0

26.4

Japan

0.3

0.2

0

United States

1.2

0.8

0

Brazil

11.7

9.8

0

0.4

2.3

China

9.0

6.0

0

18.0

18.9

India

8.5

8.2

0

1.3

5.0

6.3

*

*

*

Other 16

4.0

3.3

0

26.3

45.4

71.7

0.2

0.4

0.6

3.3

2.5

0

105.2

135.6

240.8

1.0

1.5

2.4

Countrya European Union

Exports to 2 partners 1.7

Imports from the world

Total

50.2

0.3

15.8

6.5

22.3

17.0

33.7

50.7

Total

1.6

Increase after modality and sector cutsd

23.7

Imports from the world

European Union

All 22

GRAPHICS

© Peterson Institute for International Economics | www.piie.com

98  Figuring Out the Doha Round

Table .5

0.1

0.4

0.3

*

0.3

0.1

0.3

0.4

2.7

*

0.1

0.1

36.9

0.1

0.6

0.7

Impact of sector cuts alone Exports to 2 partners

0.4

2.1

1.4

Imports from the world

Total

0.3

1.8



Japan

1.2

*

1.2

0.9

*

0.9

United States

0.7

0.9

1.6

0.6

0.6

1.2

Brazil

*

0.5

0.5

*

0.5

0.5

China

0.9

2.3

3.1

0.7

1.7

2.4

India

0.1

0.8

0.9

0.1

0.8

0.9

Other 16

0.9

2.8

3.7

0.7

2.4

3.2

All 22

5.5

7.8

13.3

4.5

6.3

10.8

(continued on next page)

74

Table 3.5

Topping up the Doha Package  99

© Peterson Institute for International Economics | www.piie.com

FIGURING OUT THE DOHA ROUND

Impact of sector initiative in environmental goods (trade in billions of US dollars; tariffs in percent) (continued)

Memorandum: GDP impact of new environmental goods tradee Countrya

Billions of dollars

Percent

Memorandum: Current total merchandise trade (billions of dollars) Countrya

Exports to 21 partners

Imports from the world

Total

European Union

0.8

*

European Union

1,049.2

1,954.0

3,003.2

Japan

0.4

*

Japan

628.0

622.2

1,250.2

United States

0.6

*

United States

935.1

2,017.1

2,952.2

Brazil

0.2

*

Brazil

135.5

120.6

256.2

China

1.1

*

China

1,097.6

956.0

2,053.6

India

0.4

*

India

104.4

218.6

323.1

Other 16

1.5

*

Other 16

2,322.2

2,419.7

4,741.9

All 22

5.0

*

All 22

6,272.0

8,308.3

14,580.3

a. The 22 countries are Argentina, Australia, Brazil, Canada, China, Colombia, the European Union, India, Indonesia, Japan, Korea, Malaysia, Mexico, Norway, Pakistan, Philippines, South Africa, Switzerland, Taiwan, Thailand, Turkey, and the United States. b. Listed tariff rates are the weighted average (weighted by bilateral imports) of the simple average of HS 6-digit applied tariffs on all traded environmental goods in each bilateral relationship. c. Trade data from the following years and bilateral pairs are used: Norway - all countries (2008); Pakistan - all countries (2008); Thailand - all countries (2006); Indonesia - India, Malaysia, Mexico, Pakistan, Philippines, and Taiwan (2005); Indonesia - all other countries (2007); Mexico - Brazil, India, Indonesia, Malaysia, Pakistan, Philippines, and Taiwan (2006); Mexico - all other countries (2007); all other bilateral relationships (2007). d. An import price elasticity of -2.10 is applied here for every tariff line and bilateral trade flow. This elasticity is the simple average of all environmental goods observations in Kee, Nicita, and Olarreaga (2004). e. GDP impacts are calculated using the dollar ratio average from table A.2. * indicates that the percentage of GDP or trade impact for these countries is positive but less than 0.05 percent or $0.05 billion. Note: See table E.1 for product list. Calculations are made using all traded tariff lines listed in table E.1 at the HS 6-digit level. Sources: UN Comtrade Database via World Integrated Trade Solution, 2009; UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; Kee, Nicita, and Olarreaga (2004); authors’ calculations.

Trade and GDP Gains We first estimate the impact of NAMA modality tariff cuts. Swiss formulas with a coefficient of 20 for developing countries and 8 for developed countries are applied to the simple average of 2008 bound product-level tariffs at the tariff line level.19 If the resulting new bound tariff is lower than the 2008 applied tariff, the consequence is a tariff reduction—i.e., new market access. To calculate the impact of the tariff cuts—tariff cuts being measured as applied tariffs before the modality reductions minus the applied tariffs after the reductions—we multiply the tariff cut expressed in percentage points by the same price elasticity of imports, namely –2.10, for every bilateral trade relationship.20 One minus the resulting figure (expressed as a percent) is then multiplied by current trade to estimate new trade after the tariff cut.21 Actual tariff cuts in environmental goods from the modality discussions are minimal. For example, for the United States as an exporter, EU tariffs on environmental goods imports drop from 2.5 to 1.8 percent as a result of modality cuts, and Chinese tariffs drop from 9.3 to 6.1 percent (table E.2). The modest tariff cuts produce modest trade gains; environmental goods exports among the sample countries and imports from the world will increase by only $1 billion and $1.5 billion, respectively, after the modality tariff cuts (table 3.5). The modality cuts will increase US exports (to the 21 other countries) by $0.1 billion and US imports (from the world) by $0.3 billion.22 Under a sector initiative in environmental goods, tariffs would drop to zero, and the gains from such an initiative would be much larger than the modality tariff cuts. We estimate the impact of complete tariff elimination on environmental goods for the 22 countries. The calculation procedure is identical to that for the modality tariff cuts, but with much larger tariff cuts. The result of a sector initiative, including the modality cuts, would be an additional $7.8 billion increase in environmental goods imports from

19. Under the Swiss formula, a coefficient of 20 means that the maximum permitted tariff, after the formula cut, is 20 percent. Likewise, a coefficient of 8 means that the maximum permitted tariff, after the formula cut, is 8 percent. 20. This elasticity is calculated as the simple average of all environmental goods observations in Kee, Nicita, and Olarreaga (2004). See table E.1 for a list of environmental goods. 21. For example, if imports of environmental goods totaled $100 in the presence of a 10 percent tariff, and then the tariff is removed, new trade would be: $100 * (1 – (10 * –2.10) /100) = $121. 22. The modality impacts described here do not correspond with the impacts for all NAMA products because of different elasticities and the use of tariff cut flexibilities. Specifically, the price elasticity used here is –2.10, while the calculations for all NAMA products used an elasticity of –1.19. Also, in the full NAMA calculations we assume that tariff cut flexibilities are used on some environmental products; in the sector calculation we assume no flexibilities are used.

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the world (table 3.5). The increase in exports of environmental goods to the 22 countries could reach $5.5 billion from the modality and sector tariff cuts combined. A trade increase of this size would increase total world trade by roughly one-tenth of 1 percent (0.1 percent). Together, the sector and modality tariff cuts would increase US exports (to the 21 other countries) by $0.7 billion and US imports (from the world) by $0.9 billion; these figures amount to a 4.1 and 2.7 percent increase in exports and imports, respectively, above current levels of US environmental goods trade. Trade gains associated with free trade in environmental goods (not including the modality cuts) would yield world exports of $5.9 billion (table 1.2) and GDP gains of $5.0 billion for the group of 22 countries (table 3.5). Bilateral trade and tariff relationships are detailed in appendix E.

Trade Facilitation Trade facilitation has become one of the more successful subjects of negotiation in the Round. To date, WTO members have put forward over 70 new proposals dealing with trade facilitation (see table F.1 in appendix F). A representative from the Global Express Association—an organization representing private express delivery companies (notably, DHL, FedEx, and UPS)—partially attributes this success to “a growing recognition on the part of developing countries that Trade Facilitation is not a zero sum proposition” (Simpson 2009). Negotiations have been so positive that some WTO members—including the European Union—have expressed interest in a separate plurilateral agreement on trade facilitation, if the Doha Round ultimately fails (Simpson 2009). Trade facilitation negotiations have a narrow scope. Only three GATT articles are affected: Article V on Freedom of Transit, which calls for goods to transit via the most convenient routes, and for reasonable transit charges, with no distinction between the vessels or contracting parties involved; Article VIII on Fees and Formalities connected with Importation and Exportation, which limits border fees and charges as well as penalties for minor breaches of customs regulations or procedural requirements; and Article X on Publication and Administration of Trade Regulations, which requires transparent trade regulations and prompt publication of laws, regulations, judicial decisions, and administrative rulings affecting imports and exports.23 These articles, especially Article VIII, cover a wide range of topics that may constrict trade but are not tariffs, quotas, or other formal barriers. Proposals for reform range from the use of international standards on customs documents, to limits on import and export fees, to the online publication of customs procedures and policies (table F.1). 23. World Trade Organization, “WTO Analytical Index: Guide to WTO Law and Practice— General Agreement on Tariffs and Trade 1994,” available at www.wto.org.

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Most consumers in the developed world regard trade facilitation and customs procedures as third-tier issues. But even in the United States, which has some of the best practices in the world according to a recent World Bank study, trade facilitation costs can be significant. The cost of exporting a standard cargo container from the United States, with contents valued at $20,000, is about $990, almost 5 percent of the average shipment value. The cost of importing a standard container into the United States is higher, around $1,245, about 6 percent of the average shipment value (World Bank 2009). These costs are official charges (not including any bribes) incurred from completing all necessary documents, plus inland transportation (usually waterways), customs clearance and inspection, and port handling. The additional 5 to 6 percent ad valorem costs exceed the average ad valorem tariffs that US exports and imports face, but they tell only half the trade facilitation story. US exports face an additional cost when they arrive in the destination country, and US imports face costs in the originating country. While additional trade costs can never go to zero—even the top performing country, Singapore, adds costs of $456 and $439, respectively, to each container exported and imported—the possible gains from improved trade facilitation are clearly large (World Bank 2009). A number of studies take on the heroic task of estimating the potential gains for trade in manufactured goods from improved trade facilitation. Among them, OECD (2003b) evaluates direct and indirect total trade costs to measure the effects of trade facilitation. Using a computable general equilibrium (CGE) model, the paper uses an “iceberg” representation: The longer goods are in transit, the larger the fraction of value that “melts away.” Taking the analysis a step further, the OECD differentiated between sectors and traders: Agrifood products face a faster decay time (thus a higher total trade cost) when in transit compared with nonfood merchandise; small and medium-sized enterprises often face higher trade costs because of infrequent transactions and handicaps in taking advantage of “simplified procedures” that are available to bigger enterprises. Iwanow and Kirkpatrick (2009) estimated the impact of trade facilitation in sub-Saharan Africa, using a gravity model that is fitted with policy variables. Decreux and Fontagné (2009) measured trade facilitation as time to import and time to export. While these papers have been very useful in promoting trade facilitation as a worthwhile topic on the negotiating agenda, we found Wilson, Mann, and Otsuki (2005) to be best suited for estimating potential gains, largely because these authors expressed their results in a manner that maps directly onto the trade facilitation agenda of the Doha Round. (We compare this study with OECD 2003b in appendix F.) Wilson, Mann, and Otsuki (2005) used a gravity model to estimate trade facilitation gains among a group of 75 countries. They examined the impact of a modestly optimistic scenario for improved trade facilitation: In their scenario, any country whose trade facilitation policies fall below 102  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

the global average in one of four areas would (following successful negotiations) be brought up halfway to the global average in that area.24 The four trade facilitation areas covered by Wilson, Mann, and Otsuki (2005) are port efficiency, customs environment, own regulatory environment, and service-sector infrastructure (effective use of information technology). They argue that port efficiency, which is measured by the efficiency of airport and seaport facilities and inland waterways, is related to GATT Article V; customs environment, measured by hidden import barriers and bribery, is relevant to GATT Article VIII; regulatory environment, measured by transparency of government policies and corruption control, is relevant to GATT Article X; and services infrastructure, which is measured by the efficacy of internet access, is related broadly to trade in services within the trade facilitation agenda. The simulation results of Wilson, Mann, and Otsuki (2005) are shown in table F.2 of appendix F. Their estimates of increased trade due to improvements in trade facilitation are very large for some regions. For example, exports might rise as much as 40 percent for South Asia. As a starting point, we attribute these estimated trade effects to all countries that belong to the region and are in our sample. By this approach, we are explicitly assuming that the sample country in question and all its trading partners undertake the specified magnitude of reforms—and lift themselves halfway to the global average (if the starting point was below the global average). However, in this exercise we omit port efficiency and service infrastructure from our trade facilitation calculations, for two reasons. First, since our study is concerned with the Doha Round negotiations, we have decided to limit our trade facilitation measure to topics that fall squarely within the cited GATT Articles. This approach eliminates reforms to services infrastructure used by ports.25 Second, port efficiency may be partly or largely covered by our calculations (previously surveyed) for the services sector. We did not want to double-count or blur the boundary between broad services reforms and trade facilitation; accordingly, port efficiency was excluded from the present calculations.26

24. For example, if the global average were an index score of 50 and a country had a score of 20, that country would be brought up to a score of 35 for the purpose of the simulation. 25. Improved services infrastructure could raise imports from the world by the 22 countries by $196.8 billion, mostly additional imports by the United States, the European Union, and China. Exports from the group of 22 countries could rise by $118.1 billion (table F.4). These are very large sums. However, the trade facilitation negotiations do not appear to cover services infrastructure; reforms in services for handling cargo will be addressed, if at all, in the services negotiations. 26. Port efficiency reforms could boost imports from the world by the 22 countries by $133 billion and increase exports of the 22 countries by $79.1 billion (table F.4).

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Trade and GDP Gains Table F.3 in appendix F shows our calculations of potential trade gains for the 22 countries in our sample. To be complete, we show both a “broad definition”—covering everything in the Wilson, Mann, and Otsuki analysis—and a “narrow definition,” omitting reforms to services infrastructure used by ports and port efficiency (table F.4). With successful coverage of trade facilitation, imports from the world would increase by $138.5 billion using the “narrow definition” and $468.2 billion using the “broad definition.” Exports to the group of 22 countries would rise by $86.8 billion using the “narrow definition” and $284 billion using the “broad definition.” The positive GDP gains for the 22 countries are $103.6 billion for the “narrow definition,” amounting to a 0.2 percent increase. This translates into a global total of $117.8 billion in GDP gains. The “broad definition” estimates an increase of $346 billion of GDP gains, a 0.7 percent increase, which in turn is a global total of $393.2 billion. Clearly, trade facilitation is big stuff. But even the narrow definition numbers should be taken with a tablespoon of salt, since the underlying data and scenarios are more speculative than calculations in other sections of this study. Even if the trade facilitation negotiations are highly successful, full implementation will take many years. However, the broad thrust should not be dismissed. Trade facilitation is key to boosting global commerce, and gains would be very large, especially for developing countries.

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Conclusion

4

The Doha Round is now older than its immediate predecessor, the Uruguay Round, which lasted what seemed at the time a marathon (7 years, 7 months) from inception to signing. WTO negotiators have missed every deadline set by ministers and summiteers; this record of futility has led some observers to propose dropping the whole venture. We believe that would be a big mistake. Resurrecting a new WTO negotiation with a different set of negotiating objectives would be difficult to sell to most WTO members; instead, the death of Doha would likely propel a new wave of preferential trade pacts and severely fracture the multilateral trading system. Our analysis shows that the Doha Round can still be successfully concluded with a concerted push by the major trading nations. Contrary to the Doha doomsayers, the potential gains from proposals now on the table are significant, albeit not sufficient to close a deal. With additional effort, particularly by the G-20 members in the services negotiations, WTO countries can put together a Doha package that is both ambitious and balanced between the interests of developed and developing countries. This study has examined gains from different topics that are at varying levels of completeness and certainty in the Doha Round talks. Tariff and subsidy cuts in agriculture and NAMA are written into the current negotiating modalities; gains in these areas are thus the foundation of a Doha Round liberalization package. Gains from additional sector negotiations in chemicals, electronics/electrical goods, and environmental goods are more problematic. Agreements in these sectors will likely emerge in some form; however, country participation, product coverage, and depth of liberalization in each sector are uncertain. We assume, for the purpose of our calculations, optimistic but plausible scenarios for each of the sectors. Services negotiations, perhaps the lynchpin of the Round, currently 105 © Peterson Institute for International Economics | www.piie.com

do not establish new market access. Our calculations of potential gains in services are thus based on a dose of wishful thinking, recognizing that, unless the current offers for liberalizing services barriers are improved, the Doha Round will probably not reach a successful conclusion. Trade facilitation negotiations have been among the most productive in the Round. Our estimated gains from improved trade facilitation, however, are only partially tied to the negotiations. Most of the gains ultimately depend on faithful implementation of reform, so our calculations could just as easily underestimate as overestimate the potential benefits. For agricultural products, tariff cuts prescribed by the current negotiating modalities create new market access. US and EU applied tariffs would be almost halved (1.3 percent down to 0.7 percent for the United States and 6 percent down to 3.4 percent for the European Union; table 2.1). Developing-country applied tariffs decline slightly—which is actually a significant accomplishment given the high levels of “water” between bound and applied agricultural tariffs in most developing countries. Agricultural tariff cuts contemplated in the Round, along with new caps on tariff rate quotas, export subsidies, and domestic subsidies, would increase world exports by $17.1 billion (this figure is scaled up from our sample of 22 countries; see table 1.2). On the whole, tariffs on NAMA products are low. Pre-Doha average applied tariffs in the European Union, Japan, and the United States are all less than 2 percent (table 2.4). Average applied tariffs are less than 8 percent in Brazil, India, and China. Low initial applied tariffs make the task of creating new market access in NAMA more challenging—the average applied tariff cut in our sample is only 0.6 percentage points (from an average tariff of 2.4 percent to 1.8 percent). Since NAMA trade is so vast, however, trade gains are also large, despite small tariff cuts. In total, we estimate annual scaled-up world exports will increase by $50.6 billion from NAMA formula cuts (table 1.2). Moreover, any reduction in bound tariff levels, even if bound rates remain above applied rates, reduces the risk of backsliding into protectionist policies. The potential trade and GDP gains from NAMA sector agreements— liberalization that would go above and beyond NAMA formula cuts— could be much greater. We estimate the impact of eliminating tariffs in electronics/electrical goods and environmental goods across the 22 countries covered in this study. We also estimate the impact of freer trade (i.e., substantial tariff cuts and tariff harmonization) in chemicals across the same countries. A sector agreement in chemicals would increase scaled-up world exports by $15.8 billion (table 1.2). An electronics/electrical goods sector agreement would boost world exports by $49.2 billion and an environmental goods sector agreement by $5.9 billion. All told, we estimate the three sector agreements would increase annual world exports by an additional $70.9 billion above the trade spurred by the formula cuts. In services, current proposals are deficient and unlikely to promote trade 106  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

and investment (Gootiiz and Mattoo 2009). To be sure, the proposals are a small step forward from the Uruguay Round commitments, but services offers need to be substantially improved to generate real gains. The July 2008 “signaling exercise” gave some indication that countries would be willing to liberalize further, but substantive new offers have not yet been submitted. We estimate that the possible gains from meaningful liberalization of services barriers are large. A 10 percent reduction in the tariff equivalent of applied services barriers would increase annual scaled-up world exports by an estimated $55 billion (table 1.2). Trade facilitation negotiations have been championed as one of the most successful subjects in the Doha Round. Over 70 provisions on topics ranging from publication standards to new restrictions on fees connected to importation and exportation have been put forward. These negotiations might go forward even if the Doha Round stalls. Quantifying the possible gains from each of the roughly 70 proposals is difficult if not impossible, so we turn to an estimate of potential gains from a modestly optimistic trade facilitation improvement scenario by Wilson, Mann, and Otsuki (2005). Drawing from the work of these authors, we use conservative coefficients to calculate that exports by the 22 sample countries to each other could increase by $86.8 billion if underperforming countries are brought up halfway to the global average in selected areas of trade facilitation (our “narrow definition” of reform). These trade gains would increase annual global GDP gains by roughly $117.8 billion annually (table 1.3). In general, our findings are broadly consistent with results from other notable studies. For agriculture and NAMA, Yvan Decreux and Lionel Fontagné (2009) estimate a $57 billion boost to world GDP in 2025, while Kym Anderson, Will Martin, and Dominique van der Mensbrugghe (2006) calculate a $96 billion global gain by 2015.1 Our $63 billion global GDP gain is in the same ballpark. Decreux and Fontagné (2009) also estimate a $68 billion gain in world GDP for services while our approximation is around $45.5 billion (see table 1.3). Appendix G outlines the recent work of David Laborde, Martin, and van der Mensbrugghe (2009a, 2009b) that sheds new light on measuring trade distortions and compares our results with their estimates. Broadly speaking, our calculations are conservative compared with their estimates. Moreover, our findings contradict the critics who argue that the world should trash the Doha Round because the payoff is too small. The potential gains are significant, but the current Doha package is neither ambitious enough nor balanced enough to garner political support in major economies. This is why, for example, US and EU officials have had so much difficulty securing private-sector support for the prospective deal. The services industries—almost ignored for the first eight years of talks— 1. The $96 billion global gain calculation from Anderson, Martin, and van der Mensbrugghe (2006a) is based on scenario 7 in their paper.

CONCLUSION  107 © Peterson Institute for International Economics | www.piie.com

are openly skeptical. Accelerating the request/offer negotiations in services, at least among the G-20 countries, is a prerequisite in our view for progress on the Doha agenda. The challenge today is to break the impasse in Geneva and translate the lofty G-20 mandate to conclude the Doha Round into concrete, new offers by the G-20 countries to reform their trade-distorting practices. For the United States, this means above all tightening its discipline on farm subsidies, bringing its cotton programs into compliance with WTO obligations, and topping up its offer on duty-free, quota-free (DFQF) treatment for the least developed countries. Similarly, the European Union will have to offer tighter discipline on farm subsidies and deeper cuts in farm tariffs, as well as broader commitments to reform trade and investment in services. At the same time, major developing countries like Brazil, India, and China will have to up the ante in terms of offers on liberalizing NAMA sectors, services, and trade facilitation. In addition, they will have to place limits on their recourse to special agricultural safeguards under the Special Safeguard Mechanism yet preserve the legitimate policy space for supporting subsistence farmers. Because its rates are already low, China can afford to substantially cut many of its NAMA applied tariffs without harming its competitive position. Brazil and India also can augment their NAMA tariff offers to eliminate “water” in their bindings and create new trade opportunities. If our recommendations are followed, the Doha Round package will be ambitious and well balanced for all participants and could yield potential annual world GDP gains of between $164.9 billion and $282.7 billion. Importantly, the overall package would benefit the developing countries more than the developed countries in terms of percentage GDP gains (1.3 percent versus 0.3 percent, as shown in table 1.3). “Topping up” along these lines would generate more than four times more trade and GDP gains than agriculture and NAMA formula cuts alone. Note, however, that the larger gain reported in this study depends on negotiating ambition rising well above levels observed to date. But even if only half the sector gains we contemplate were achieved, the outcome would be substantial. While this figure represents optimistic thinking on our part, it is not a “pie in the sky” number. It may take a decade to reach gains of this magnitude once negotiations are concluded, because concessions will be implemented gradually and trade facilitation reforms will take time to become routine. But the scenarios used in our calculations are straightforward. Agriculture and NAMA modality agreements can be translated into binding commitments and topped up with additional tariff cuts resulting from sector negotiations. New rules on trade facilitation can set the stage for reform on the ground. Reducing applied services barriers by 10 percent will take long hours at the negotiating table but can be achieved with the right combination of “sticks and carrots.” All told, the prize is well worth a major push by world leaders. 108  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Appendix A Methodology for Reciprocity Measure and GDP Gains

The reciprocity measure is calculated using the change in revenue from tariff cuts and the revenue equivalent of concessions on tariff rate quotas, domestic support, and export subsidies. We then multiply tariff equivalents for all concessions by 2006 trade flows to “size up” the impact on the reciprocity measure. The general idea is that every billion dollars of reciprocity measure concessions has approximately the same political cost to the conceding country and generates approximately the same political gain to the receiving country (see boxes 2.1 and 2.2 for more details). The political cost side of the argument seems reasonable if each billion dollars of concessions corresponds to about the same amount of economic restructuring forced by trade liberalization. An ingenious survey by Valentin Zahrnt (2009) indicates that officials from developed and developing countries alike are highly concerned about the restructuring consequences of trade liberalization. The political gain side of the argument depends on a rough correspondence between the extent of new market access and each billion dollars of concessions by partner countries. Of course, this all is very rough political arithmetic, but trade negotiators who proclaim the virtue of reciprocity are seldom more specific. A convenient way to summarize GDP gains that arise through multiple channels that are opened by trade expansion is through the use of coefficients that relate the growth in GDP to growth in two-way trade. We call these GDP coefficients “growth ratios,” and they can be calculated in at least two ways (yielding similar results): n

as the ratio between dollar GDP gains and dollar two-way trade gains (dollar ratios). 109 © Peterson Institute for International Economics | www.piie.com

n

as the ratio between the percentage GDP gains and the percentage increase in trade openness (openness ratios).1

Note that two-way trade figures (rather than just exports or just imports) are used in both growth ratios, on the well-established proposition that both export and import gains serve to increase GDP.2 Table A.1 presents the underlying data for estimating growth ratios; the data are drawn from regression models and computable general equilibrium (CGE) models constructed by different scholars. Table A.2 presents the growth ratios calculated from the data in table A.1. The two-way trade figures used in several models are limited to merchandise trade, but the more ambitious studies also include services trade (a realm where the GDP payoff is likely to be high). As can be seen from table A.2, a very large gap separates high and low estimates of growth ratios. This gap corresponds to the difference in professional opinion between economists who believe that expanded trade makes a major contribution to GDP growth and economists who believe that expanded trade is a “good thing” but not necessarily a “big thing.” We are squarely in the camp of economists who believe that expanded trade is indeed a “big thing,” in the sense that it significantly fuels the growth of national income. Rising trade to GDP ratios have, in our opinion, served as major drivers of global prosperity since the Second World War. Closely related drivers are rising foreign direct investment (FDI) to GDP ratios.3 Of course there are other drivers of economic growth, such as capital formation, education, and good governance, but we do not agree with those who assign a modest role to international trade and investment flows. The smaller growth ratios recorded in table A.2 are derived from estimates of GDP gains that are generated by “plain vanilla” CGE models. Most CGE models start with the GTAP framework (Global Trade Analysis Project) of trade and production, created by Professor Thomas Hertel and his colleagues at Purdue University. In the “plain vanilla” GTAP framework, GDP gains largely correspond to the reallocation of productive resources from sectors of comparative disadvantage to sectors of comparative advantage. Measured in this way, the gains from expanded trade reflect the opportunity cost framework expounded by Gottfried von 1. In this formulation, the percentage increase in trade openness is calculated as the percentage change between the initial extent of trade openness and the postliberalization extent of trade openness, both expressed as ratios of two-way trade to GDP. Openness ratios can also be expressed as the ratio of the percentage GDP gains and percentage two-way trade gains. 2. See Bradford, Grieco, and Hufbauer (2005) for an exposition of the multiple channels by which export and import expansion enlarges GDP. 3. Rising FDI to GDP ratios are both a cause and an effect of rising trade to GDP ratios.

110  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Haberler in 1937 and the welfare triangles portrayed in contemporary textbooks.4 Valuable as it is, this framework misses several big chunks of the trade story: gains from curtailing the power of local monopolies; from greater product variety both in exports and imports; from higher productivity in local firms that are forced to compete with imports; and from economies of scale and scope realized by both exporting firms and exporting industries. To capture the true role of international trade expansion, we favor the larger ratios reported in table A.2. These ratios are found in regression models that explain economic growth and in CGE models that add structural changes to the “plain vanilla” comparative advantage account. Two examples are the CGE models designed by Brown, Kiyota, and Stern (2005) and Decreux and Fontagné (2008). It is worth noting that growth ratios estimated by CGE models for developed countries as a group often exceed those for developing countries as a group. We do not give much weight to this observation since the biggest economic success stories over the past 60 years are found among developing countries: Japan (in the 1950s and 1960s), the Asian tigers (in the 1960s, 1970s, and 1980s), Chile, and China (in the 1980s, 1990s, and 2000s). Moreover, after surveying several regression models, William Cline (2004) concluded that the relevant openness ratio for developing countries might be as large as 0.50, far larger than for developed countries. Nevertheless, the wide variation in estimated national growth ratios in individual CGE models inspires caution on our part. For the calculations reported in this study, we use a single growth ratio for the world, recognizing that ratios may differ widely and in unknown ways from country to country. Hence any calculation of GDP gains for individual countries must contain a big dose of guesswork. Table 1.3 uses a single growth ratio to translate trade gains into GDP gains for the countries covered in this study. However, econometric techniques are not well enough advanced for us to be confident of GDP growth outcomes for individual countries and certainly not for the distribution of gains within countries. We therefore place less weight on the country figures. We are more confident about the gains from trade liberalization to the entire world. To ensure that our calculations are simple and easily understood, we use a dollar ratio to estimate the world GDP gains that might be generated by a successful Doha Round.5 The dollar ratio we use is the simple average 4. See von Haberler (1937, chapter 12). For a modern exposition, see Krugman and Obstfeld (2003, 218–21). 5. The dollar ratio and the openness ratio both yield essentially the same GDP increase from the trade increase. The difference is that the dollar ratio gives the dollar amount of GDP increase while the openness ratio gives the percentage change in GDP. The dollar ratio is the ratio of dollar GDP growth to dollar trade growth from liberalization. The numbers for trade and GDP changes to calculate both ratios are taken from regression and CGE models.

Appendix A  111 © Peterson Institute for International Economics | www.piie.com

of all the dollar ratio figures reported in table A.2, namely 0.46.6 This ratio suggests that, over the long term, a $10 billion growth in two-way trade in goods and services will raise world GDP by $4.6 billion. Is this relationship plausible? We think so. Total world two-way trade in goods and services increased by $1 trillion between 2007 and 2008.7 We think it is plausible that global commerce made a contribution of $460 billion (0.46 times $1 trillion) to world GDP in 2008 (which was recorded at $60 trillion), above what might have been achieved in a world of autarchic nations. Based on this judgment, we think it is plausible that the agriculture and NAMA offers currently on the table would eventually generate annual world GDP gains of $63 billion, that a 10 percent reduction in services barriers could yield another $45.5 billion, and that free trade in the designated sectors could add as much as another $56.4 billion. A robust agreement on trade facilitation, if properly implemented, could yield another $117.8 billion in annual global gains (table 1.3).

Multiplying the dollar ratio by the estimated dollar trade increases from Doha Round liberalizations yields the calculated GDP increase. Here is an example based on India’s potential gains from liberalization in agriculture and NAMA. The estimated trade increase in agriculture and NAMA for India is $2.36 billion. The resulting GDP increase for India applying the dollar ratio of 0.46 is $1.1 billion (0.46*2.36 billion = $1.1 billion). We can walk through the same exercise using the openness ratio. Recall that the openness ratio is the percentage increase in GDP divided by the percentage increase in trade. Multiplying the openness ratio by the estimated percentage increase in trade from Doha Round liberalizations yields the calculated percentage increase in GDP. The estimated trade percentage increase for India is 0.84 percent. The resulting GDP percentage increase for India, applying the openness ratio of 0.16, is 0.13 percent (0.16*0.84 percent = 0.13 percent). The GDP dollar increase from this percentage increase is found by multiplying India’s 2007 GDP at the market exchange rate by the percentage change, giving $1.5 billion (1,136.9 billion*0.13 percent = $1.5 billion). As can be seen, both the dollar ratio and the openness ratio yield similar results. 6. This ratio can be compared with the US dollar ratio of 0.28 and the EU dollar ratio of 1.18 implied by a recent ECORYS Nederland (2009) study, which analyzed nontariff measures in EU-US trade and investment. 7. World GDP data (at market exchange rates) are from the International Monetary Fund (IMF) World Economic Outlook, October 2009. World two-way trade in goods and services data, intra–European Union trade, are from the United Nations (UN) Commodity Trade Statistics database and the UN Service Trade Statistics database. Intra–European Union trade data are from the World Trade Organization (WTO).

112  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Table A.1 Trade growth, GDP growth, and openness ratio comparisons from regression and computable general equilibrium (CGE) models (billions of dollars or percent)

Appendix GRAPHICS A  113 75

© Peterson Institute for International Economics | www.piie.com

Study

Covered trade (base year)

Model type

Initial two-way trade

Dollar two-way trade growth

Percent trade growth

Initial GDP

Dollar GDP growth

Percent GDP growth

Initial trade openness

New trade openness

Trade openness growth

OECD (2003a)

Developed countries (2000)

Regression

15,051

1,505

10.0

36,163

723

2.0

41.6

45.8

10.0

Cline (2004)

Various developing countries

Regression

18,267

1,827

10.0

39,850

1,992

5.0

45.8

50.4

10.0

Freund and Bolaky (2008)

Global economic performance (2000)

Regression

15,120

1,512

10.0

31,853

1,134

3.6

47.5

52.2

10.0

Anderson, Martin, and van der Mensbrugghe (2006)

Global liberalization (2008)

CGE

19,625

384

2.0

42,344

51

0.1

46.3

47.3

2.0

Brown, Kiyota, and Stern (2005)

Free Trade Area of the Americas (FTAA) (1997)

CGE

6,780

120

1.8

35,094

110

0.3

19.3

19.7

1.8

Brown, Deardorff, and Stern (2001)

Uruguay Round (1995)

CGE

6,552

157

2.4

33,997

75

0.2

19.3

19.7

2.4

Decreux and Fontagné (2009)

Goods, services, and trade facilitation (2020)

CGE

15,986

452

2.8

69,674

165

0.2

22.9

23.6

2.8

Decreux and Fontagné (2008)

Goods and services (2025)

CGE

15,987

73

0.5

47,502

70

0.1

33.7

33.8

0.5

Francois, van Meijl, and van Tongeren (2005)

Doha Round (2001)

CGE

12,181

1,376

11.3

31,744

155

0.5

38.4

42.7

11.3

Gilbert (2009)

Uruguay Round (2004)

CGE

20,690

1,275

6.2

41,728

74

0.2

49.6

52.6

6.2

(continued on next page)

© Peterson Institute for International Economics | www.piie.com

76 114 FIGURING Figuring OUT Out THE the DOHA Doha ROUND Round

Table A.1 Trade growth, GDP growth, and openness ratio comparisons from regression and computable general equilibrium (CGE) models (billions of dollars or percent) (continued)

Study

Covered trade (base year)

Model type

Initial two-way trade

Dollar two-way trade growth

Percent trade growth

Initial GDP

Dollar GDP growth

Percent GDP growth

Initial trade openness

New trade openness

Trade openness growth

Gilbert (2009)

Transportation costs (2004)

CGE

20,574

349

1.7

41,728

134

0.3

49.3

50.1

1.7

Scollay and Gilbert (2001)

APEC liberalization (1995)

CGE

3,563

1,102

30.9

15,955

129

0.8

22.3

29.2

30.9

Lodefalk and Kinnman (2006)

Doha Round (2001)

CGE

14,488

988

6.8

32,926

117

0.4

44.0

47.0

7.0

APEC = Asia Pacific Economic Cooperation forum Notes: GDP growth is measured as equivalent variation in Gilbert (2009) and as welfare gains in Brown, Deardorff, and Stern (2001) and Brown, Kiyota, and Stern (2005). For Freund and Bolaky (2008), trade data and GDP data come from the World Bank, World Development Indicators, 2009. For Anderson, Martin, and van der Mensbrugghe (2006), initial trade data come from UN Comtrade database, 2009; 2008 data used, or 2007 when 2008 data are not available. GDP data come from International Monetary Fund (IMF), World Economic Outlook, 2009; 2008 data used. For Brown, Kiyota, and Stern (2005) calculations, initial trade data come from UN Comtrade Database, 2009; 1997 data used. For Brown, Deardorff, and Stern (2001) calculations, initial trade data come from UN Comtrade Database, 2009; 1995 data used. For Francois, van Meijl, and van Tongeren (2005) calculations, country groups are not completely distinct. For example, Turkey is considered developed for trade growth and developing for GDP growth. For Gilbert (2009), covering Uruguay Round trade, the method involved backcasting to Uruguay Round bound rates for bilateral tariffs between the United States and its major partners. Initial GDP data for 2004 were taken from IMF, World Economic Outlook, April 2009. For Gilbert (2009), covering transportation costs, the method involved backcasting to 1980 transportation costs for bilateral costs between the United States and its major partners. Initial GDP data from 2004 were taken from IMF, World Economic Outlook, 2009. Scollay and Gilbert (2001) calculations used initial trade data from IMF, Direction of Trade Statistics, 2009; 1998 data were used. Initial GDP data were from IMF, World Economic Outlook, 2009; 1998 data were used. Lodefalk and Kinnmann (2006) provided data for the growth in openness ratios and GDP. Other data were collected by the authors of this policy analysis. Sources: In addition to the studies in the table, UN Comtrade Database, 2009, via World Integrated Trade Solution; IMF, World Economic Outlook, April 2009, www.imf.org.

Table A.2

Alternative ratios of GDP growth and trade growth from regression and computable general equilibrium (CGE) models Covered trade (base year)

Model type

Dollar ratio

Openness ratio

Developed countries (2000)

Regression

0.48

0.20

Cline (2004)

Various developing countries

Regression

1.09

0.50

Freund and Bolaky (2008)

Global economic performance (2000)

Regression

0.70

0.36

Anderson, Martin, and van der Mensbrugghe (2006)

Global liberalization (2008)

CGE

0.13

0.06

Brown, Kiyota, and Stern (2005)

Free Trade Area of the Americas (FTAA) (1997)

CGE

0.91

0.18

Brown, Deardorff, and Stern (2001)

Uruguay Round (1995)

CGE

0.48

0.09

Decreux and Fontagné (2009)

Goods, services, and trade facilitation (2020)

CGE

0.37

0.08

Decreux and Fontagné (2008)

Goods and services (2025)

CGE

0.96

0.32

Francois, van Meijl, and van Tongeren (2005)

Doha Round (2001)

CGE

0.11

0.04

Gilbert (2009)

Uruguay Round (2004)

CGE

0.06

0.03

Gilbert (2009)

Transportation costs (2004)

CGE

0.39

0.19

Scollay and Gilbert (2001)

APEC liberalization (1995)

CGE

0.12

0.03

Lodefalk and Kinnman (2006)

Doha Round (2001)

CGE

0.12

0.06

0.46

0.16

Simple average

Appendix GRAPHICS A  115 77

© Peterson Institute for International Economics | www.piie.com

Study OECD (2003a)

APEC = Asia Pacific Economic Cooperation forum Notes: The dollar ratio is the ratio of the dollar increase in GDP over the dollar increase in two-way trade. As an example, the dollar ratio in Decreux and Fontagné (2009), from their simulation of a liberalization scenario in goods and services trade as well as trade facilitation improvement, is 0.37. This number is the ratio between the dollar GDP growth in this scenario, $165 billion, and the related two-way trade growth, $452 billion (for these numbers, see table A.1). The openness ratio is the ratio of the percentage increase in GDP over the percentage increase in two-way trade. As an example, the openness ratio in Decreux and Fontagné (2009), from their simulation of a liberalization scenario in goods and services trade as well as trade facilitation improvement, is 0.08. This number is the ratio between the GDP percentage growth from this scenario, 0.2 percent, and the related two-way trade percentage growth, 2.8 percent (for these numbers, see table A.1). For more detailed explanations regarding data and calculations, see table A.1. Sources: In addition to the studies in the table, UN Comtrade Database, 2009,via World Integrated Trade Solution; IMF, World Economic Outlook, April 2009, www.imf.org.

© Peterson Institute for International Economics | www.piie.com

Appendix B Services

Services trade barriers do not take the familiar form of ad valorem tariffs. The “products” provided by the services sector are typically intangible, nonstorable, differentiated, and sometimes involve a high degree of interaction between buyers and sellers. Trade barriers range from outright bans, quotas, standards, licenses, buy-national procurement, and discriminatory access to distribution networks (Francois, Hoekman, and Woerz 2007). We have wrestled with the difficult task of quantifying potential trade gains from liberalizing barriers that limit imports of services. The academic literature reports no agreed method for calculating the tariff equivalent of assorted regulatory impediments. Bernard Hoekman (2000) outlined two widely used estimation methods. The first approach is to fit a gravity model to trade and foreign direct investment (FDI) flows to construct national measures of “revealed openness.” Joseph Francois and Hoekman (1999) were the first to apply this approach to services trade between the United States and its partners. The second approach is to construct openness indicators for modes of supply, especially FDI, using qualitative assessments of known policies that increase the costs of entry and/or the costs of operation, post entry. These existing policies are each assigned a weight, based on interviews with the private sector, and summed to obtain an overall restrictiveness index (Hardin and Holmes 1997). Since 2000, other estimates of services trade tariff barriers have appeared. Francois and Hoekman (2009) compiled a list of the price/cost impact estimates of various services policies from other studies. We have chosen to focus on seven papers from the published and unpublished literature: four recent papers that report tariff equivalent guesstimates 117 © Peterson Institute for International Economics | www.piie.com

derived from gravity model calculations and three others that use coded quantitative scores. Ben Shepherd and Sebastien Miroudot (2009) expand on Novy (2009) to derive micro-based measures of aggregate bilateral trade costs. Although trade costs are expressed as ad valorem tariff equivalents, in fact the reported costs reflect not only regulatory barriers that raise the cost of doing business but also “natural” barriers such as geographic, cultural, legal, and linguistic differences. Typically, the combination of regulatory and natural barriers exceeds 100 percent ad valorem tariff equivalent. Shepherd and Miroudot (2009) emphasize that trade costs measured this way can never be reduced to zero owing to the durability of natural barriers. Francois, Hoekman, and Julia Woerz (2007) develop a two-stage estimator suitable for analyzing balance-of-payments data on services trade. In the first stage they regress services imports on gravity model variables: GDP per capita, population, and distance. In the second stage they regress the residuals from the first stage on individual country dummies. The second-stage exercise is intended to show the level of protection in individual countries. The resulting coefficients are used to estimate tariff equivalents as a percentage of delivered prices. These tariff equivalent estimates shed light on each sample country’s relative protection in services when benchmarked against Hong Kong and Singapore, countries the authors consider to be the closest to free traders in their sample. Francois and Ganeshan Wignaraja (2008) build on the Francois-Hoekman-Woerz (2007) foundation but use slightly different gravity variables: per capita income, population, and GDP-weighted distance. Their paper, however, is specifically focused on Asian integration and therefore only reported tariff equivalents for Asian countries. Zhi Wang, Shashank Mohan, and Daniel Rosen (2009) follow pretty much the same approach as Francois and Wignaraja (2008). However, they use ordinary least squares (OLS) instead of a two-stage approach. Also, they add the United States to Hong Kong and Singapore as a third country with low or zero tariff equivalent barriers. Their estimates were based on the most detailed services trade flows data published in the GTAP-7 (Global Trade Analysis Project) database. Patrick Messerlin and Erik van der Marel (2009) use the comprehensive and internationally comparable Product Market Regulation indicators constructed by the Organization for Economic Cooperation and Development (OECD). These indicators measure the degree to which policies such as state control of business enterprises, legal and administrative obstacles to entrepreneurship, and barriers to entry inhibit or promote competition (OECD 2008). A meeting in July 2009 by the OECD Trade and Agriculture Directorate unveiled the Services Trade Restrictiveness Indices (STRI). The absence of comprehensive services trade data impedes accurate measurement of tariff equivalents. The OECD tried to remedy this deficiency. The STRI, ac118  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

cording to OECD (2009), uses data collected from many OECD databases, including the existing Product Market Regulation survey. The information from these sources is complemented by information from schedules annexed to the General Agreement on Trade in Services (GATS) and regional trade agreements. The reported barriers are then divided into different policy areas and weighted according to scoring schemes to construct the STRI values. Attempting the first survey covering applied trade policies in the major services sectors, Batshur Gootiiz and Aaditya Mattoo (2009) worked with local law firms from 32 developing and transition countries to assess GATS commitments; they also drew on published sources for the 24 OECD countries. A summary of key restrictions was prepared for each sector-mode and then mapped on a 5-point scale, weighted according to the relative importance of the different modes for a sector. The sector restrictiveness indices were then aggregated using sector GDP shares as weights. The resultant measure, the regional services trade restrictiveness index, represents a simple average of the country indices in each region (table B.1). After considering the seven papers, we place special emphasis on the findings reported by Gootiiz and Mattoo. However, since their results are only regional in scope, we have compared them with tariff equivalent values reported in the other six papers. In the end, we use the results reported by Wang, Mohan, and Rosen, as adjusted in accordance with the explanation below, to make our calculations. We decided to use the Wang, Mohan, and Rosen results as the basis of our calculations by a process of elimination. Since Shepherd and Miroudot’s measures of trade costs cover both regulatory and natural barriers, and often exceed 100 percent ad valorem equivalent, they exaggerate the scope of liberalization that can be achieved by policy reform—a limitation clearly recognized by the authors. To illustrate this limitation, we observe that Gootiiz and Mattoo calculate that the Latin American region has lower trade restrictions than East and South Asia. However, the Shepherd and Miroudot measures indicate that trade costs in Brazil are much higher than in India, Korea, or China. Moreover, while Gootiiz and Mattoo estimated that the OECD countries have the lowest trade restrictions on services among world regions, this feature is not closely reflected in the trade cost measures compiled by Shepherd and Miroudot. The limited country coverage in Francois and Wignaraja meant that we could not use their study for our calculations. Francois, Hoekman, and Woerz cover a wide range of countries, but we were puzzled by some of the results. According to Francois, Hoekman, and Woerz, China, at 19.8 percent tariff equivalent estimate for total services, has lower trade barriers than the United States, at 30.6 percent. This seems implausible. It also seems implausible that Pakistan, at 25.9 percent, is more restrictive than India, at 18.0 percent, and that the two South Asian countries are more APPENDIX B  119 © Peterson Institute for International Economics | www.piie.com

open to services imports than the United States. These and other results are out of line with the index levels reported by Gootiiz and Mattoo. Accordingly, we did not feel that Francois, Hoekman, and Woerz would be appropriate for our calculations. Messerlin and Marel’s Product Market Regulation indicators do not cover all services, as the authors recognize. The indicators omit education, health, and social services, but these omissions are not particularly important because trade flows in these services are not, at this stage, large. More importantly, Messerlin and Marel’s Product Market Regulation indicators are only available, on an applied basis, for four countries. The pattern for these countries, in terms of relative restrictiveness, follows that reported by Gootiiz and Mattoo’s estimates, which is reassuring. However, while Messerlin and Marel report figures for the bound level of regulatory constraints for a very wide range of countries, we need applied levels for our calculations. Accordingly, we ruled out this source. The STRI values constructed by the OECD are comprehensive in terms of country coverage, but index values are not the same as ad valorem tariff equivalents, the figures we need for our calculations. However, relationships derived from the STRI are informative. The United States has one of the lowest trade costs in the sample country group (based on a presentation at the OECD Experts Meeting on STRI). A GDP-weighted average of all the EU countries in the sample reveals that the EU average trade restrictiveness index is higher than the US index (the EU index is 2.190 compared with the US index of 1.975). The individual EU countries with the highest indices are Luxembourg, Greece, Hungary, and Iceland. At 2.108, Canada also has a higher index than the United States. The sample countries, which did not include India or China, show Korea and Turkey as having high restrictiveness indices, more than twice the levels of the United States, Germany, and Switzerland. We conclude that the pattern of the STRI index values seems sensible, but again since these are indices and not tariff equivalents, the figures do not suit our purposes. By this process of elimination, we decided to start with the tariff equivalent estimates reported by Wang, Mohan, and Rosen, but we made judgmental adjustments. We assumed that the United States does not have zero tariff equivalent barriers (contrary to Wang, Mohan, and Rosen), but instead 0.9016 times the level reported for the European Union (6.7 percent). The factor of 0.9016 reflects the ratio of STRI values reported by the OECD (2.190 for the European Union versus 1.975 for the United States). This assumption results in 6.0 percent for US tariff equivalent barriers. Contrary to the values reported by Wang, Mohan, and Rosen, we do not think that China’s barriers to services imports are higher than Indonesia’s, so we lowered the reported tariff equivalent barrier attributed to China to the Indonesian level (67.9 percent). Following similar reasoning, we lowered India’s level to Pakistan’s (68.1 percent). Applying these judgmental estimates of tariff equivalent barriers to 120  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

services trade, table 3.1 displays estimates of the impact of a 10 percent reduction in tariff equivalent barriers by the 21 countries (Taiwan is excluded from this exercise). A 10 percent reduction in the tariff equivalent of services barriers is admittedly an optimistic scenario given the current negotiations but conservative in terms of scope of policy reform that could be undertaken by the major trading nations. In any event, a 10 percent reduction could be achieved by various changes in policies across countries. For our purposes, we assume that these changes would be binding commitments in GATS schedules that actually lower the applied level of services barriers. As mentioned, the basis of the tariff equivalents we apply are the econometric estimates by Wang, Mohan, and Rosen (2009); simply put, the estimates reflect the shortfall between actual and expected imports of services for each country examined.

Methodology To estimate the potential trade gains from liberalization in services, we assume a 10 percent reduction in the econometrically estimated tariff equivalent of services barriers in the 21 countries studied (excluding Taiwan). The initial tariff equivalents (table B.2) are taken from Wang, Mohan, and Rosen (2009). The tariff equivalents are calculated as the average across services sectors using an OLS gravity model estimation procedure.1 To determine the impact of a 10 percent tariff equivalent change we must first determine bilateral services trade flows between the 21 countries. Only some of these flows are publicly available (and some of the data may not be collected at all). Essentially, only the bilateral flows of OECD countries with other OECD countries, and their bilateral flows with major economies (e.g., China and India), are readily available. To fill in the missing data points, we calculate bilateral services flows between countries by assuming that the share of a country’s services trade with a partner, out of its total services trade with the world, is equal to the share 1. The gravity equation estimated using ordinary least squares is: Mi,j = ai + aj + a1ln(GDP)j + a2ln(PCI)j + ej where Mi,j represents existing services imports in sector i by country j; ai and aj are sector and country fixed effect variables, respectively; PCIj represents per capita income in the importing country; GDPj represents national GDP; and ej is the error term. The fixed effect coefficients for free trade countries (Hong Kong and Singapore) are set equal to zero. The fixed effect coefficients for other countries are presumably negative and can be used, after adjusting by the import substitution elasticity, to derive estimates of the trade-cost equivalent of existing barriers in services averaged across all services sectors for that country. The relevant derivation is: aj = –s ln(Tj) where Tj is 1 plus the tariff equivalent (1+t1). For a free trade country Tj = 1, so ai equals zero. s is the substitution elasticity between imported services and domestic services, calculated to be around 3.88. For example, for the United Kingdom, if ai is –0.18, the estimated value of tj would be 4.75. This explanation is based on Francois and Wignaraja (2008). The data for the calculations come from GTAP (Wang, Mohan, and Rosen 2009).­­

APPENDIX B  121 © Peterson Institute for International Economics | www.piie.com

of that country’s merchandise trade with the same partner out of its total merchandise trade with the world. A collapsed version of the results from this estimation procedure is shown in table B.3. We use a partial equilibrium analysis to determine the impact of a 10 percent tariff equivalent reduction. For each bilateral trade flow, the percentage point difference in tariff equivalents for the importing country is multiplied by an elasticity of –1.37; 1 minus the resulting figure (as a percent) is then multiplied by the current trade flow to estimate trade after the 10 percent cut. The results from this estimation procedure are displayed in table B.4. The results indicate a large jump in developingcountry services imports ($35.3 billion). Developing-country exports in services among the sample countries would also increase, but only by $11.5 billion. Developed-country imports would increase by just $14.5 billion; most of this increase would come from US and EU imports ($3.1 billion and $5.2 billion, respectively). The smaller increase for developedcountry imports, compared to developing-country imports, is due to the low levels of developed-country services barriers relative to developingcountry barriers (as measured by the tariff equivalents shown in table B.2).

122  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

78

Table B.1

FIGURING OUT THE DOHA ROUND

Overall

Financial

Telecom

Retail

Maritime

Professional

Uruguay Round commitments South Asia

84

67

38

100

100

100

East Asia

63

40

57

79

57

76

Middle East

58

38

28

70

65

81

Africa

70

34

71

83

89

93

Latin America

65

62

39

61

96

75

OECD

28

14

9

15

85

56

Eastern Europe

21

19

10

0

64

47

World

48

33

30

46

82

70

South Asia

68

48

33

83

80

87

Doha offers

APPENDIX B  123

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Region

Restrictiveness indices for services policies: Uruguay Round commitments, current Doha Round offers, and applied levels

East Asia

61

40

57

75

50

74

Middle East

54

38

25

60

55

81

Africa

70

33

69

83

89

92

Latin America

59

61

31

56

80

66

OECD

19

13

9

9

20

41

Eastern Europe

15

14

10

0

13

38

World

42

31

28

41

48

61 (continued on next page)

Restrictiveness indices for services policies: Uruguay Round commitments, current Doha Round offers, and applied levels (continued)

Region

Overall

Financial

Telecom

Retail

Maritime

Professional

Estimated applied levels South Asia

36

24

25

33

33

58

East Asia

37

33

32

25

35

59

Middle East

37

38

10

25

29

64

Africa

17

7

17

4

4

47

Latin America

17

13

6

3

13

44

OECD

15

3

9

9

8

41

Eastern Europe

11

5

0

0

8

37

World

21

13

13

11

15

47

OECD = Organization for Economic Cooperation and Development 0 = completely open; 100 = completely closed Source: Gootiiz and Mattoo (2009).

GRAPHICS

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124  Figuring Out the Doha Round

Table B.1

79

Table B.2 Tariff equivalents of services barriers (percent) Country

Current tariff equivalent

Tariff equivalent after 10 percent cut

Argentina

33.09

29.78

Australia

16.12

14.51

Brazil

55.54

49.99

Canada

15.42

13.88

Chinaa

67.93

61.14

Colombia

40.87

36.78

6.69

6.02

European Unionb c

India

68.06

61.25

Indonesia

67.93

61.14

Japan

16.76

15.08

Korea

25.04

22.54

Malaysia

28.77

25.89

Mexico

44.32

39.89

Norway

0.00

0.00

Pakistan

68.06

61.25

Philippines

55.35

49.81

South Africa

39.66

35.69

3.37

3.03

Thailand

Switzerland

44.06

39.65

Turkey

43.89

39.50

6.03

5.43

United Statesd

a. Set equal to the Indonesia tariff equivalent (see text). b. Measured as the weighted average of services tariff equivalents for Belgium, France, Germany, Italy, Netherlands, and the United Kingdom, using 2008 US exports to each country as weights. c. Set equal to the Pakistan tariff equivalent (see text). d. Set equal to a fraction of the EU tariff equivalent (as explained in the main text). Wang, Mohan, and Rosen (2009) assumes that the US tariff equivalent of services barriers is zero. Sources: Wang, Mohan, and Rosen (2009); authors’ calculations.

80

FIGURING OUT THE DOHA ROUND

APPENDIX B  125

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126  150 Figuring FIGURING Out OUT the THE Doha DOHA Round ROUND

Table B.3

Estimated 2007 bilateral services trade (billions of dollars)

Country/group

World

Developed (7)

Developing (14)

European Union

Japan

United States

Brazil

China

India

All 21

1,777.3

1,080.8

316.0

421.3

81.9

394.2

19.0

84.8

24.8

Developed (7)

1,284.3

827.3

175.0

322.3

51.0

294.3

10.5

39.4

18.5

492.9

253.5

141.0

98.9

30.9

99.8

8.6

45.4

6.3

Developing (14) European Union

567.1

285.3

71.2

…

18.9

175.1

5.5

14.7

7.4

Japan

150.5

85.3

24.6

33.1

…

43.1

0.3

8.2

0.6

United States

378.4

223.6

59.2

145.9

26.2

…

4.1

8.8

9.7

Brazil

37.2

20.7

10.9

8.8

0.6

9.9

…

3.9

0.7

China

129.3

51.8

27.5

24.4

8.2

14.2

2.5

…

2.0

India

77.6

26.8

17.7

10.2

1.2

9.5

0.3

8.7

…

Notes: Rows are imports; columns are exports. Services import data availabilities (including reported exports by a partner) are as follows: Argentina: All countries but Australia, Brazil, Colombia, Turkey; Australia: Only Canada, European Union, Japan, Norway, Pakistan, United States; Brazil: Only Canada, European Union, Japan, Norway, Pakistan, United States; Canada: All countries; China: Only Australia, Canada, European Union, Japan, Korea, Norway, Pakistan, United States; European Union: All countries; India: Only Australia, Canada, European Union, Japan, Norway, Pakistan, United States; Indonesia: Only Australia, Canada, European Union, Japan, Pakistan, United States; Japan: All countries but Argentina, Colombia, Turkey; Korea: Only Australia, Canada, Colombia, European Union, Japan, Pakistan, United States; Malaysia: Only Australia, Canada, European Union, Japan, Pakistan, United States; Mexico: Only Australia, Canada, European Union, Japan, Pakistan, United States; Norway: All countries but Argentina, Colombia, Indonesia, Korea, Malaysia, Mexico, Philippines South Africa, Thailand; Pakistan: All countries; Philippines: Only Australia, Canada, European Union, Japan, Pakistan, United States; South Africa: Only Australia, Canada, European Union, Japan, Pakistan, United States; Switzerland: Only Australia, Canada, European Union, Japan, Norway, Pakistan, United States; Thailand: Only Australia, Canada, European Union, Japan, Pakistan, United States; Turkey: Only Canada, European Union, Norway, Pakistan; United States: All countries but Colombia, Turkey. All other bilateral relationships are estimated by multiplying each country’s total services imports by the relevant proportion of bilateral merchandise trade in 2007. Sources: BEA (2009); UN Services Trade Database, 2009; OECD (2009); UN Comtrade Database, 2009; authors’ calculations.

82 FIGURING OUT THE DOHA ROUND

Impact on trade of a 10 percent cut in the tariff equivalents of services barriers

Country/group

World

Developed (7)

Developing (14)

European Union

Japan

United States

Brazil

China

India

Increase in billions of dollars All 21

49.8

25.7

11.5

9.8

2.5

10.2

0.6

3.3

0.6

Developed (7)

14.5

8.9

2.1

3.0

0.5

3.9

0.1

0.6

0.2

Developing (14)

35.3

16.8

9.4

6.8

2.0

6.3

0.5

2.8

0.4

European Union

5.2

2.6

0.7

…

0.2

1.6

0.1

0.1

0.1

Japan

3.5

2.0

0.6

0.8

…

1.0

*

0.2

*

United States

3.1

1.8

0.5

1.2

0.2

…

*

0.1

0.1

Brazil

2.8

1.6

0.8

0.7

*

0.8

…

0.3

0.1

China

12.0

4.8

2.6

2.3

0.8

1.3

0.2

…

0.2

India

7.2

2.5

1.7

1.0

0.1

0.9

*

0.8

…

Percent increase from current services trade

APPENDIX B  127

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Table B.4

All 21

2.8

2.4

3.6

2.4

3.0

2.6

3.4

3.9

2.5

Developed (7)

1.1

1.1

1.2

0.9

0.9

1.3

1.0

1.4

1.0

Developing (14)

7.2

6.6

6.7

6.9

6.4

6.3

6.4

6.1

6.9

European Union

0.9

0.9

0.9

…

0.9

0.9

0.9

0.9

0.9

Japan

2.3

2.3

2.3

2.3

…

2.3

2.3

2.3

2.3

United States

0.8

0.8

0.8

0.8

0.8

…

0.8

0.8

0.8

* indicates that the increase is positive but less than $0.05 billion.

(continued on next page)

GRAPHICS  137

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128  Figuring Out the Doha Round

Table B.4     Impact on trade of a 10 percent cut in the tariff equivalents of services barriers (continued) Country/group

World

Developed  (7)

Developing  (14)

European  Union

Japan

United  States

Brazil

China

India

Percent increase from current services trade (continued) Brazil

7.6

7.6

7.6

7.6

7.6

7.6

…

7.6

7.6

China

9.3

9.3

9.3

9.3

9.3

9.3

9.3

…

9.3

India

9.3

9.3

9.3

9.3

9.3

9.3

9.3

9.3

…

Note: Rows are imports; columns are exports. Sources: Wang, Mohan, and Rosen (2009); BEA (2009); UN Services Trade Database, 2009; OECD (2009); UN Comtrade Database, 2009; Marquez (2005); authors’ calculations.

Appendix C Chemicals

Using the same partial equilibrium methodology detailed earlier, we determine the impact of NAMA modality tariff cuts and a sector initiative on chemicals trade between the 22 countries. The simple averages of applied bilateral tariffs before and after the modality tariff cuts on all traded tariff lines in the chemicals sector are displayed in table C.1. The rates vary widely, even for a single country’s tariffs, because of different product coverage. For example, the average tariff rates that the United States applies (before the modality cuts) to chemicals imports from Japan and China are roughly the same, 3.3 and 3.2 percent, respectively, while the average tariff rates applied to chemicals imports from Brazil and India are much lower, 0.7 and 0.9 percent, respectively. After the modality cuts, US tariff rates for chemicals imports from Japan and China drop by about 1.5 percentage points while rates for chemicals imports from Brazil and India drop by much smaller margins, about 0.3 percentage points. Under a sector initiative, we assume that after the modality cuts, all chemicals tariffs at or below 2.5 percent will drop to zero; all tariffs above 2.5 percent and equal to or below 5 percent will drop to a new tariff of 2.5 percent; and all tariffs above 5 percent will drop to a new tariff of 5 percent. The modality cuts would increase chemicals exports to the 22 countries by 1.8 percent over current levels of chemicals trade (table C.2). Chemicals imports by the three main developed countries (the European Union, Japan, and the United States) would increase by less than 2 percent each from the modality cuts. Chemicals imports by the three main developing countries (Brazil, China, and India) would increase by over 2.5 percent each, with Brazilian and Chinese chemicals imports increasing by over 3 percent each. Of the $2.3 billion increase in US chemicals imports, over 129 © Peterson Institute for International Economics | www.piie.com

half ($1.2 billion) comes from the European Union. Of the EU increase in chemicals imports of some $2.9 billion, only about a third ($1 billion) comes from the United States (table C.2). Table C.3 shows the estimated trade flows from the combination of modality and sector initiative tariff cuts. The volume of trade gains in nearly every bilateral relationship at least doubles by comparison with gains from modality cuts alone. Table C.4 shows the additional increase in trade from sector tariff cuts over modality cuts. Modality and sector cuts each increase chemicals exports from the 22 sample countries to the other 21 countries by $12.3 billion and $12.8 billion, respectively, totaling $25.1 billion (table 3.2).

130  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Average applied tariffs on chemicals (percent)

Country/group

World

Developed (7)

Developing (15)

European Union

3.29

2.95

2.98

3.05

Japan

United States

Brazil

China

India

2.78

2.26

2.56

3.63

Current applied rates All 22

4.78

Developed (7)

2.05

1.77

1.43

2.01

3.38

2.05

0.73

1.67

2.37

Developing (15)

5.58

4.99

5.92

4.70

5.98

3.87

4.74

5.70

5.91

European Union

2.57

2.54

1.16

...

3.88

3.88

0.67

0.73

3.69

Japan

1.66

2.50

0.52

2.55

...

2.58

0.17

0.05

0.06

United States

2.13

1.88

1.98

2.92

3.28

...

0.70

3.24

0.85

Brazil

8.02

8.86

5.59

8.57

9.11

9.11

...

8.56

8.02

China

6.71

6.87

6.60

6.78

6.86

6.76

7.27

...

6.81

India

8.72

8.51

9.85

8.31

8.31

8.42

13.93

8.22

...

All 22

2.24

1.99

2.06

1.72

1.76

2.51

Post-modality applied rates

APPENDIX C  GRAPHICS 131

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Table C.1

2.09

3.25

1.83

Developed (7)

1.20

1.03

0.89

1.21

1.97

1.15

0.54

1.05

1.42

Developing (15)

4.16

3.64

4.49

3.45

4.36

2.84

3.63

4.27

4.49

European Union

1.52

1.46

0.80

...

2.24

2.23

0.59

0.63

2.14

Japan

0.83

1.27

0.27

1.28

...

1.29

0.10

0.03

0.04

United States

1.24

1.12

1.14

1.76

1.87

...

0.50

1.84

0.58

(continued on next page)

83

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84 132 FIGURING Figuring OUT Out THE the DOHA Doha ROUND Round

Table C.1

Average applied tariffs on chemicals (percent) (continued)

Country/group

World

Developed (7)

Developing (15)

5.91

6.47

4.96

European Union

Japan

United States

Brazil

China

India

6.30

6.84

Post-modality applied rates (continued) Brazil

6.29

6.64

6.64

...

China

4.95

4.98

4.98

4.91

4.98

4.95

5.24

...

4.99

India

7.04

6.74

8.18

6.66

6.66

6.72

11.98

6.62

...

Notes: Rows are tariffs applied to imports; columns are tariffs applied to exports. Tariffs are the simple average of 2008 applied tariffs (for most countries) on all traded tariff lines in the chemical sector in each bilateral relationship. Applied tariffs from 2007 are used for Korea, Malaysia, and the Philippines. Applied tariffs from 2006 are used for Thailand. For Brazil, 2008 applied tariffs are used except for imports from India, Indonesia, Malaysia, Mexico, Pakistan, the Philippines and Taiwan, where 2007 applied tariffs are used. For India, 2008 applied tariffs are used except for imports from Brazil, Indonesia, Malaysia, Mexico, Pakistan, the Philippines, and Taiwan, where 2007 applied tariff are used. For Indonesia, 2007 applied tariffs are used except for imports from India, Malaysia, Mexico, Pakistan, the Philippines, and Taiwan, where 2006 applied tariffs are used. For Mexico, 2008 applied tariffs are used except for imports from Brazil, India, Indonesia, Malaysia, Pakistan, the Philippines, and Taiwan, where 2006 applied tariffs are used. See table 3.2, note, for product coverage. Average tariffs for groups of countries are calculated using the 2007 imports by each country in the group as weights. Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

Estimated increase in chemicals trade from NAMA modality tariff cuts

Country/group

World

Developed Developing (7) (15)

European Union

Japan

United States

Brazil

China

India

Increase in billions of dollars All 22 Developed (7)

15.41

8.63

3.66

3.57

1.99

2.48

0.05

1.15

0.22

6.39

3.65

1.13

1.77

0.54

1.15

0.02

0.51

0.13

Developing (15)

9.02

4.97

2.54

1.80

1.45

1.34

0.03

0.65

0.09

European Union

2.89

1.26

0.33

...

0.27

0.96

0.01

0.02

0.11

Japan

0.79

0.64

0.11

0.38

...

0.19

*

*

*

United States

2.28

1.48

0.61

1.15

0.25

...

*

0.44

0.02

Brazil

0.80

0.57

0.09

0.26

0.01

0.01

...

0.05

0.01

China

3.56

1.80

1.22

0.53

0.63

0.46

0.01

...

0.03

India

0.46

0.22

0.18

0.12

0.02

0.05

*

0.10

...

Percent increase from current chemicals trade

APPENDIX C  GRAPHICS 133

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Table C.2

All 22

1.79

1.56

1.86

1.63

2.68

1.59

0.56

1.69

1.56

Developed (7)

1.23

1.01

1.18

1.15

2.40

1.18

0.43

1.11

1.52

Developing (15)

2.64

2.59

2.49

2.74

2.81

2.24

0.74

2.85

1.63

European Union

1.61

1.17

0.94

...

2.58

1.88

0.67

0.15

2.49

Japan

1.58

2.11

0.64

2.38

...

1.70

1.43

0.01

0.20

United States

1.27

1.17

1.80

1.41

2.46

...

0.27

2.74

0.58

* indicates increase is positive but less than $0.05 billion.

(continued on next page)

85

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138 134  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round

Table C.2

Estimated increase in chemicals trade from NAMA modality tariff cuts (continued)

Country/group

World

Developed Developing (7) (15)

European Union

Japan

United States

Brazil

China

India

Percent increase from current chemicals trade (continued) Brazil

3.68

4.35

1.85

4.29

3.61

3.61

...

3.24

1.14

China

3.20

3.48

2.74

3.75

3.14

3.82

3.41

...

2.23

India

2.62

3.29

0

3.25

2.61

3.14

2.49

2.20

...

Note: Rows are imports; columns are exports. Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

86  FIGURING OUT THE DOHA ROUND

Country

World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

Increase in billions of dollars All 22

30.79

16.69

8.42

6.90

4.15

4.56

0.14

2.47

0.52

Developed (7)

10.60

6.12

2.07

3.25

0.88

1.69

0.06

1.02

0.23

Developing (15)

20.19

10.57

6.34

3.65

3.26

2.86

0.09

1.45

0.29

European Union

4.30

1.88

0.59

…

0.40

1.42

0.04

0.11

0.16

Japan

1.01

0.79

0.16

0.45

…

0.27

*

0.01

*

United States

4.57

3.03

1.14

2.44

0.46

…

0.01

0.81

0.06

Brazil

1.80

1.24

0.26

0.56

0.03

0.03

…

0.11

0.04

China

8.03

3.75

3.07

1.08

1.39

0.92

0.03

…

0.09

India

1.30

0.49

0.05

0.26

0.05

0.11

0.01

0.26

…

Percent increase from current chemicals trade

APPENDIX C  135

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Table C.3     Estimated increase in chemicals trade from modality and sector tariff cuts

All 22

3.57

3.02

4.27

3.14

5.61

2.91

1.63

3.63

3.66

Developed (7)

2.03

1.70

2.18

2.11

3.94

1.75

1.15

2.26

2.73

Developing (15)

5.91

5.50

6.22

5.56

6.33

4.79

2.28

6.37

5.01

European Union

2.40

1.74

1.71

…

3.80

2.80

1.83

0.69

3.75

Japan

2.02

2.62

0.94

2.79

…

2.40

1.49

0.07

0.40

United States

2.55

2.40

3.40

2.99

4.46

…

0.93

5.06

1.96

* indicates increase is positive but less than $0.05 billion.

(continued on next page)

GRAPHICS  139

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136  Figuring Out the Doha Round

Table C.3     Estimated increase in chemicals trade from modality and sector tariff cuts (continued) Country

World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

Percent increase from current chemicals trade (continued) Brazil

8.30

9.48

5.38

9.35

8.31

8.31

…

7.39

6.96

China

7.22

7.25

6.91

7.57

6.98

7.74

7.51

…

5.71

India

7.35

7.37

0

7.34

6.48

7.16

16.83

5.75

…

Note: Rows are imports; columns are exports. Sources: UNCTAD TRAINS database via World Integrated Trade Solution, 2009; authors’ calculations.

Country

World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

Increase in billions of dollars All 22 Developed (7)

15.38

8.06

4.76

3.32

2.16

2.07

0.09

1.32

0.30

4.21

2.47

0.95

1.47

0.34

0.55

0.04

0.52

0.10

Developing (15)

11.17

5.59

3.81

1.85

1.82

1.53

0.06

0.80

0.19

European Union

1.41

0.61

0.27

...

0.13

0.47

0.02

0.09

0.05

Japan

0.22

0.16

0.05

0.07

...

0.08

*

*

*

United States

2.29

1.55

0.54

1.29

0.21

...

0.01

0.37

0.04

Brazil

1.00

0.67

0.17

0.30

0.02

0.02

...

0.06

0.03

China

4.47

1.95

1.86

0.54

0.77

0.47

0.01

...

0.05

India

0.84

0.27

0

0.14

0.03

0.06

0.01

0.16

...

Percent increase from current chemicals trade

APPENDIX C  GRAPHICS  137 87

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Table C.4     Additional increase in chemicals trade from sector tariff cuts above modality tariff cuts

All 22

1.78

1.46

2.41

1.51

2.92

1.32

1.07

1.93

2.10

Developed (7)

0.81

0.68

1.00

0.96

1.54

0.56

0.72

1.14

1.21

Developing (15)

3.27

2.91

3.73

2.81

3.52

2.55

1.54

3.52

3.39

European Union

0.79

0.57

0.77

...

1.22

0.92

1.17

0.54

1.26

Japan

0.43

0.51

0.29

0.41

...

0.70

0.07

0.05

0.20

United States

1.28

1.23

1.59

1.58

2.00

...

0.66

2.33

1.38

* indicates increase is positive but less than $0.05 billion.

(continued on next page)

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140  138  FIGURING FiguringOUT OutTHE theDOHA DohaROUND Round

Table C.4     Additional increase in chemicals trade from sector tariff cuts above modality tariff cuts     (continued) Country

World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

Percent increase from current chemicals trade (continued) Brazil

4.62

5.12

3.53

5.06

4.70

4.70

...

4.14

5.82

China

4.02

3.77

4.18

3.82

3.84

3.92

4.10

...

3.48

India

4.73

4.08

0

4.08

3.87

4.03

14.34

3.54

...

Note: Rows are imports; columns are exports. Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

Appendix D Information Technology and Electronics/Electrical Goods

WTO negotiators are working on a sector agreement covering electronics and electrical goods. The agreement would cover a large amount of trade, but several key players are absent from the negotiations, most notably the European Union and China. Accordingly, we are skeptical that an electronics/electrical goods sector initiative can succeed. A more likely outcome is an expanded Information Technology Agreement (ITA). We calculate the trade impact of both scenarios. A list of the products included in the ITA sector calculations is displayed in table D.1. A list of products included in the electronics/electrical goods calculations is displayed in table D.2. Applied tariffs on ITA goods are low (table D.3). The developedcountry average is 0.4 percent, and even China (which unlike Brazil, Mexico, and South Africa is an ITA member) has relatively low tariffs (1.7 percent). Due to product coverage, US exports face applied tariffs that are higher than the world average on ITA goods entering the European Union (1.1 percent for US exports versus an average of 0.4 percent for world exports), China (1.8 percent versus 1.7 percent), and Brazil (11.8 percent versus 9.9 percent). After the modality tariff cuts, the average tariff on US ITA goods exported to China would be equal to the average Chinese applied tariff on world exports. However, US ITA exports to the European Union and Brazil would still pay higher rates than world average tariffs in those markets. Japan experiences almost no increase in ITA import trade from the modality or sector tariff cuts because current tariffs on Japanese imports are essentially zero (tables D.4 to D.6). Brazil and India have very minimal export increases, because they currently export only a small amount of ITA goods. Under the sector tariff cuts, China gains the most, with an 139 © Peterson Institute for International Economics | www.piie.com

$8.7 billion increase in imports from the world and a $2.8 billion increase in exports to the 21 other countries included in this study (table D.5). The increase in Chinese imports from Japan ($1.7 billion) accounts for about a fifth of the increase in total Chinese imports of ITA goods (table D.5). The additional increase beyond modality tariff cuts in US trade from a sector initiative in ITA goods is $3.6 billion. Close to three-quarters of this increase ($2.6 billion) is from US exports to the 21 other countries (table D.6). Tariffs on electronics/electrical goods are substantially higher than on ITA goods (table D.7). For example, the average applied tariff by China on imports from the world of electronics/electrical goods is 6.6 percent; for ITA goods it is only 1.7 percent. The impact of tariff cuts on trade in the broader electronics/electrical goods category could be substantial since initial tariffs are high. This is especially true in a sector initiative where, we assume, all electronics/electrical goods tariffs go to zero. Sector and modality tariff cuts in electronics/electrical goods could lead to a $45.4 billion increase in world imports and $43.1 billion in exports within the 22 countries. These figures are much higher than the sector and modality tariff cuts in ITA goods: a $29.2 billion increase in world imports and a $27.9 billion increase in exports to the other 21 countries. The sector initiative in electronics/electrical goods (not including the modality cuts) can result in a $35.4 billion increase in world imports and a $33.5 billion increase in exports among the sample countries (tables D.8 to D.10, 3.3, and 3.4). For the United States a sector initiative in electronics/electrical goods would increase exports to the 21 other countries by $3.4 billion.

140  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Table D.1

Goods covered by the Information Technology Agreement (ITA)

Code

Description

381800

Chemical elements doped for use in electronics, in the form of discs, wafers, or similar forms; chemical compounds doped for use in electronics

701710

Of fused quartz or other fused silica

702000

Other articles of glass

841989

Other machinery, plant and equipment—other

841990

Parts for machinery, plant, or laboratory equipment for the treatment of material involving temperature change (except domestic machinery), nesoi

842119

Centrifuges, including centrifugal dryers—other

842191

Parts of centrifuges, including centrifugal dryers

842430

Steam or sandblasting machines and similar jet-projecting machines

842489

Other appliances—other

842490

Parts for mechanical appliances for projecting, dispersing, or spraying, fire extinguishers, spray guns, and steam or sandblasting machines

842820

Pneumatic elevators and conveyors

842833

Other continuous-action elevators and conveyors, for goods or materials—other, belt type

842839

Other continuous-action elevators and conveyors, for goods or materials—other

842890

Other machinery

843139

Machinery of heading no. 84.28—other

845610

Operated by laser or other light or photon beam processes

845691

Other, for dry-etching patterns on semiconductor materials

845699

Machine tools for removal of material by electrochemical, electron beam, ionic beam, or plasma arc processes, nesoi

846221

Bending, folding, straightening, or flattening machines (including presses)— numerically controlled

846229

Bending, folding, straightening, or flattening machines (including presses)—other

846410

Sawing machines

846420

Grinding or polishing machines

846490

Machine tools for working stone, ceramics, concrete, asbestos-cement, or like mineral materials or for cold-working glass, nesoi

846599

Machine tools (also those for nailing, stapling, gluing, etc.) for working wood, cork, bone, hard rubber, hard plastics, or similar materials, nesoi

846610

Tool holders and self-opening dieheads

846620

Work holders

846630

Dividing heads and other special attachments for machine tools

846691

Other—for machines of heading no. 84.64

846693

Other—for machines of headings nos. 84.56 to 84.61 (continued on next page)

88

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Table D.1

Goods covered by the Information Technology Agreement (ITA) (continued)

Code

Description

846694

Other—for machines of heading no. 84.62 or 84.63

846911

Automatic typewriters and word-processing machines—word-processing machines

846912

Automatic typewriters and word-processing machines—automatic typewriters

847010

Electronic calculators capable of operation without an external source of electric power and pocket-sized data recording, reproducing, and displaying machines with calculating functions

847021

Other electronic calculating machines—incorporating a printing device

847029

Other electronic calculating machines—other

847030

Other calculating machines

847040

Accounting machines

847050

Cash registers

847090

Postage-franking machines, ticket-issuing machines, and similar machines, incorporating a calculating device, nesoi

847110

Analogue or hybrid automatic data-processing machines

847130

Portable digital automatic data-processing machines, weighing not more than 10 kg, consisting of at least a central processing unit, a keyboard, and a display

847141

Other digital automatic data-processing machines—comprising in the same housing at least a central processing unit and an input and output unit, whether or not combined

847149

Other digital automatic data-processing machines—other, presented in the form of systems

847150

Digital processing units other than those of subheadings 8471.41 and 8471.49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units, output units

847160

Input or output units, whether or not containing storage units in the same housing

847170

Storage units

847180

Other units of automatic data-processing machines

847190

Automatic data-processing units thereof; magnetic/optical readers, machinery for transcribing data to data media in coded form and machinery for processing data, nesoi

847290

Office machines nesoi (including automatic banknote dispensers, coin-sorting machines, pencil-sharpening machines, perforating or stapling machines)

847310

Parts and accessories of the machines of heading no. 84.69

847321

Parts and accessories of the machines of heading no. 84.70—of the electronic calculating machines of subheading no. 8470.10, 8470.21 or 8470.29

847329

Parts and accessories of the machines of heading no. 84.70—other

847330

Parts and accessories of the machines of heading no. 84.71 (continued on next page)

142  Figuring Out the Doha Round

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89

Table D.1

Goods covered by the Information Technology Agreement (ITA) (continued)

Code

Description

847340

Parts and accessories of the machines of heading no. 84.72

847350

Parts and accessories equally suitable for use with machines of two or more of the heading nos. 84.69 to 84.72

847710

Injection molding machines

847740

Vacuum molding machines and other thermoforming machines

847759

Other machinery for molding or otherwise forming—other

847790

Parts of machinery for working rubber or plastics or parts of machinery used in the manufacture of products from rubber or plastic materials, nesoi

847950

Industrial robots, nesoi

847989

Other machines and mechanical appliances—other

847990

Parts of machines and mechanical appliances having individual functions, nesoi

848071

Molds for rubber or plastics—injection or compression types

850440

Static converters

850450

Other inductors

850490

Parts for electrical transformers, static converters, and inductors

851410

Resistance heated furnaces and ovens

851420

Induction or dielectric furnaces and ovens

851430

Other furnaces and ovens

851490

Parts for industrial or laboratory electric furnaces and ovens; parts for industrial or laboratory induction or dielectric heating equipment, nesoi

851580

Other machines and apparatus

851590

Parts for electric laser, ultrasonic, welding machines; parts for electric machines for hot spraying of metals or sintered metal carbides

851711

Telephone sets; videophones—line telephone sets with cordless handsets

851719

Telephone sets; videophones—other

851721

Facsimile machines and teleprinters—facsimile machines

851722

Facsimile machines and teleprinters—teleprinters

851730

Telephonic or telegraphic switching apparatus

851750

Other apparatus, for carrier-current line systems or for digital line systems

851780

Other apparatus

851790

Parts of electrical apparatus for line telephony or telegraphy, including parts of such apparatus for carrier-current line systems

851810

Microphones and stands therefor

851829

Loudspeakers, whether or not mounted in their enclosures—other

851830

Headphones, earphones, and combined microphone/speaker sets

851840

Audio-frequency electric amplifiers (continued on next page)

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Table D.1

Goods covered by the Information Technology Agreement (ITA) (continued)

Code

Description

851890

Parts of microphones, loudspeakers, headphones, earphones, audio-frequency electric amplifiers, and electric sound amplifier sets

852020

Telephone answering machines

852290

Parts and accessories, except pickup cartridges, for sound reproducing, sound recording, and video recording or reproducing apparatus

852311

Magnetic tapes—of a width not exceeding 4 mm

852312

Magnetic tapes—of a width exceeding 4 mm but not exceeding 6.5 mm

852313

Magnetic tapes—of a width exceeding 6.5 mm

852320

Magnetic discs

852390

Prepared magnetic media, unrecorded, nesoi

852431

Discs for laser reading systems—For reproducing phenomena other than sound or image

852439

Discs for laser reading systems—Other

852440

Magnetic tapes for reproducing phenomena other than sound or image

852491

Other—for reproducing phenomena other than sound or image

852499

Recorded media for reproducing sound or image, nesoi

852510

Transmission apparatus

852520

Transmission apparatus incorporating reception apparatus

852540

Still image video cameras and other video camera recorders

852790

Other apparatus

852812

Reception apparatus for television, whether or not incorporating radio broadcast receivers or sound or video recording or reproducing apparatus—color

852910

Aerials and aerial reflectors of all kinds; parts suitable for use therewith

852990

Parts (except antennas and reflectors) for use with radio transmission, radar, radio navigational aid, reception, and television apparatus, nesoi

853120

Indicator panels incorporating liquid crystal devices (LCD) or light-emitting diodes (LED)

853180

Other apparatus

853190

Parts of electric sound or visual signaling apparatus, nesoi

853210

Fixed capacitors designed for use in 50/60 Hz circuits and having a reactive power handling capacity of not less than 0.5 kvar (power capacitors)

853221

Other fixed capacitors—tantalum

853222

Other fixed capacitors—aluminum electrolytic

853223

Other fixed capacitors—ceramic dielectric, single layer

853224

Other fixed capacitors—ceramic dielectric, multilayer

853225

Other fixed capacitors—dielectric of paper or plastics

853229

Other fixed capacitors—other (continued on next page)

144  Figuring Out the Doha Round

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91

Table D.1

Goods covered by the Information Technology Agreement (ITA) (continued)

Code

Description

853230

Variable or adjustable (preset) capacitors

853290

Parts for electrical capacitors

853310

Fixed carbon resistors, composition or film types

853321

Other fixed resistors—for a power-handling capacity not exceeding 20 W

853329

Other fixed resistors—other

853331

Wirewound variable resistors, including rheostats and potentiometers—for a power-handling capacity not exceeding 20 W

853339

Wirewound variable resistors, including rheostats and potentiometers—other

853340

Other variable resistors, including rheostats and potentiometers

853390

Parts for electrical resistors, including parts for rheostats and potentiometers

853400

Printed circuits

853650

Other switches

853669

Lamp-holders, plugs and sockets—other

853690

Other apparatus

853890

Parts for electrical apparatus for electrical circuits, boards, panels, etc., for electric control or distribution of electricity, nesoi

854110

Diodes, other than photosensitive or light-emitting diodes

854121

Transistors, other than photosensitive transistors—with a dissipation rate of less than 1 W

854129

Transistors, other than photosensitive transistors—other

854130

Thyristors, diacs and triacs, other than photosensitive devices

854140

Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes

854150

Other semiconductor devices

854160

Mounted piezoelectric crystals

854190

Parts for diodes, transistors, and similar semiconductor devices; parts for photosensitive semiconductor devices and mounted piezoelectric crystals

854212

Cards incorporating an electronic integrated circuit (“smart cards”)

854213

Monolithic digital integrated circuits—metal oxide semiconductors (MOS technology)

854214

Monolithic digital integrated circuits—circuits obtained by bipolar technology

854219

Monolithic digital integrated circuits—other, including circuits obtained by a combination of bipolar and MOS technologies (BIMOS technology)

854230

Other monolithic integrated circuits

854240

Hybrid integrated circuits

854250

Electronic microassemblies

854290

Parts for electronic integrated circuits (continued on next page)

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Table D.1

Goods covered by the Information Technology Agreement (ITA) (continued)

Code

Description

854311

Particle accelerators—ion implanters for doping semiconductor materials

854330

Machines and apparatus for electroplating, electrolysis, or electrophoresis

854381

Other machines and apparatus—proximity cards and tags

854389

Other machines and apparatus—other

854390

Parts for electrical machines and apparatus having individual functions, nesoi

854441

Other electric conductors, for a voltage not exceeding 80 V—fitted with connectors

854449

Other electric conductors, for a voltage not exceeding 80 V—other

854451

Other electric conductors, for a voltage exceeding 80 V but not exceeding 1,000 V—fitted with connectors

854470

Optical fiber cables

900911

Electrostatic photocopying apparatus—operating by reproducing the original image directly onto the copy (direct process)

900921

Other photocopying apparatus—incorporating an optical system

900990

Parts and accessories

901041

Apparatus for the projection or drawing of circuit patterns on sensitized semiconductor materials—direct write-on-wafer apparatus

901042

Apparatus for the projection or drawing of circuit patterns on sensitized semiconductor materials—step and repeat aligners

901049

Apparatus for the projection or drawing of circuit patterns on sensitized semiconductor materials—other

901050

Other apparatus and equipment for photographic (including cinematographic) laboratories; negatoscopes

901090

Parts and accessories

901110

Stereoscopic microscopes

901120

Other microscopes, for photomicrography, cinephotomicrography or microprojection

901190

Parts and accessories

901210

Microscopes other than optical microscopes and diffraction apparatus

901290

Parts and accessories

901380

Other devices, appliances and instruments

901390

Parts and accessories

901710

Drafting tables and machines, whether or not automatic

901720

Other drawing, marking-out, or mathematical calculating instruments

901790

Parts and accessories

902610

Instruments and apparatus for measuring or checking the flow or level of liquids

902620

Instruments and apparatus for measuring or checking pressure (continued on next page)

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Table D.1

Goods covered by the Information Technology Agreement (ITA) (continued)

Code

Description

902680

Other instruments or apparatus

902690

Parts and accessories

902720

Chromatographs and electrophoresis instruments

902730

Spectrometers, spectrophotometers, and spectrographs using optical radiations (ultraviolet, visible, infrared)

902750

Other instruments and apparatus using optical radiations (ultraviolet, visible, infrared)

902780

Other instruments and apparatus

902790

Microtomes, parts and accessories

903040

Other instruments and apparatus, specially designed for telecommunications (for example, cross-talk meters, gain measuring instruments, distortion factor meters, psophometers)

903082

Other instruments and apparatus, for measuring or checking semiconductor wafers or devices

903090

Parts and accessories

903141

Other optical instruments and appliances, for inspecting semiconductor wafers or devices or for inspecting photomasks or reticles used in manufacturing semiconductor devices

903149

Other optical instruments and appliances—other

903180

Other instruments, appliances, and machines

903190

Parts and accessories

nesoi = not elsewhere specified or included Sources: WTO (2009b); Finger (2007); US International Trade Commission Interactive Tariff and Trade Dataweb, http://dataweb.usitc.gov, 2009.

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Table D.2

Goods to be included in an electronics/electrical goods sector initiative

Code

Description

381800

Chemical elements doped for use in electronics, in the form of discs, wafers, or similar forms: chemical compounds doped for use in electronics, of substances other than those of silicon

700991

Unframed glass mirrors, excluding rear-view mirrors for vehicles

702000

Articles of glass, other than those of headings 7001 to 7019

841430

Other machinery, plant and equipment—other

841451

Table, floor, wall, window, ceiling, or roof fans, with a self-contained electric motor of an output not exceeding 125 W

841490

Centrifuges, including centrifugal dryers—other

841510

Parts of centrifuges, including centrifugal dryers

841581

Air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, incorporating a refrigerating unit and a valve for reversal of the cooling/heat cycle (reversible heat pumps), other than those of subheadings 8415.10 and 8415.20

841590

Parts of air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity

841810

Combined refrigerator-freezers, fitted with separate external doors

841821

Household-type refrigerators of compression-type

841822

Other continuous-action elevators and conveyors, for goods or materials—other, belt type

841829

Other continuous-action elevators and conveyors, for goods or materials—other

841830

Freezers of the chest type, not exceeding 800 liter capacity

841840

Machinery of heading 84.28—other

841861

Refrigerating or freezing equipment of compression type, whose condensers are heat exchangers, other than those of subheadings 8418.10 to 8418.50, heat pumps

841899

Other, for dry-etching patterns on semiconductor materials

841989

Machinery, plant or laboratory equipment, for the treatment of materials by a process involving a change of temperature such as heating, cooking, roasting, distilling, rectifying, sterilizing, pasteurizing, steaming, drying, evaporating, vaporizing, condensing, or cooling, other than machinery or plant of a kind used for domestic purposes other than those of subheadings 8419.20 to 8419.81

841990

Bending, folding, straightening, or flattening machines (including presses)— numerically controlled

842112

Bending, folding, straightening, or flattening machines (including presses)—other

842119

Centrifuges, including centrifugal dryers, other than cream separators and clothes dryers

842191

Parts of centrifuges or centrifugal dryers

842211

Dishwashing machines of the household type (continued on next page)

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Table D.2

Goods to be included in an electronics/electrical goods sector initiative (continued)

Code

Description

842310

Personal weighing machines, including baby scales, household scales

842489

Mechanical appliances (whether or not hand operated) for projecting, dispersing, or spraying liquids or powders, other than those for agricultural or horticultural use

842490

Parts of mechanical appliances (whether or not hand-operated) for projecting, dispersing, or spraying liquids or powders; parts of fire extinguishers, whether or not charged; parts of spray guns and similar appliances; parts of steam or sandblasting machines and similar jet-projecting machines

842839

Continuous-action elevators and conveyors, for goods or materials, other than those specially designed for underground use, those of bucket or belt type, pneumatic elevators and pneumatic conveyors

842890

Other—for machines of heading 84.64

843139

Other—for machines of headings 84.56 to 84.61

845011

Other—for machines of heading 84.62 or 84.63

845012

Automatic typewriters and word-processing machines—word-processing machines

845019

Automatic typewriters and word-processing machines—automatic typewriters

845090

Parts of household or laundry-type washing machines

845121

Other electronic calculating machines—incorporating a printing device

845190

Other electronic calculating machines—other

845210

Sewing machines of the household type

845290

Parts of sewing machines, other than those of book-sewing machines of heading 84.40, sewing machine needles and furniture, base and covers for sewing machines and parts thereof

845610

Machine tools for working any material by removal of material, by laser or other light or photon beam processes

845691

Machine tools for working any material by removal of material, for dry-etching patterns on semiconductor materials, by electrochemical, electron beam, ionic beam, or plasma arc processes

845699

Machine tools for working any material by removal of material by electrochemical, electron beam, ionic beam, or plasma arc processes, other than for dry-etching patterns on semiconductor materials

846221

Numerically controlled bending, folding, straightening, or flattening machines (including presses) for working metal

846229

Other digital automatic data-processing machines—comprising in the same housing at least a central processing unit and an input and output unit, whether or not combined

846410

Other digital automatic data-processing machines—other, presented in the form of systems (continued on next page)

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Table D.2

Goods to be included in an electronics/electrical goods sector initiative (continued)

Code

Description

846420

Grinding or polishing machines for working stone, ceramics, concrete, asbestoscement, or like mineral materials or for cold-working glass

846490

Machine tools for working stone, ceramics, concrete, asbestos-cement, or like mineral materials or for cold-working glass, other than sawing, grinding, or polishing machines

846610

Self-opening dieheads for use solely or principally with the machines of headings 84.56 to 84.65

846620

Work holders for use solely or principally with the machines of headings 84.56 to 84.65

846630

Dividing heads and other special attachments for machine tools of heading 84.65

846691

Parts and accessories suitable for use solely or principally with the machines of heading 84.64 other than those of subheadings 8466.11 to 8466.30

846693

Parts and accessories suitable for use solely or principally with the machines of headings 84.56 to 84.61 other than those of subheadings 8466.11 to 8466.30

846694

Parts and accessories of the machines of heading 84.70—of the electronic calculating machines of subheading 8470.10, 8470.21, or 8470.29

846911

Parts and accessories of the machines of heading 84.70—other

846920

Electric typewriters, other than automatic typewriters and printers of heading 84.71

8470

Calculating machines and pocket-size data recording, reproducing, and displaying machines with calculating functions; accounting machines, postage-franking machines, ticket-issuing machines and similar machines, incorporating a calculating device; cash registers

8471

Automatic data-processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, nesoi

847290

Office machines, other than those of subheadings 8472.10 to 8472.30

8473

Parts and accessories (other than covers, carrying cases, and the like) suitable for use solely or principally with machines of headings 84.69 to 84.72

847710

Other machinery for molding or otherwise forming—other

847740

Vacuum molding machines and other thermoforming machines, for rubber or plastics, not specified or included elsewhere in this chapter

847759

Machinery for molding or otherwise forming rubber or plastics, not specified or included elsewhere in this chapter

847790

Other machines and mechanical appliances—other

847950

Industrial robots, not elsewhere specified

847989

Molds for rubber or plastics—injection or compression types

847990

Parts of machines and mechanical appliances, having individual functions, not specified or included elsewhere in this chapter (continued on next page)

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Table D.2

Goods to be included in an electronics/electrical goods sector initiative (continued)

Code

Description

848071

Molds for rubber or plastics, of injection or compression types

8501

Electric motors and generators (excluding generating sets)

8502

Electric generating sets and rotary converters

8503

Parts suitable for use solely or principally with the machines of heading 85.01 or 85.02

850421

Liquid dielectric transformers, having a power-handling capacity not exceeding 650 kVA, other than ballasts for discharge lamps or tubes

850422

Liquid dielectric transformers having a power-handling capacity exceeding 650 kVA but not exceeding 10,000 kVA

850423

Liquid dielectric transformers having a power-handling capacity exceeding 10,000 kVA

850431

Electrical transformers, having a power-handling capacity not exceeding 1 kVA, other than those of liquid dielectric transformers and ballasts for discharge lamps or tubes

850432

Telephone sets, videophones—line telephone sets with cordless handsets

850434

Telephone sets, videophones—other

850440

Facsimile machines and teleprinters—facsimile machines

850450

Facsimile machines and teleprinters—teleprinters

850490

Parts of electrical transformers, static converters or inductors

8505

Electromagnets; permanent magnets and articles intended to become permanent magnets after magnetisation; electromagnetic or permanent magnet chucks, clamps and similar holding devices; electromagnetic couplings, clutches and brakes; electromagnetic lifting heads

8506

Primary cells and primary batteries

8507

Electric accumulators, including separators thereof, whether or not rectangular (including square)

850910

Vacuum cleaners for domestic appliances, including dry and wet vacuum cleaners, with self-contained electric motors

850920

Loudspeakers, whether or not mounted in their enclosures—other

850940

Food grinders, mixers, and fruit or vegetable juice extractors, for domestic appliance, with self-contained electric motors

850980

Electromechanical domestic appliances, with self-contained electric motors, other than those of subheadings 8509.10 to 8509.40

8510

Shavers, hair clippers, and hair-removing appliances, with self-contained electric motors

851310

Portable electric lamps designed to function by their own sources of energy (for example, dry batteries, accumulators, magnetos), other than lighting equipment of heading 8512

851410

Resistance-heated furnaces and ovens (continued on next page)

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Table D.2

Goods to be included in an electronics/electrical goods sector initiative (continued)

Code

Description

851420

Magnetic tapes—of a width not exceeding 4 mm

851430

Magnetic tapes—of a width exceeding 4 mm but not exceeding 6.5 mm

851440

Magnetic tapes—of a width exceeding 6.5 mm

851490

Parts of industrial or laboratory electric furnaces and ovens (including those functioning by induction or dielectric loss) and other industrial or laboratory equipment for the heat treatment of materials by induction or dielectric loss

851519

Electric brazing or soldering machines or apparatus, other than soldering irons and guns

851521

Discs for laser reading systems—for reproducing phenomena other than sound or image

851529

Discs for laser reading systems—other

851531

Machines and apparatus for arc welding of metals, fully or partly automatic

851580

Other—for reproducing phenomena other than sound or image

851590

Parts of electric (including electrically heated gas), laser or other light or photon beam, ultrasonic, electron beam, magnetic pulse or plasma arc soldering, brazing or welding machines and apparatus, whether or not capable of cutting, or parts of electric machines and apparatus for hot spraying of metals or cermets

8516

Electric instantaneous or storage water heaters and immersion heaters; electric space heating apparatus and soil heating apparatus; electrothermic hairdressing apparatus and hand dryers; electric smoothing irons; other electrothermic appliances of a kind used for domestic purposes; electric heating resistors, other than those of heading 85.45

8517

Electrical apparatus for line telephony or line telegraphy, including line telephone sets with cordless handsets and telecommunication apparatus for carrier-current line systems or for digital line systems, videophones

8518

Microphones and stands thereof; loudspeakers, whether or not mounted in their enclosures; headphones and earphones, whether or not combined with a microphone, and sets consisting of a microphone and one or more loudspeakers; audio-frequency electric amplifiers; electric sound-amplifier sets

851910

Coin- or token-operated record players

851921

Reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus—color

851931

Turntables, with automatic record-changing mechanism

851992

Pocket-sized cassette players, not incorporating a sound recording device

851993

Sound-reproducing apparatus of cassette type, not incorporating a sound recording device, other than those of pocket-size cassette players

851999

Sound-reproducing apparatus, not incorporating a sound-recording device, other than those of subheadings 8519.10 to 8519.93

8520

Magnetic tape recorders and other sound recording apparatus

8521

Videorecording or reproducing apparatus of magnetic tape type (continued on next page)

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Table D.2

Goods to be included in an electronics/electrical goods sector initiative (continued)

Code

Description

8522

Other fixed capacitors—tantalum

8523

Other fixed capacitors—aluminum electrolytic

8524

Other fixed capacitors—ceramic dielectric, single layer

8525

Other fixed capacitors—ceramic dielectric, multilayer

852691

Other fixed capacitors—dielectric of paper or plastics

852692

Other fixed capacitors—other

8527

Reception apparatus for radio-telephony, radio-telegraphy or radio-broadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock

852812

Reception apparatus for television of color, whether or not incorporating radio broadcast receivers or sound or video recording or reproducing apparatus

852813

Black and white or other monochrome reception apparatus for television, whether or not incorporating radio broadcast receivers or sound or video recording or reproducing apparatus. Reception apparatus for television of black and white or other monochrome whether or not incorporating radio broadcast receivers or sound or video recording or reproducing apparatus

852821

Other fixed resistors—for a power handling capacity not exceeding 20 W

852830

Other fixed resistors—other

8529

Wirewound variable resistors, including rheostats and potentiometers—for a power handling capacity not exceeding 20 W

8530

Wirewound variable resistors, including rheostats and potentiometers—other

8531

Electric sound or visual signaling apparatus, other than those of heading 85.12 or 85.30

8532

Electrical capacitors, fixed, variable or adjustable (preset)

8533

Electrical resistors, other than heating resistors

8534

Printed circuits

8535

Lamp-holders, plugs, and sockets—other

853610

Fuses, for a voltage not exceeding 1,000 volts

853620

Automatic circuit breakers for a voltage not exceeding 1,000 volts

853630

Apparatus for protecting electrical circuits for a voltage not exceeding 1,000 volts, other than fuses and automatic circuit breakers

853641

Transistors, other than photosensitive transistors—with a dissipation rate of less than 1 W

853649

Transistors, other than photosensitive transistors—other

853650

Switches for a voltage not exceeding 1,000 volts, other than relays

853669

Plugs and sockets for a voltage not exceeding 1,000 volts

853690

Electrical apparatus forsaking connections in electrical circuits, for a voltage not exceeding 1,000 volts, other than those of subheadings 8536.10 to 8536.69 (continued on next page)

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Table D.2

Goods to be included in an electronics/electrical goods sector initiative (continued)

Code

Description

8537

Boards, panels, consoles, desks, cabinets, and other bases, equipped with two or more apparatus of heading 85.35 or 85.36, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of chapter 90, and numerical control apparatus, other than switching apparatus of heading 85.17

8538

Parts suitable for use solely or principally with the apparatus of heading 85.35, 85.36, or 85.37

853921

Electric filament lamps of tungsten halogen

853922

Monolithic digital integrated circuits—metal oxide semiconductors (MOS technology)

853929

Monolithic digital integrated circuits—circuits obtained by bipolar technology

853931

Monolithic digital integrated circuits—other, including circuits obtained by a combination of bipolar and MOS technologies (BIMOS technology)

853932

Mercury or sodium vapor lamps; metal halide lamps

853939

Electric discharge lamps, other than ultraviolet lamps, and those of subheadings 8539.31 and 8539.32

853941

Arc lamps

853949

Ultraviolet lamps and infrared lamps

853990

Particle accelerators—ion implanters for doping semiconductor materials

8540

Thermionic, cold cathode, or photocathode valves and tubes

8541

Other machines and apparatus—proximity cards and tags

8542

Other machines and apparatus—other

8543

Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter

854411

Other electric conductors, for a voltage not exceeding 80 V—fitted with connectors

854419

Other electric conductors, for a voltage not exceeding 80 V—other

854420

Other electric conductors, for a voltage exceeding 80 V but not exceeding 1,000 V—fitted with connectors

854441

Electric conductors fitted with connectors, for a voltage not exceeding 80 V, other than those of subheadings 8544.20 and 8544.30

854449

Electrostatic photocopying apparatus—operating by reproducing the original image directly onto the copy (direct process)

854451

Other photocopying apparatus—incorporating an optical system

854459

Insulated electric conductors, for a voltage exceeding 80 V but not exceeding 1,000 V, not fitted with connectors

854460

Apparatus for the projection or drawing of circuit patterns on sensitized semiconductor materials—direct write-on-wafer apparatus (continued on next page)

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Table D.2

Goods to be included in an electronics/electrical goods sector initiative (continued)

Code

Description

854470

Apparatus for the projection or drawing of circuit patterns on sensitized semiconductor materials—step and repeat aligners

8545

Apparatus for the projection or drawing of circuit patterns on sensitized semiconductor materials—other

8546

Electrical insulators of any material

8547

Insulating fittings for electrical machines, appliances, or equipment, being fittings wholly of insulating material apart from any minor components of metal incorporated during molding solely for purposes of assembly, other than insulators of heading 85.46; electrical conduit tubing and joints thereof, of base metal lined with insulating material

8548

Waste and scrap of primary cells, primary batteries, and electric accumulators; spent primary cells, spent primary batteries, and spent electric accumulators; electrical parts of machinery or apparatus, not specified or included elsewhere in this chapter

900110

Optical fibers, optical fiber bundles and cables, other than optical fiber cables made up of individually sheathed fibers

900120

Sheets and plates of polarizing material

900190

Lenses (including contact lenses), prisms, mirrors, and other optical elements of any material, unmounted, other than those of glass not optically worked and of subheadings 9001.30 to 9001.50

9002

Lenses, prisms, mirrors, and other optical elements, of any material, mounted, being parts of or fittings for instruments or apparatus, other than such elements of glass not optically worked

9006

Photographic (other than cinematographic) cameras; photographic flashlight apparatus and flashbulbs other than discharge lamps of heading 85.39

9007

Cinematographic cameras and projectors

9008

Image projectors, other than cinematographic; photographic (other than cinematographic) enlargers and reducers

900911

Electrostatic photocopying apparatus, operated by reproducing the original image directly onto the copy (direct process)

900912

Electrostatic photocopying apparatus, operated by reproducing the original image via an intermediate onto the copy (indirect process)

900921

Photocopying apparatus incorporating an optical system, other than those of subheadings 9009.11 and 9009.12

900991

Automatic document feeders for photocopying apparatus incorporating an optical system or of the contact type and for thermocopying apparatus

900992

Paper feeders, photocopying apparatus, and thermocopying apparatus

900993

Sorters for photocopying apparatus incorporating an optical system or of the contact type and for thermocopying apparatus (continued on next page)

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Table D.2

Goods to be included in an electronics/electrical goods sector initiative (continued)

Code

Description

900999

Parts and accessories of photocopying apparatus (incorporating an optical system or the apparatus of the contact type) and thermocopying apparatus, other than automatic document feeders, paper feeders and sorters

901010

Apparatus and equipment for automatically developing photographic (including cinematographic) film or paper in rolls or for automatically exposing developed film to rolls of photographic paper

901041

Apparatus for the projection or drawing of circuit patterns on sensitized semiconductor materials, direct write-on-wafer apparatus, not specified or included elsewhere in this chapter

901042

Apparatus for the projection or drawing of circuit patterns on sensitized semiconductor materials, step and repeat aligners, not specified or included elsewhere in this chapter

901049

Apparatus for the projection or drawing of circuit patterns on sensitized semiconductor materials, not specified or included elsewhere in this chapter

901050

Other apparatus and equipment for photographic (including cinematographic) laboratories, negatoscopes

901090

Other instruments and apparatus—for measuring or checking semiconductor wafers or devices

901110

Stereoscopic microscopes

901120

Other optical instruments and appliances—for inspecting semiconductor wafers or devices or for inspecting photomasks or reticles used in manufacturing semiconductor devices

901180

Other optical instruments and appliances—other

901190

Parts and accessories for compound optical microscopes, including those for microphotography, micro cinematography or micro projection

901210

Microscopes other than optical microscopes and diffraction apparatus

901290

Parts and accessories for microscopes other than optical microscopes; and diffraction apparatus

901390

Liquid crystal devices not constituting articles provided for more specifically in other headings; lasers, other than laser diodes; other optical appliances and instruments, not specified or included elsewhere in this chapter

901410

Direction-finding compasses

901480

Other instruments and appliances

901490

Parts and accessories for direction-finding compasses and other navigational instruments and appliances excluding those of electrical instruments and apparatus

9015

Surveying, hydrographic, oceanographic, hydrological, meteorological, or geophysical instruments and appliances, excluding compasses; rangefinders

9016

Balances of a sensitivity of 5 cg or better, with or without weights

901710

Drafting tables and machines (continued on next page)

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Table D.2

Goods to be included in an electronics/electrical goods sector initiative (continued)

Code

Description

901720

Drawing, marking-out, or mathematical calculating instruments, other than drafting tables and machines

901780

Drawing, marking-out, or mathematical calculating instruments other than drafting tables and machines, micrometers, calipers, and gauges

901790

Parts and accessories for drawing, marking-out, or mathematical calculating instruments; parts and accessories for instruments for measuring length, for use in the hand

901812

Ultrasonic scanning apparatus

901819

Electrodiagnostic apparatus (including apparatus for functional exploratory examination or for checking physiological parameters), other than those subheadings 9018.11 to 9018.14 and parts thereof

9023

Instruments, apparatus, and models, designed for demonstrational purposes, unsuitable for other uses

9024

Machines and appliances for testing the hardness, strength, compressibility, elasticity, or other mechanical properties of materials

9025

Hydrometers and similar floating instruments, thermometers, pyrometers, barometers, hygrometers and psychrometers, recording or not, and any combination of these instruments

9026

Instruments and apparatus for measuring or checking the flow, level, pressure, or other variables of liquids or gases, excluding instruments and apparatus of heading 90.14, 90.15, 90.28, or 90.32

9027

Instruments and apparatus for physical or chemical analysis; instruments and apparatus for measuring or checking viscosity, porosity, expansion, surface tension, or the like; instruments, and apparatus for measuring or checking quantities of heat, sound, or light; microtomes

9028

Gas, liquid, or electricity supply or production meters, including calibrating meters thereof

9029

Revolution counters, production counters, taximeters, mileometers, pedometers, and the like; speed indicators and tachometers, other than those of heading 90.14 or 90.15; stroboscopes

903010

Instruments and apparatus for measuring or detecting ionizing radiations

903020

Cathode-ray oscilloscopes and cathode-ray oscillographs

903031

Multimeters; instruments and apparatus, for measuring or checking voltage, current, resistance, or power, without a recording device

903039

Instruments and apparatus for measuring or checking voltage, current, resistance, or power, without a recording device (excluding multimeters), other than those of subheadings 9030.10 and 9030.20

903040

Instruments and apparatus, specially designed for telecommunications, other than those of subheadings 9030.10 to 9030.39

903082

Instruments and apparatus for measuring or checking semiconductor wafers or devices, other than those of subheadings 9030.10 to 9030.40 (continued on next page)

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Table D.2

Goods to be included in an electronics/electrical goods sector initiative (continued)

Code

Description

903083

Other instruments and apparatus for measuring or checking electrical quantities, with a recording device

903090

Parts and accessories of instruments and apparatus for measuring or checking electrical quantities, excluding meters of heading 90.28; parts and accessories of instruments and apparatus for measuring or detecting ionizing radiations

9031

Measuring or checking instruments, appliances, and machines, not specified or included elsewhere in this chapter; profile projectors

9032

Automatic regulating or controlling instruments and apparatus

9033

Parts and accessories (not specified or included elsewhere in this chapter) for machines, appliances, instruments, or apparatus of chapter 90

910111

Wristwatches with mechanical display only, with case of precious metal or of metal clad with precious metal

910112

Wristwatches, electrically operated with optoelectronic display only, with cases of precious metal or of metal clad with precious metal

910119

Wristwatches, electrically operated, with case of precious metal or of metal clad with precious metal, other than those of subheadings 9101.11 and 9101.12

910191

Electrically operated pocketwatches and other watches, including stopwatches, with case of precious metal or of metal clad with precious metal

910211

Electrically operated wristwatches with mechanical display only, whether or not incorporating a stopwatch facility, other than those of heading 91.01

910212

Electrically operated wristwatches with optoelectronic display only, whether or not incorporating a stopwatch facility, other than those of heading 91.01

910219

Electrically operated wristwatches, whether or not incorporating a stopwatch facility, other than those of heading 91.01 and of subheadings 9102.11 and 9102.12

910291

Electrically operated pocketwatches and other watches, including stopwatches, other than those of heading 91.01

910310

Electrically operated clocks with watch movements, excluding clocks of heading 91.04

910511

Alarm clocks, electrically operated

910521

Wall clocks, electrically operated

910591

Clocks, electrically operated, not specified or included elsewhere in this chapter

910811

Electrically operated watch movements, complete and assembled, with mechanical display only or with a device to which a mechanical display can be incorporated

910812

Electrically operated watch movements, complete and assembled, with optoelectronic display only

910819

Electrically operated watch movements, complete and assembled other than those of subheadings 9108.11 and 9108.12

910911

Electrically operated clock movements, complete and assembled, of alarm clocks (continued on next page)

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Table D.2

Goods to be included in an electronics/electrical goods sector initiative (continued)

Code

Description

910919

Electrically operated clock movements, complete and assembled, other than those of alarm clocks

940510

Chandeliers and other electric ceiling or wall lighting fittings, excluding those of a kind used for lighting public open spaces or thoroughfares, excluding those of base metal

940520

Electric table, desk, bedside, or floor-standing lamps

940530

Lighting sets of a kind used for Christmas trees

940540

Electric lamps and lighting fittings, nes

940560

Illuminated signs, illuminated name-plates and the like

940592

Parts of lamps and lighting fittings, of plastics; parts of illuminated signs, illuminated name-plates, and the like, of plastics

940599

Parts of lamps and lighting fittings, nes.; parts of illuminated signs, illuminated name-plate, and the like, nes

950410

Video games of a kind used with a television receiver

950490

Articles for funfair, table, or parlor games, including pinball tables, billiards, special tables for casino games, and automatic bowling alley equipment, other than those of subheadings 9504.10 to 9504.40

961210

Typewriter or similar ribbons, inked or otherwise prepared for giving impressions, whether or not on spools or in cartridges

nesoi = not elsewhere specified or included Source: WTO (2008c).

106

FIGURING OUT THE DOHA ROUND

APPENDIX D  159

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160  Figuring Out the Doha Round

© Peterson Institute for International Economics | www.piie.com

Table D.

Average applied tariffs on ITA goods (percent)

Country

World

Developed Developing () (5)

European Union

Japan

United States

Brazil

China

India

Current applied rates All 22

1.12

1.21

1.13

1.39

1.82

1.15

0.84

1.19

1.53

Developed (7)

0.40

0.52

0.40

0.67

1.13

0.50

0.04

0.52

0.65

Developing (15)

2.43

2.39

2.63

2.52

2.42

2.11

2.12

3.57

3.12

European Union

0.37

0.74

0.23

…

1.13

1.13

0.04

0.04

1.13

Japan

0.01

0.02

*

0.02

…

0.02

0

0

0

United States

0.58

0.61

0.64

0.91

1.14

…

0.01

1.14

0.01

Brazil

9.91

12.19

8.60

12.27

11.77

11.77

…

12.27

12.28

China

1.73

1.84

1.71

1.84

1.84

1.84

2.16

…

1.87

India

3.43

3.37

4.70

3.35

3.45

3.37

8.62

3.35

…

Post-modality applied rates All 22

0.86

0.90

0.85

1.08

1.29

0.86

0.66

0.91

1.15

Developed (7)

0.27

0.34

0.25

0.48

0.69

0.31

0.04

0.31

0.41

Developing (15)

1.95

1.87

2.10

2.03

1.80

1.69

1.68

3.03

2.50

European Union

0.26

0.46

0.15

…

0.70

0.70

0.04

0.04

0.70

GRAPHICS

Japan

0.01

0.02

*

0.01

…

0.01

0

0

0

United States

0.36

0.39

0.36

0.62

0.63

…

0.01

0.63

0.01

(continued on next page)

0

108 FIGURING OUT THE DOHA ROUND

Country

Average applied tariffs on ITA goods (percent) (continued) World

Developed Developing (7) (15)

European Union

Japan

United States

Brazil

China

India

Post-modality applied rates (continued) Brazil

8.76

10.56

7.49

10.60

10.34

10.34

…

10.59

10.72

China

1.21

1.21

1.20

1.21

1.21

1.21

1.43

…

1.23

India

2.81

2.94

3.24

2.93

3.01

2.95

4.36

2.93

…

ITA = Information Technology Agreement * indicates that applied rates are positive but less than 0.05 percent. Notes: Rows are tariffs applied to imports; columns are tariffs applied to exports. Tariffs are the simple average of 2008 applied tariffs (for most countries) on all traded tariff lines for ITA goods in each bilateral relationship. Applied tariffs from 2007 are used for Korea, Malaysia, and the Philippines. Applied tariffs from 2006 are used for Thailand. For Brazil, 2008 applied tariffs are used except for imports from India, Indonesia, Malaysia, Mexico, Pakistan, the Philippines, and Taiwan, where 2007 applied tariffs are used. For India, 2008 applied tariffs are used except for imports from Brazil, Indonesia, Malaysia, Mexico, Pakistan, the Philippines, and Taiwan, where 2007 applied tariff are used. For Indonesia, 2007 applied tariffs are used except for imports from India, Malaysia, Mexico, Pakistan, the Philippines, and Taiwan, where 2006 applied tariffs are used. For Mexico, 2008 applied tariffs are used except for imports from Brazil, India, Indonesia, Malaysia, Pakistan, the Philippines, and Taiwan, where 2006 applied tariffs are used. See table D.1 for product coverage. Average tariffs for groups of countries are calculated using the 2007 imports by each country in the group as weights. Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

APPENDIX D  161

© Peterson Institute for International Economics | www.piie.com

Table D.3

162  Figuring Out the Doha Round

© Peterson Institute for International Economics | www.piie.com

Table D.4

Estimated increase in ITA goods trade from NAMA modality tariff cuts

Country

World

Developed Developing (7) (15)

European Union

Japan

United States

Brazil

China

India

0.52

0.03

Increase in billions of dollars All 22

5.99

3.31

2.51

0.96

1.57

0.67

*

Developed (7)

1.47

0.77

0.70

0.16

0.37

0.20

*

0.17

0.01

Developing (15)

4.52

2.54

1.81

0.80

1.20

0.47

*

0.35

0.02

European Union

0.87

0.42

0.45

...

0.21

0.20

0

0

0.01

*

*

*

*

...

*

0

0

0

Japan United States

0.51

0.27

0.24

0.11

0.15

...

0

0.17

0

Brazil

0.27

0.20

0.07

0.10

0.02

0.02

...

0.05

*

China

1.90

0.67

1.19

0.15

0.43

0.07

*

...

*

India

0.22

0.08

0.12

0.06

0.01

0.01

*

0.03

...

All 22

0.53

0.59

0.51

0.17

0.24

0.73

Percent increase from current ITA trade 0.58

0.87

0.43

GRAPHICS

Developed (7)

0.26

0.33

0.24

0.21

0.81

0.30

*

0.11

0.52

Developing (15)

0.79

0.77

0.92

0.89

0.89

0.52

0.50

0.63

1.18

European Union

0.41

0.54

0.39

...

1.03

0.59

0

*

0.88

*

*

*

*

...

*

0

0

0

0.26

0.38

0.21

0.32

0.68

...

0

0.27

0

Japan United States

(continued on next page)

109

Table D.4 Country

Estimated increase in ITA goods trade from NAMA modality tariff cuts (continued) World

Developed Developing (7) (15)

European Union

Japan

United States

Brazil

China

India

Percent increase from current chemicals trade (continued) Brazil

1.62

1.90

1.57

1.94

1.58

1.58

...

2.24

2.15

China

0.98

0.70

1.34

0.53

0.82

0.59

1.30

...

0.68

India

1.06

0.72

0

0.83

0.54

0.54

13.21

0.99

...

* indicates increase is positive but less than $0.05 billion or 0.05 percent. Note: Rows are imports; columns are exports. Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

GRAPHICS APPENDIX D  163 141

© Peterson Institute for International Economics | www.piie.com

ITA = Information Technology Agreement; NAMA = nonagricultural market access

164  Figuring the Doha Round 110Out FIGURING OUT THE DOHA ROUND

© Peterson Institute for International Economics | www.piie.com

Table D.5

Estimated increase in ITA goods trade from modality and sector tariff cuts

Country

World

Developed Developing (7) (15)

European Union

Japan

United States

Brazil

China

India

Increase in billions of dollars All 22

29.20

15.66

12.21

5.23

6.35

3.30

0.04

2.82

0.14

4.29

2.51

1.70

0.82

0.97

0.57

*

0.57

0.04

Developing (15)

24.91

13.15

10.51

4.42

5.38

2.72

0.04

2.25

0.10

European Union

2.06

1.09

0.94

...

0.46

0.57

*

0.06

0.04

Developed (7)

Japan

0.01

*

0.01

*

...

*

0

0

0

United States

1.50

0.86

0.62

0.44

0.37

...

*

0.43

*

Brazil

3.53

2.43

0.85

1.32

0.24

0.24

...

0.44

0.01

China

8.72

2.66

5.88

0.67

1.65

0.26

*

...

0.01

India

1.36

0.79

0.01

0.52

0.11

0.11

*

0.15

...

Percent increase from current ITA trade All 22

2.59

2.79

2.50

3.14

3.49

2.10

1.43

1.29

3.44

Developed (7)

0.77

1.08

0.58

1.08

2.11

0.87

0.06

0.35

1.61

Developing (15)

4.37

3.99

5.32

4.88

3.96

2.98

4.20

4.04

7.30

European Union

0.97

1.38

0.83

...

2.31

1.70

0.01

0.09

2.47

Japan

0.01

0.01

0.01

0.01

...

0.01

0

0

0

United States

0.77

1.21

0.54

1.33

1.71

...

0.02

0.71

0.03

(continued on next page)

142 FIGURING OUT THE DOHA ROUND

Country

APPENDIX D  165

© Peterson Institute for International Economics | www.piie.com

Table D.5

Estimated increase in ITA goods trade from modality and sector tariff cuts (continued) World

Developed Developing (7) (15)

European Union

Japan

United States

Brazil

China

India

Increase in billions of dollars Brazil

21.00

23.16

19.19

27.97

23.96

23.96

...

21.04

21.97

China

4.51

2.76

6.63

2.38

3.16

2.08

4.17

...

4.52

India

6.42

6.96

0

7.31

7.48

5.43

20.74

5.07

...

ITA = Information Technology Agreement * indicates increase is positive but less than $0.05 billion or 0.05 percent. Note: Rows are imports; columns are exports. Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

166  Figuring Out the Doha Round

© Peterson Institute for International Economics | www.piie.com

Table D.6     Additional increase in ITA goods trade from sector tariff cuts above modality tariff cuts Country

World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

0.03

2.30

0.11

Increase in billions of dollars All 22 Developed (7)

23.21

12.35

9.70

4.28

4.77

2.63

2.82

1.74

1.00

0.66

0.60

0.37

*

0.40

0.03

20.39

10.61

8.70

3.61

4.17

2.25

0.03

1.90

0.08

European Union

1.18

0.67

0.49

...

0.26

0.37

*

0.06

0.03

Japan

0.01

*

*

*

...

*

0

0

0

Developing (15)

United States

0.99

0.59

0.38

0.34

0.22

...

*

0.27

*

Brazil

3.25

2.23

0.78

1.21

0.23

0.23

...

0.40

0.01

China

6.82

1.99

4.70

0.52

1.22

0.19

*

...

0.01

India

1.13

0.70

0

0.46

0.11

0.09

*

0.12

...

All 22

2.06

2.20

1.98

1.26

1.05

2.71

Percent increase from current ITA trade 2.57

2.63

1.67

Developed (7)

0.51

0.75

0.34

0.87

1.30

0.57

0.06

0.24

1.09

Developing (15)

3.58

3.22

4.41

4.00

3.07

2.46

3.70

3.41

6.12

GRAPHICS  111

European Union

0.56

0.84

0.43

...

1.28

1.11

0.01

0.09

1.60

Japan

0.01

0.01

0.01

0.01

...

0.01

0

0

0

United States

0.51

0.83

0.33

1.02

1.03

...

0.02

0.44

0.03

(continued on next page)

  Country

(continued) World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

Increase in billions of dollars Brazil

19.37

21.26

17.61

23.03

22.38

22.38

...

18.80

19.82

China

3.53

2.06

5.29

1.85

2.34

1.50

2.86

...

3.84

India

5.35

6.24

0

6.48

6.94

4.88

7.54

4.08

...

* indicates increase is positive but less than $0.05 billion. Note: Rows are imports; columns are exports. Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

GRAPHICS  143APPENDIX D  167

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ITA = Information Technology Agreement

168  Figuring 2 Out FIGURING the Doha OUTRound THE DOHA ROUND

© Peterson Institute for International Economics | www.piie.com

Table D.

Average applied tariffs on electronics/electrical goods (percent)

Country

World

Developed Developing () (5)

European Union

Japan

United States

Brazil

China

India

1.64

2.01

2.97

Current applied rates All 22

2.34

3.08

2.91

2.72

4.23

2.29

Developed (7)

1.24

1.11

0.86

1.37

2.27

1.17

0.27

1.05

1.45

Developing (15)

7.02

6.47

7.19

6.26

7.87

5.13

5.10

7.22

8.55

European Union

0.85

1.64

0.68

…

2.31

2.31

0.25

0.27

2.22

Japan

0.04

0.40

0.08

0.09

…

0.09

0

0

0

United States Brazil

0.95

1.06

1.09

1.53

1.82

…

0.11

1.82

0.08

11.23

12.83

9.36

13.90

13.06

13.06

…

13.98

13.44

China

6.62

9.29

8.46

7.47

7.49

7.39

5.99

…

6.46

India

6.38

8.19

9.31

6.74

6.32

6.66

9.51

6.62

…

All 22

1.79

2.33

2.27

1.27

1.57

2.17

Post-modality applied rates 2.04

3.02

1.68

Developed (7)

0.87

0.80

0.61

1.04

1.56

0.83

0.25

0.73

1.05

Developing (15)

5.47

4.97

5.73

4.84

5.92

3.98

4.03

6.38

6.34

European Union

0.62

1.17

0.54

…

1.53

1.53

0.18

0.20

1.47

Japan

0.03

0.26

0.05

0.06

…

0.06

0

0

0

United States

0.64

0.74

0.66

1.09

1.11

…

0.07

1.11

0.06

(continued on next page)

Table D.7 Country

Average applied tariffs on electronics/electrical goods (percent) (continued) World

Developed Developing (7) (15)

European Union

Japan

United States

Brazil

China

India

Post-modality applied rates (continued) Brazil

9.13

10.72

7.85

10.96

10.61

10.61

…

10.96

10.85

China

4.57

6.06

5.99

4.84

4.84

4.81

4.05

…

4.25

India

5.73

8.03

8.87

6.12

5.72

6.05

7.79

6.02

…

Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

GRAPHICS 113 APPENDIX D  169

© Peterson Institute for International Economics | www.piie.com

Notes: Rows are tariffs applied to imports; columns are tariffs applied to exports. Tariffs are the simple average of 2008 applied tariffs (for most countries) on all traded tariff lines for electronics/electrical goods in each bilateral relationship. Applied tariffs from 2007 are used for Korea, Malaysia, and the Philippines. Applied tariffs from 2006 are used for Thailand. For Brazil, 2008 applied tariffs are used except for imports from India, Indonesia, Malaysia, Mexico, Pakistan, the Philippines, and Taiwan, where 2007 applied tariffs are used. For India, 2008 applied tariffs are used except for imports from Brazil, Indonesia, Malaysia, Mexico, Pakistan, the Philippines, and Taiwan, where 2007 applied tariff are used. For Indonesia, 2007 applied tariffs are used except for imports from India, Malaysia, Mexico, Pakistan, the Philippines, and Taiwan, where 2006 applied tariffs are used. For Mexico, 2008 applied tariffs are used except for imports from Brazil, India, Indonesia, Malaysia, Pakistan, the Philippines, and Taiwan, where 2006 applied tariffs are used. See table D.2 for product coverage. Average tariffs for groups of countries are calculated using the 2007 imports by each country in the group as weights.

170  Figuring the Doha Round Out FIGURING OUT THE DOHA ROUND

© Peterson Institute for International Economics | www.piie.com

Table D.8

Estimated increase in electronics/electrical goods trade from NAMA modality tariff cuts

Country

World

Developed Developing () (5)

European Union

Japan

United States

Brazil

China

India

0.01

1.88

0.04

Increase in billions of dollars All 22

9.94

0.69

0.30

1.31

2.31

0.92

Developed (7)

0.48

0.20

0.10

0.09

0.05

0.04

*

0.07

*

Developing (15)

0.97

0.49

0.20

0.19

0.21

0.08

*

0.06

0.01

European Union

1.71

0.07

0.01

…

0.45

0.28

*

0.28

0.02

Japan

0.01

*

*

*

…

*

0

*

*

United States

1.39

0.11

0.07

0.19

0.22

…

*

0.81

*

Brazil

0.53

0.03

0.02

0.14

0.02

0.02

…

0.16

*

China

3.58

0.30

0.12

0.49

1.03

0.21

*

…

0.01

India

0.41

*

*

0.09

0.02

0.05

*

0.05

…

All 22

0.59

1.03

0.78

0.15

0.48

0.81

Percent increase from current electronics trade 0.75

1.17

0.47

Developed (7)

0.59

0.53

0.35

0.62

0.85

0.42

0.05

0.48

0.26

Developing (15)

1.82

1.68

1.84

1.62

2.19

1.21

0.77

1.54

5.09

European Union

0.50

0.56

0.08

…

1.40

0.57

0.01

0.23

0.92

Japan

0.01

0.12

0.05

0.01

…

0.01

0

*

*

United States

0.40

0.81

0.61

0.46

0.69

…

*

0.67

*

(continued on next page)

(continued) Country

World

Developed Developing () (5)

European Union

Japan

United States

Brazil

China

India

Percent increase from current electronics trade (continued) Brazil

2.33

2.09

5.01

3.15

2.54

2.54

…

3.67

2.78

China

1.16

3.01

2.91

1.73

1.76

1.09

3.53

…

1.72

India

1.41

0.03

0

1.30

1.19

2.11

2.96

0.60

…

* indicates increase is positive but less than $0.05 billion or 0.05 percent. Note: Rows are imports; columns are exports. Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

GRAPHICS 5APPENDIX D  171

© Peterson Institute for International Economics | www.piie.com

NAMA = nonagricultural market access

172  Figuring 116Out FIGURING the Doha OUT Round THE DOHA ROUND

© Peterson Institute for International Economics | www.piie.com

Table D.9

Estimated increase in electronics/electrical goods trade from sector tariff cuts

Country

World

Developed Developing (7) (15)

European Union

Japan

United States

Brazil

China

India

0.12

8.62

0.21

Increase in billions of dollars All 22

45.38

3.79

1.69

6.99

8.78

4.36

Developed (7)

1.68

0.76

0.38

0.34

0.17

0.20

*

0.27

0.02

Developing (15)

6.10

3.03

1.31

1.36

1.02

0.54

0.02

0.59

0.05

European Union

4.66

0.30

0.05

…

1.17

0.89

*

0.90

0.07

Japan

0.02

0.01

*

*

…

*

0

*

*

United States

4.03

0.33

0.24

0.80

0.66

…

*

2.03

*

Brazil

4.42

0.27

0.12

1.02

0.17

0.17

…

1.04

0.02

China

14.86

1.18

0.43

1.93

3.76

0.77

0.01

…

0.03

India

2.09

0.30

*

0.65

0.13

0.18

0.01

0.50

…

All 22

2.69

5.68

4.38

2.10

2.19

3.86

Percent increase from current electronics trade Developed (7) Developing (15)

3.98

4.44

2.20

2.03

2.02

1.38

2.35

2.75

1.95

0.66

1.93

1.75

11.46

10.39

11.73

11.54

10.71

8.39

7.77

14.07

18.66

European Union

1.36

2.59

0.44

…

3.63

1.81

0.08

0.74

3.21

Japan

0.02

0.34

0.14

0.03

…

0.02

0

*

*

United States

1.15

2.48

1.99

1.99

2.03

…

0.04

1.69

0.03

(continued on next page)

APPENDIX D  173

© Peterson Institute for International Economics | www.piie.com

144  FIGURING OUT THE DOHA ROUND

Table D.9     Estimated increase in electronics/electrical goods trade from sector tariff cuts (continued) Country

World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

Increase in billions of dollars Brazil

19.40

22.32

26.94

23.71

22.02

22.02

…

23.10

23.91

China

4.84

11.80

10.53

6.77

6.40

3.92

12.03

…

8.38

India

7.22

14.84

0

9.53

9.08

7.19

20.96

5.86

…

* indicates increase is positive but less than $0.05 billion or 0.05 percent. Note: Rows are imports; columns are exports. Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

174  Figuring Out the Doha Round

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Table D.10     Additional increase in electronics/electrical goods trade from sector tariff cuts above    modality tariff cuts  Country

World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

0.11

6.74

0.16

Increase in billions of dollars All 22

35.45

3.10

1.39

5.68

6.47

3.43

Developed (7)

1.19

0.56

0.28

0.25

0.12

0.16

*

0.20

0.01

Developing (15)

5.13

2.54

1.10

1.17

0.81

0.46

0.02

0.52

0.04

European Union

2.96

0.24

0.04

…

0.72

0.61

*

0.62

0.05

Japan

0.01

0.01

*

*

…

*

0

0

0

United States

2.63

0.22

0.16

0.62

0.44

…

*

1.22

*

Brazil

3.89

0.24

0.10

0.89

0.15

0.15

…

0.87

0.02

China

11.28

0.88

0.31

1.44

2.73

0.55

0.01

…

0.02

India

1.68

0.30

0

0.56

0.11

0.13

0.01

0.45

…

All 22

2.10

4.65

3.60

1.96

1.71

3.05

Percent increase from current electronics trade 3.23

3.27

1.73

Developed (7)

1.45

1.50

1.04

1.73

1.90

1.52

0.62

1.44

1.48

Developing (15)

9.64

8.71

9.89

9.93

8.52

7.18

7.00

12.53

13.57

GRAPHICS  117

European Union

0.86

2.03

0.35

…

2.24

1.25

0.08

0.51

2.28

Japan

0.01

0.22

0.09

0.02

…

0.02

0

0

0

United States

0.75

1.67

1.38

1.52

1.34

…

0.03

1.02

0.03

(continued on next page)

modality tariff cuts (continued) Country

World

Developed Developing (7) (15)

European Union

Japan

United States

Brazil

China

India

Increase in billions of dollars Brazil

17.06

20.23

21.93

20.56

19.48

19.48

…

19.43

21.13

China

3.68

8.79

7.62

5.04

4.64

2.83

8.50

…

6.67

India

5.81

14.81

0

8.24

7.89

5.08

18.00

5.27

…

Note: Rows are imports; columns are exports. Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

GRAPHICS 145APPENDIX D  175

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* indicates that the increase is positive but less than $0.05 billion.

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Appendix E Environmental Goods

There is no set definition of what constitutes an “environmental good.” For our calculations we use a list developed by the World Bank (2007) (table E.1). Products related to solar power, wind power, heating/cooling, and natural gas dominate the list. There is a large disparity in applied tariffs on environmental goods between developed and developing countries. The average applied tariff of the seven developed countries covered in this study is 1.2 percent while that in the 15 developing countries is 7 percent (table E.2). The average developing-country tariff is brought up by the high average tariffs in the three main developing countries—Brazil (11.7 percent), China (9 percent), and India (8.5 percent). After the modality cuts, China experiences the largest cuts in applied tariffs, in large part because of the small amount of “water” between its bound and applied tariffs (table 2A.3 in chapter 2). Under a sector initiative we assume all tariffs on environmental goods go to zero. Tables E.3 to E.5 show the increase in trade following modality and sector tariff cuts. The impact of modality cuts is small. The total increase in imports is only $1.5 billion, and more than half of this goes into US and Chinese imports (increases of $0.3 billion and $0.6 billion, respectively). The impact of the sector initiative (including only sector tariff cuts) would increase exports among the 22 sample countries of environmental goods by $4.5 billion (tables E.4 and 3.5). In percentage terms, environmental goods imports of all three main developing countries increase more than 10 percent over their current levels in the majority of their bilateral relationships.1 1. While all of the percentage impacts on Brazilian, Chinese, and Indian imports shown in table E.4 are above 10 percent, some of the underlying bilateral relationships that make up the “developed (7)” and “developing (15)” groupings do not experience increases above 10 percent.

177 © Peterson Institute for International Economics | www.piie.com

Table E.1

List of environmental goods

Code

Description

392010

PVC or polyethylene plastic membrane systems to provide an impermeable base for landfill sites and protect soil under gas stations, oil refineries, etc. from infiltration by pollutants and for reinforcement of soil

560314

Nonwovens, whether or not impregnated, coated, covered, or laminated: of manmade filaments, weighing more than 150 g/m2 for filtering wastewater

701931

Thin sheets (voiles), webs, mats, mattresses, boards, and similar nonwoven products

730820

Towers and lattice masts for wind turbines

730900

Containers of any material, of any form, for liquid or solid waste, including for municipal or dangerous waste

732111

Solar-driven stoves, ranges, grates, cookers (including those with subsidiary boilers for central heating), barbecues, braziers, gas rings, plate warmers, and similar nonelectric domestic appliances, and parts thereof, of iron or steel

732190

Stoves, ranges, grates, cookers (including those with subsidiary boilers for central heating), barbecues, braziers, gas rings, plate warmers, and similar nonelectric domestic appliances, and parts thereof, of iron or steel

732490

Water saving shower

761100

Aluminum reservoirs, tanks, vats, and similar containers for any material (specifically tanks or vats for anaerobic digesters for biomass gasification)

761290

Containers of any material, of any form, for liquid or solid waste, including for municipal or dangerous waste

840219

Vapor-generating boilers, nesoi, hybrid

840290

Superheated water boilers and parts of steam-generating boilers

840410

Auxiliary plant for steam, water, and central boiler

840490

Parts for auxiliary plant for boilers, condensers for steam, vapor power unit

840510

Producer gas or water gas generators, with or without purifiers

840681

Turbines, steam and other vapor, over 40 MW, nesoi

841011

Hydraulic turbines and water wheels of a power not exceeding 1,000 kW

841090

Hydraulic turbines and water wheels, parts, including regulators

841181

Gas turbines of a power not exceeding 5,000 kW

841182

Gas turbines of a power exceeding 5,000 kW

841199

Gas turbine parts, nesoi

841581

Air conditioning machines, nesoi, incorporating a refrigerating unit and valve for reversal of the cooling/heat cycle

841861

Heat pumps, other than air conditioning machines of 8415

841869

Refrigerating or freezing equipment, nesoi

841919

Solar boiler (water heater)

841940

Distilling or rectifying plant

841950

Solar collector and solar system controller, heat exchanger (continued on next page)

118 FIGURING OUT THE DOHA ROUND 178  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Table E.

List of environmental goods (continued)

Code

Description

841989

Machinery, plant, or laboratory equipment whether or not electrically heated (excluding furnaces, ovens, etc.) for treatment of materials by a process involving a change of temperature

841990

Medical, surgical, or laboratory stabilizers

848340

Gears and gearing and other speed changers (specifically for wind turbines)

848360

Clutches and universal joints (specifically for wind turbines)

850161

AC generators not exceeding 75 kVA (specifically for all electricity-generating renewable energy plants)

850162

AC generators exceeding 75 kVA but not 375 kVA (specifically for all electricitygenerating renewable energy plants)

850163

AC generators exceeding 375 kVA but not 750 kVA (specifically for all electricitygenerating renewable energy plants)

850164

AC generators exceeding 750 kVA (specifically for all electricity-generating renewable energy plants)

850231

Electric generating sets and rotary converters, wind-powered

850680

Fuel cells that use hydrogen or hydrogen-containing fuels such as methane to produce an electric current, through an electrochemical process rather than combustion

850720

Other lead acid accumulators

853710

Photovoltaic system controller

853931

Discharge lamps, (ex ultraviolet), fluorescent

854140

Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels, light-emitting diodes

900190

Mirrors of other than glass (specifically for solar concentrator systems)

900290

Mirrors of glass (specifically for solar concentrator systems)

903210

Thermostats

903220

Manostats

Source: World Bank (2007); US International Trade Commission Interactive Tariff and Trade Dataweb, http:// dataweb.usitc.gov, 2009.

GRAPHICS  APPENDIX E  179 © Peterson Institute for International Economics | www.piie.com

20Out FIGURING OUT THE DOHA ROUND 180  Figuring the Doha Round

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Table E.2

Average applied tariffs on environmental goods (percent)

Country/group

World

Developed Developing () (5)

European Union

Japan

United States

Brazil

China

India

Current applied rates All 22

3.27

3.08

2.91

3.27

5.28

2.75

2.11

2.41

3.98

Developed (7)

1.24

1.11

0.86

1.37

2.27

1.17

0.27

1.05

1.45

Developing (15)

7.02

6.47

7.19

6.26

7.87

5.13

5.10

7.22

8.55

European Union

1.59

1.64

0.68

…

2.51

2.51

0.33

0.37

2.46

Japan

0.26

0.40

0.08

0.40

…

0.41

0

0

0

United States

1.23

1.06

1.09

1.62

1.92

…

0.04

1.90

0.04

Brazil

11.74

12.83

9.36

12.78

12.72

12.72

…

13.67

13.34

China

9.00

9.29

8.46

9.29

9.18

9.31

7.09

…

9.48

India

8.47

8.19

9.31

8.22

8.16

8.23

11.76

8.23

…

Post-modality applied rates All 22

2.49

2.33

2.27

2.52

3.90

2.09

1.69

1.98

2.94

Developed (7)

0.87

0.80

0.61

1.04

1.56

0.83

0.25

0.73

1.05

Developing (15)

5.47

4.97

5.73

4.84

5.92

3.98

4.03

6.38

6.34

European Union

1.15

1.17

0.54

…

1.79

1.79

0.32

0.35

1.76

Japan

0.17

0.26

0.05

0.26

…

0.27

0

0

0

United States

0.79

0.74

0.66

1.20

1.18

…

0.03

1.15

0.03

(continued on next page)

Table E.2

Average applied tariffs on environmental goods (percent) (continued)

Country/group

World

Developed Developing (7) (15)

European Union

Japan

United States

Brazil

China

India

Post-modality applied rates (continued) Brazil

9.82

10.72

7.85

10.65

10.68

10.68

…

11.26

11.33

China

6.04

6.06

5.99

6.07

6.01

6.07

5.08

…

6.13

India

8.24

8.03

8.87

8.06

8.01

8.05

10.33

8.08

…

Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

GRAPHICS 121 APPENDIX E  181

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Notes: Rows are tariffs applied to imports; columns are tariffs applied to exports. Tariffs are the simple average of 2008 applied tariffs (for most countries) on all traded tariff lines for environmental goods in each bilateral relationship. Applied tariffs from 2007 are used for Korea, Malaysia, and the Philippines. Applied tariffs from 2006 are used for Thailand. For Brazil, 2008 applied tariffs are used except for imports from India, Indonesia, Malaysia, Mexico, Pakistan, the Philippines, and Taiwan, where 2007 applied tariffs are used. For India, 2008 applied tariffs are used except for imports from Brazil, Indonesia, Malaysia, Mexico, Pakistan, the Philippines, and Taiwan, where 2007 applied tariff are used. For Indonesia, 2007 applied tariffs are used except for imports from India, Malaysia, Mexico, Pakistan, the Philippines, and Taiwan, where 2006 applied tariffs are used. For Mexico, 2008 applied tariffs are used except for imports from Brazil, India, Indonesia, Malaysia, Pakistan, the Philippines, and Taiwan, where 2006 applied tariffs are used. See table E.1 for product coverage. Average tariffs for groups of countries are calculated using the 2007 imports for each country in the group as weights.

182  Figuring Out 122 the FIGURING Doha Round OUT THE DOHA ROUND

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Table E.3     Estimated increase in environmental goods trade from NAMA modality tariff cuts Country/group

World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

Increase in billions of dollars All 22

1.45

0.69

0.30

0.28

0.26

0.12

*

0.13

0.02

Developed (7)

0.48

0.20

0.10

0.09

0.05

0.04

*

0.07

*

Developing (15)

0.97

0.49

0.20

0.19

0.21

0.08

*

0.06

0.01

European Union

0.10

0.07

0.01

…

0.02

0.04

0

*

*

Japan

0.01

*

*

*

…

*

0

0

0

United States

0.33

0.11

0.07

0.07

0.03

…

*

0.06

*

Brazil

0.06

0.03

0.02

0.01

*

*

…

0.02

*

China

0.58

0.30

0.12

0.12

0.13

0.05

*

…

0.01

*

*

*

*

*

*

*

*

…

India

Percent increase from current environmental goods trade All 22

1.07

1.03

0.78

1.07

1.67

0.72

0.44

0.73

1.30

Developed (7)

0.59

0.53

0.35

0.62

0.85

0.42

0.05

0.48

0.26

Developing (15)

1.82

1.68

1.84

1.62

2.19

1.21

0.77

1.54

5.09

European Union

0.40

0.56

0.08

…

0.50

0.82

0

*

0.54

Japan

0.09

0.12

0.05

0.12

…

0.12

0

0

0

United States

0.96

0.81

0.61

0.91

1.34

…

0.04

1.15

*

(continued on next page)

APPENDIX E  183

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6  FIGURING OUT THE DOHA ROUND

 

(continued)

Country/group

World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

Percent Increase from current environmental goods trade Brazil

2.71

2.09

5.01

2.26

2.69

2.69

…

6.90

2.34

China

3.07

3.01

2.91

2.92

2.93

3.92

3.17

…

9.33

India

0.05

0.03

0

0.03

0.01

0.01

1.82

0.02

…

NAMA = nonagricultural market access * indicates increase is positive but less than $0.05 billion or 0.05 percent. Note: Rows are imports; columns are exports. Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

184  Figuring Out the Doha Round

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Table E.4     Estimated increase in environmental goods trade from modality and sector tariff cuts  Country/group

World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

Increase in billions of dollars All 22

7.78

3.79

1.69

1.71

1.19

0.75

0.02

0.85

0.07

Developed (7)

1.68

0.76

0.38

0.34

0.17

0.20

*

0.27

0.02

Developing (15)

6.10

3.03

1.31

1.36

1.02

0.54

0.02

0.59

0.05

European Union

0.42

0.30

0.05

…

0.08

0.20

*

0.01

0.01

Japan

0.02

0.01

*

*

…

*

0

0

0

United States

0.90

0.33

0.24

0.24

0.08

…

*

0.20

*

Brazil

0.54

0.27

0.12

0.15

0.03

0.03

…

0.09

0.01

China

2.28

1.18

0.43

0.50

0.48

0.17

*

…

0.02

India

0.79

0.30

*

0.23

0.03

0.03

*

0.15

…

Percent increase from current environmental goods trade All 22

5.74

5.68

4.38

6.45

7.58

4.40

4.54

4.74

5.37

Developed (7)

2.03

2.02

1.38

2.35

2.75

1.95

0.66

1.93

1.75

Developing (15)

11.46

10.39

11.73

11.54

10.71

8.39

7.77

14.07

18.66

European Union

1.78

2.59

0.44

…

2.17

3.81

0.26

0.11

2.69

GRAPHICS  123

Japan

0.25

0.34

0.14

0.32

…

0.36

0

0

0

United States

2.67

2.48

1.99

3.07

3.26

…

0.26

3.90

0.02

(continued on next page)

 

(continued)

Country/group

World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

Percent increase from current environmental goods trade Brazil

23.73

22.32

26.94

24.30

26.39

26.39

…

32.78

28.70

China

12.02

11.80

10.53

12.48

10.64

14.59

13.13

…

24.19

India

15.78

14.84

0

15.40

13.95

13.60

26.25

17.78

…

Note: Rows are imports; columns are exports. Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

GRAPHICS  147APPENDIX E  185

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* indicates increase is positive but less than $0.05 billion.

186  Figuring 124 Out FIGURING the Doha OUT Round THE DOHA ROUND

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Table E.5     Additional increase in environmental goods trade from sector tariff cuts above modality    tariff cuts  Country/group

World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

Increase in billions of dollars All 22

6.32

3.10

1.39

1.42

0.93

0.62

0.02

0.72

0.05

Developed (7)

1.19

0.56

0.28

0.25

0.12

0.16

*

0.20

0.01

Developing (15)

5.13

2.54

1.10

1.17

0.81

0.46

0.02

0.52

0.04

European Union

0.33

0.24

0.04

…

0.06

0.16

*

0.01

0.01

Japan

0.01

0.01

*

*

…

*

0

0

0

United States

0.58

0.22

0.16

0.17

0.05

…

*

0.14

*

Brazil

0.48

0.24

0.10

0.14

0.02

0.02

…

0.07

0.01

China

1.70

0.88

0.31

0.38

0.35

0.12

*

…

0.01

India

0.78

0.30

0

0.23

0.03

0.03

*

0.15

…

Percent increase from current environmental goods trade All 22

4.66

4.65

3.60

5.39

5.91

3.67

4.10

4.01

4.07

Developed (7)

1.45

1.50

1.04

1.73

1.90

1.52

0.62

1.44

1.48

Developing (15)

9.64

8.71

9.89

9.93

8.52

7.18

7.00

12.53

13.57

European Union

1.38

2.03

0.35

…

1.67

2.99

0.26

0.11

2.14

Japan

0.16

0.22

0.09

0.20

…

0.24

0

0

0

United States

1.71

1.67

1.38

2.16

1.92

…

0.23

2.75

0.02

(continued on next page)

APPENDIX E  187

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8  FIGURING OUT THE DOHA ROUND

 

tariff cuts 

Country/group

World

Developed  Developing  (7) (15)

European  Union

Japan

United  States

Brazil

China

India

Percent increase from current environmental goods trade Brazil

21.02

20.23

21.93

22.05

23.70

23.70

…

25.88

26.36

China

8.95

8.79

7.62

9.56

7.71

10.67

9.96

…

14.86

India

15.73

14.81

0

15.37

13.94

13.59

24.43

17.76

…

* indicates increase is positive but less than $0.05 billion. Note: Rows are imports; columns are exports. Sources: UNCTAD TRAINS Database via World Integrated Trade Solution, 2009; authors’ calculations.

© Peterson Institute for International Economics | www.piie.com

Appendix F Trade Facilitation

OECD (2003b) versus Wilson, Mann, and Otsuki (2005) The OECD (2003b) paper does not evaluate specific trade facilitation measures or instruments—such as those that are the subject of WTO negotiations. Instead, it applies a CGE model (using the GTAP framework) to evaluate scenarios of hypothetical trade facilitation efforts carried out on a multilateral basis. To summarize the OECD results, in a scenario where better trade facilitation leads to a reduction in trade transaction costs (TTCs) by 1 percent of the value of world trade, the aggregate GDP gains are estimated to amount to $43 billion annually worldwide. Apart from its overall results, the contribution of the OECD paper lies in the way it handles trade facilitation in the framework of a CGE model: 1. Differing characteristics of both direct and indirect TTCs are represented. Indirect TTCs are calculated using border clearing times. The paper uses an “iceberg” representation: The longer goods are in transit, the larger the fraction of value that “melts away.” Direct TTCs, or “logistics duties,” are calculated using (1) charges applied on the export side of the transactions (direct TTCs in the exporting country) and (2) various handling costs on the import side of the transaction (direct TTCs in the importing country). Lower direct TTCs are modeled both as a cut in export and import impediments and as a loss of government revenue from logistics duties. 2. Country-specific differences in the quality of trade facilitation are measured by statistical evidence on border clearing times and by survey 189 © Peterson Institute for International Economics | www.piie.com

evidence on hassles in border processes. The OECD survey–based evidence is the closest in kind to the analysis developed by John S. Wilson, Catherine L. Mann, and Tsunehiro Otsuki (2005). The survey evidence reports four factors that affect “border process quality” (sources are listed in parentheses): n Customs efficiency: survey information on whether “customs authorities do [do not] facilitate efficient transit of goods” (IMD 2002). n Hidden import barriers: survey information on whether “in your country, hidden import barriers, i.e., barriers other than published tariffs and quotas, are an important problem [not an important problem]” (WEF 2002). n Administrative integrity: corruption perceptions index (Transparency International 2002). n Trade facilitation commitments: count of participation in, or implementation of, “trade facilitation instruments” (UN CEFACT 2001). The scaling for each survey response is different (e.g., customs efficiency, 1 to 10; hidden import barriers, 1 to 7). The raw data were normalized by dividing the data value for each individual country by the average for the respective data series. Full datasets were not available for every country, and only countries with at least two indicator components were considered in the analysis. The result was 102 countries in the sample. Country-specific indicators of border process quality were derived as the simple average of data for the available components. These indicators in turn were used to estimate direct TTCs in the quantitative analysis. In the baseline scenario, TTCs for all countries, sectors, and types of traders were assumed to fall by 1 percentage point of the value of traded goods (imports plus exports). 3. In alternative scenarios, higher TTCs were assumed for agrifood products (since they have a sell-by date and lose a larger fraction of value with longer transit times) and for small and medium-sized enterprises (due to infrequent transactions and handicaps in taking advantage of “simplified procedures”). Table 6 in OECD (2003b) shows the different scenarios that the OECD modeled, table 7 summarizes the results, and table 8 shows the income gains as a percentage of GDP. On the whole, the OECD approach seems to encompass a wider variety of trade barriers than the Wilson, Mann, and Otsuki (2005) approach. However, there is a rough match between the two approaches. Indirect TTCs, or border processing times, roughly correspond to port efficiency, services sector infrastructure, and customs environment. Direct TTCs, or border process quality, roughly correspond to regulatory environment and customs environment. 190  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

The OECD takes a step further than Wilson, Mann, and Otsuki (2005) in differentiating between sectors (agrifood products versus manufactured goods) and traders (small and medium-sized enterprises versus large firms). However, the fact that the OECD’s analysis is not tailored to WTO negotiations on trade facilitation is a disadvantage. Wilson, Mann, and Otsuki (2005) estimate the relationship between trade facilitation and global trade flows in manufactured goods for 2000– 01. They evaluate the relationship in four baskets, three of them constructed in accordance with trade facilitation concepts covered in GATT Articles V, VII, and X, which are the subject of WTO negotiations. The fourth basket, services sector infrastructure, is designed to measure the extent to which an economy has the necessary domestic infrastructure and is using networked information to improve efficiency and transform activities to enhance economic activity. Wilson, Mann, and Otsuki use a gravity model to estimate the relationship across 75 countries. The gains from better trade facilitation are predicted by using a simulation method and compared across geographical regions, trade facilitation categories, and the party undertaking reforms (the domestic country or its trade partners). To summarize Wilson, Mann, and Otsuki’s results, the total gain in trade flow in manufacturing goods from trade facilitation improvements in all four areas is estimated to be $377 billion; all regions gain in imports and exports. Wilson, Mann, and Otsuki (2005) contribute in important ways to the methodology of conducting empirical research on four aspects of trade facilitation. They measure 1. port efficiency for each country J as the average of two indexed inputs (WEF 2002): n port facilities and inland waterways (where 1 = underdeveloped, 7 = as developed as the world's best) and n air transport (1 = infrequent and inefficient, 7 = as extensive and efficient as the world's best). 2. customs environment for each country J as the average of two indexed inputs (WEF 2002): n hidden import barriers (other than published tariffs and quotas) and n irregular extra payments or bribes connected with import and export permits. 3. regulatory environment for each country J as the average of indexed inputs: n transparency of government policy (IMD 2002) and n control of corruption (Kaufmann, Kraay, and Zoido-Lobaton 2002) 4. proxy for services sector infrastructure, e-business usage, for each country J as the average of indexed inputs (WEF 2002): APPENDIX F  191 © Peterson Institute for International Economics | www.piie.com

n

speed and cost of internet access (where 1 = slow and expensive, 7 = fast and cheap) n internet contribution to reduced inventory costs (where 1 = no improvement, 7 = huge improvement). Wilson, Mann, and Otsuki’s modeling methodology accounts for the fact that trade flows will be affected by trade facilitation efforts, both in the country of origin (the exporter) and the country of destination (the importer). The design of scenarios accounts for differences among countries relative to the world’s best practice. In the Wilson, Mann, and Otsuki scenarios, each country improves toward the best practice levels by a countryspecific amount. Their “improvement formula” brings the below-average countries in a group half-way to the average for the entire set of countries. Their focus on below-average countries reflects the World Bank’s mandate to build capacity in poor countries. WTO negotiations on trade facilitation, if they succeed, are also likely to make the greatest difference in below-average countries. Table 8 in Wilson, Mann, and Otsuki (2005) shows the change in trade flow by region, by trade facilitation indicators, and by reforms in each country versus its trading partners. A big selling point of Wilson, Mann, and Otsuki (2005) is the match between their trade facilitation measures and GATT articles, which allows us to apply their results to potential outcomes from successful trade facilitation negotiations in the Doha Round.

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Table F.1 Brief summary of Doha Round trade facilitation proposals Sector

Description

Proposing member(s)

Cross cutting

Small economies/developing countries may use institutions under regional trade agreements or customs unions to aid in the implementation of new trade facilitation measures.

Barbados, Cuba, Fiji, Papua New Guinea, Solomon Islands

Publication

Members shall publish all rules pertaining to import and export procedures, duties, classification rules, prohibitions, fees, penalties, and appeal procedures.

Hong Kong, Japan, Mongolia, Norway, Switzerland, Turkey

Internet publication

Members shall publish and update a full description of their customs procedures and make available the forms and documents required for importation and exportation on the internet.

United States

Members shall publish and update a description of import/export and transit procedures and all required forms thereof on the internet. Whenever practical the language of publication should be one of the official languages of the WTO.

Hong Kong, Japan, Mongolia, Norway, Switzerland, Turkey

Members shall ensure that enquiry points regarding trade procedures exist. If fees exist for enquiries they shall not exceed the cost of service.

Hong Kong, Japan, Mongolia, Norway, Switzerland, Turkey

Small economies/developing countries that are party to regional agreements may establish regional enquiry points.

Barbados, Cuba, Fiji, Papua New Guinea, Solomon Islands

Except in urgent circumstances, members shall provide information to interested parties on new trade facilitation policies with a reasonable period of time to comment.

Hong Kong, Japan, Mongolia, Switzerland

Members shall allow for a certain, predetermined number of days between publication and implementation of new customs procedures.

Turkey

Consults

Members shall hold regular consultations between border agencies and traders within their territories.

Hong Kong, Japan, Mongolia, Switzerland

Advance rulings

A member shall issue an advance ruling to an applicant submitting a request regarding a good’s classification, customs valuation, and the application of duties or quotas.

Australia, Canada, Turkey, United States

Appeals

Each member shall provide that any person to whom customs or other border agency issues a decision has the right to an administrative appeal and a judicial appeal of the decision.

Japan, Mongolia

Enquiry points

Comment period

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Table F.1 Brief summary of Doha Round trade facilitation proposals (continued) Sector

Description

Proposing member(s)

Appeals (continued)

There shall be a mechanism for an appeal of adverse findings of inspection authorities at the import points of a customs union.

India

Import alerts

Import warnings and any resulting prohibitions must be applied uniformly across the issuing country, a warning may only be issued after positive evidence, and warnings and prohibitions may not be maintained once the situation is resolved.

India

Goods detention

When imported goods are detained for inspection by customs, information regarding the detention shall be provided to the importer or agent promptly.

India

Test procedure

In the event that an import is found to be contaminated or otherwise not compliant, members shall grant a second confirmatory test of the import upon request.

India

Import/export fees

Import and export fees shall only be imposed for services provided in direct connection with the specific importation or exportation; not exceed the approximate cost of the services; not be calculated on an ad valorem basis; and not be imposed with respect to consular services and equivalent measures.

European Union, Korea, Switzerland

Prearrival

Members shall maintain or introduce pre-arrival processing for imports. Where applicable, members shall draw on international standards as a basis for prearrival processing.

Hong Kong, Japan, Korea, Mongolia, Switzerland

Declaration procedures for vessels shall be European Union applied prior to the vessels’ arrival, or as rapidly as not to unduly delay the vessel and its cargo. Members will also provide for advance electronic lodging of documents and for prearrival processing of such documents. Return of goods

Members shall have procedures authorizing an importer to remove goods from customs’ control prior to the final determination of customs duties, taxes, and fees when these are not determined at or prior to arrival.

Canada, Switzerland

Risk assessment

A customs union shall generally apply a harmonized risk-management system across the entire customs union.

India

(continued on next page)

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Table F.1 Brief summary of Doha Round trade facilitation proposals (continued) Sector

Description

Proposing member(s)

For the purpose of risk management members shall concentrate examinations on higher-risk goods, thereby facilitating the movement of lower-risk goods.

Taiwan, Korea, Switzerland

Members shall apply risk-management techniques with the purpose to reduce physical inspections on goods. Members shall concentrate physical inspections on high-risk goods.

China

Postclearance audit

Members shall conduct postclearance audits on the account books, vouchers, commercial documents, customs declaration forms, and other related information of trading enterprises.

China, Indonesia, Korea

Average time

Members shall measure and publish their own average time for the release of goods in a consistent manner on a periodic basis. Members shall try to reduce average release time.

Korea, Japan

Authorized traders

Members shall apply further simplified import and export formalities for certain authorized traders.

European Union, Mongolia

Norms for authorized trader status shall be applied uniformly by all member states of a customs union.

India

Expedited shipments

Each member shall adopt or maintain customs procedures allowing for expedited shipments while maintaining customs control and selection.

United States

Consular transactions

A member shall not require a consular transaction, including any related fee or charge, in connection with the importation of any good.

Uganda, United States

Border agencies

Members shall ensure that their authorities and agencies involved in border and other import and export controls cooperate and coordinate their procedures.

Canada, Norway

Transshipped goods may be declared, by the relevant party, at the port or place of destination for customs evaluation at that location.

European Union

Each member shall make periodic reviews of its policies, taking into account new business practices, techniques, technologies, international best practices, and outside input.

Hong Kong, Switzerland

Periodic review

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Table F.1 Brief summary of Doha Round trade facilitation proposals (continued) Sector

Description

Proposing member(s)

Reducing requirements

Members shall minimize the incidence and complexity of import and export formalities and decrease and simplify import and export documentation requirements.

Hong Kong, Switzerland

Members shall ensure that documentation requirements are no more administratively burdensome or trade restrictive than necessary to achieve their legitimate objectives.

Mongolia, Norway, Switzerland

International standards

Members shall use relevant international standards or parts thereof as a basis for their laws, regulations, and administrative procedures that lay down requirements for formalities and procedures in connection with importation, exportation, or transit.

Mongolia, Norway, Switzerland

Available information

Customs and other border agencies shall require only those documents necessary to permit control of the operation and to ensure that all requirements relating to the application of relevant laws have been complied with.

Hong Kong, Korea, Switzerland

Single window

Members shall maintain or establish a “single window“ where documentation and/or data requirements for exportation, importation, and transit are submitted one time only.

Korea, Singapore, Thailand

Preshipment

Members shall not require the use of preshipment inspections or their equivalent.

European Union, Taiwan

Members shall not require the provision of shipping notes and associated documents as a condition for the import, unloading, or transshipment of cargos.

European Union

Customs brokers

Members shall not require the use of customs brokers.

European Union, Mongolia, Taiwan, Switzerland

Customs unions

For border clearance of goods, member states of a customs union shall adopt the same border procedures.

India

All documentation requirements relating to import clearance shall be uniform for all member states of a customs union.

India

In case of rejection of a food consignment on account of failure to meet certain standards, an option shall first be given to the exporter to return the rejected goods to the exporter.

India

Returned goods

(continued on next page)

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Table F.1 Brief summary of Doha Round trade facilitation proposals (continued) Sector

Description

Proposing member(s)

Scope of goods transit

Definition of goods in transit: Goods shall be deemed to be in transit across the territory of a member when the passage across such territory is only a portion of a complete journey beginning and ending beyond the frontier of the member whose territory the traffic passes.

Macedonia, Mongolia, Switzerland, Swaziland

Consignments that are being transshipped shall not be subject to transit procedures.

European Union

Freedom of transit

There shall be nondiscriminatory freedom of transit through the territory of each member via the routes most convenient for international transit.

Macedonia, Mongolia, Switzerland, Swaziland

Regulations on freedom of transit

All regulation imposed by a member on traffic in transit to or from the territories of other members shall be reasonable, having regard to the conditions of the traffic.

Macedonia, Mongolia, Switzerland, Swaziland

Traffic in transit shall not be subject to any restrictions unless a member takes a measure to fulfill one of the objectives laid down in GATT Articles XX and XXI.

Cuba, Georgia, Moldova, Paraguay, Turkey

Members shall not apply discriminatory measures to goods in transit, or to vessels or other means of transport of other members, for noncommercial reasons.

Cuba

With respect to traffic charges, each member shall accord to traffic in transit to or from the territory of any member treatment no less favorable than that accorded to its own traffic or the treatment afforded to traffic from the most favored nation, whichever is more favorable.

Macedonia, Mongolia, Switzerland, Swaziland

Members shall publish promptly information on transit charges.

Macedonia, Mongolia, Switzerland, Swaziland

Each member shall periodically review its charges to ensure that they are in line with WTO commitments and with a view to reducing their number and diversity, where appropriate.

Macedonia, Mongolia, Switzerland, Swaziland

Members shall exempt traffic in transit from customs duties and from all transit duties and other fees and charges imposed in respect of transit, except for charges like road tolls.

Macedonia, Mongolia, Switzerland, Swaziland

Fees and charges on transit

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Table F.1 Brief summary of Doha Round trade facilitation proposals (continued) Sector

Description

Proposing member(s)

Fees and charges on transit (continued)

Members shall accord to traffic in transit to or from the territory of any Member, treatment no less favorable than that accorded to domestic traffic, under like conditions, within the territory of that member.

Cuba, Georgia, Moldova, Paraguay, Turkey

Documents for goods in transit

Each member shall publish all transit formalities and documentation requirements, and regional transit agreements or arrangements.

Macedonia, Mongolia, Switzerland, Swaziland

Each member shall periodically review its transit formalities and documentation requirements to ensure that they are in line with WTO commitments.

Macedonia, Mongolia, Switzerland, Swaziland

Any member may require that traffic in transit through its territory be entered at the proper customs office without prejudice to the other commitments on transit.

Macedonia, Mongolia, Switzerland, Swaziland

Bonded transport regime

Where a member requires a guarantee to avoid inland diversion of goods in transit, any person required to provide security shall be allowed to choose any form of security provided that it is acceptable to the customs and other border authorities.

Macedonia, Mongolia, Switzerland, Swaziland

Regional transit agreements

Members shall promote bilateral and regional transit agreements or arrangements with a view to reducing trade barriers and enhancing freedom of transit.

Macedonia, Mongolia, Switzerland, Swaziland

Transit cooperation

Members shall ensure cooperation and coordination between all concerned authorities and agencies in their territory to facilitate traffic in transit.

Macedonia, Mongolia, Switzerland, Swaziland

Members shall provide opportunities for interested traders or their representatives to comment on the transit regime and its operation.

Macedonia, Mongolia, Switzerland, Swaziland

Members shall, upon request, exchange information and documents on matters such as Harmonized System (HS) classification, description, quantity, country of origin, and valuation of goods in identified cases of import or export where there is reason to doubt the truth or accuracy of a declaration filed by the importer or exporter.

India, South Africa, Sri Lanka

Customs cooperation

(continued on next page)

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Table F.1 Brief summary of Doha Round trade facilitation proposals (continued) Sector

Implementation of trade facilitation

Description

Proposing member(s)

Members may seek assistance from other members in accordance with the following requirements: A member shall seek to obtain and review the relevant and necessary documentation from the importer respecting the declared value of goods and shall conduct a verification before it requests assistance from another member; and if the member has reasonable grounds to doubt the truth or accuracy of supporting documentation it may request assistance from the exporting member on mutually agreed terms consistent with the requirements of this proposal. However, a member shall not require an original or copy of export declarations issued by the authorities of the exporting member as a requirement for importation.

Canada

Cross-cutting measures containing provisions on the following: capacity self-assessment, notification procedures, entry into force of the agreement, special and differential treatment, formulation of capacity building plans, notification of capacity building plans, timing of implementation of commitments, verification of capacity acquisition, notification of capacity acquisition, full implementation of the agreement, technical assistance, cooperation and coordination in implementation, technical assistance in capacity building.

A group of 23 members; prominent members include the European Union, Japan, Mexico, Canada, and Switzerland

Cross-cutting measures containing provisions on the following: special and differential treatment, the establishment of the WTO’s Trade Facilitation Technical Assistance and Capacity-Building Support Unit (TFTACBSU), capacity self-assessment, notification procedures, formulation of capacity building plans, preparations and notifications of capacity building plans, entry into force of the agreement, applicability of the agreement, implementation of capacity building plans, verification of capacity acquisition, developedmember obligations relating to technical assistance and capacity building, cooperation and coordination in implementation.

Core Group of Developing Countries on Trade Facilitation

(continued on next page)

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Table F.1 Brief summary of Doha Round trade facilitation proposals (continued) Sector

Description

Proposing member(s)

Implementation of trade facilitation (continued)

Cross-cutting measures containing provisions on the following: linking technical assistance and capacity building to trade facilitation, needs assessments before the trade facilitation agreement, needs assessments after the trade facilitation agreement, special and differential treatment in levels of commitments, exceptions for least developed countries, early warning mechanisms and dispute settlement.

Core Group of Developing Countries; African, Caribbean, and Pacific Group; African Group; Least Developed Countries Group

Members and the WTO, within its competence, Barbados, Cuba, Fiji, Papua shall provide technical and financial assistance, New Guinea, Solomon on mutually agreed terms, to small economies/ Islands developing countries to support the establishment, modification, and maintenance of these national and regional enquiry points. A Committee on Trade Facilitation is hereby established. The committee shall be open for participation by all members. The committee shall elect its own chairman. The committee shall meet as needed and envisaged by the relevant provisions of the agreement, but no less than once a year.

Guatemala, Honduras, Hong Kong, Nicaragua, Norway, Taiwan, Switzerland

In order to facilitate the process of domestic coordination of trade facilitation needs, priorities, and implementation, members shall establish a national committee or a similar mechanism on trade facilitation with the objective of assisting in the implementation of the Agreement on Trade Facilitation.

Honduras, Norway, Switzerland

Note: In the interest of brevity, proposals have been shortened and paraphrased in several instances. The official proposals should be consulted for actual text. Source: WTO (2009c).

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Table F.2     Trade gains from improved trade facilitation: Simulation results from Wilson, Mann, and Otsuki (2005)     (percent change of trade flow) Regulatory  environment

Services sector  infrastructure

Combined effect of  customs and regulatory  environmenta

East Asia

7.6

0.8

3.9

11.7

4.7

East Europe and Central Asia

9.5

0.9

6.1

13.5

7.0

Latin America and the Caribbean

7.9

0.9

4.4

6.8

5.3

Middle East and North Africa

0.6

0.7

0.6

1.4

1.3

OECD

0.7

0.8

1.3

1.0

2.1

Region Exporters

South Asia

12.1

0.8

7.4

20.0

8.2

Sub-Saharan Africa

1.4

0.6

3.3

5.6

3.9

Total

2.8

0.8

2.1

4.0

2.9

East Asia

4.2

2.2

3.3

7.0

5.5

East Europe and Central Asia

4.9

3.2

4.0

7.7

7.2

Latin America and the Caribbean

4.2

3.5

3.8

4.7

7.3

Middle East and North Africa

1.3

1.3

1.2

2.8

2.5

OECD

2.2

0.1

1.6

3.0

1.7

South Asia

4.5

5.8

4.8

9.3

10.6

Sub-Saharan Africa

3.0

3.0

3.1

6.1

6.1

Total

2.8

0.8

2.1

4.0

2.9

Importers

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Port efficiency

Customs  environment

a. The simulation results from port efficiency and services infrastructure are excluded from the “combined effect,” in keeping with the “narrow definition” explained in the main text. Source: Wilson, Mann, and Otsuki (2005).

Table F.3     Trade and GDP gains from trade facilitation    improvements Trade gains   (billions of dollars) Country/region

Imports

Exports

GDP gains Percent

Billions   of dollars

Broadly defineda European Union

70.0

29.5

0.3

45.8

Japan

20.7

13.7

0.4

15.8

United States

93.3

19.0

0.4

51.7

Brazil

10.3

8.2

0.6

8.5

China

97.3

101.4

2.8

91.4

India

20.9

12.7

1.4

15.4

468.2

284.0

0.7

346.0

NC

NC

0.8

393.2

Sample country total Global total

Narrowly defined      b

European Union Japan United States

17.2

16.3

0.1

15.4

5.1

7.5

0.1

5.8

23.0

10.5

0.1

15.4

Brazil

4.7

2.2

0.2

3.2

China

32.0

19.9

0.7

23.9

India Sample country total Global total

9.1

2.6

0.5

5.4

138.5

86.8

0.2

103.6

NC

NC

0.2

117.8

NC = not calculated. The trade facilitation numbers were not adjusted in the same way as the rest of the sectors to reflect global trade flows. The import and export gains from trade facilitation shown in table 1.2 follow the same 22-sample country total as in table 1.1. a. The broad definition of trade facilitation from Wilson, Mann, and Otsuki (2005) includes the estimated gains from services infrastructure, port efficiency, customs environment, and regulatory environment. b. The narrow definition includes only the estimated gains from customs environment and regulatory environment. Notes: Imports are imports from the world and exports are exports to the 22 countries in the sample. When a country can be categorized as more than one region (for example, Japan can be either East Asia or OECD), the smaller trade gain coefficient is chosen. Trade gains are calculated using coefficients from Wilson, Mann, and Otsuki (2005) excluding the port efficiency and services infrastructure categories. GDP gains are calculated using the dollar ratio average from table A.2. Sources: Wilson, Mann, and Otsuki (2005); authors’ calculations.

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Table F.4     Elements excluded from the “narrow definition” of     trade facilitation Trade gains   (billions of dollars) Country/region

Imports

Exports

GDP gains Percent

Billions of  dollars

Services infrastructure European Union Japan United States

30.4

7.8

0.10

17.57

9.0

3.6

0.13

5.80

40.6

5.0

0.15

20.96

Brazil

3.0

2.8

0.20

2.67

China

40.8

49.4

1.26

41.49

India

8.0

6.3

0.58

6.56

Total

196.8

118.1

0.30

114.85

Port efficiency European Union Japan United States

22.3

5.4

0.08

12.77

6.6

2.5

0.10

4.20

29.8

3.5

0.11

15.30

Brazil

2.7

3.2

0.20

2.73

China

24.5

32.1

0.79

26.02

India

3.9

3.8

0.31

3.52

Total

133.0

79.1

0.20

97.57

Notes: The “narrow definition” of trade facilitation includes just the estimated gains from customs environment and regulatory environment. For more information, see table F.3. Imports are imports from the world and exports are exports to the 22 countries in the sample. When a country can be categorized as belonging to more than one region (for example, Japan can be either East Asia or OECD), the smaller trade gain coefficient is chosen. Trade gains are calculated using coefficients from Wilson, Mann, and Otsuki (2005). GDP gains are calculated using the dollar ratio average from table A.2. Sources: Wilson, Mann, and Otsuki (2005); authors’ calculations.

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Appendix G Measuring Trade Distortions

David Laborde, Will Martin, and Dominique van der Mensbrugghe (2009b) offer solutions to the central problem associated with using trade-weighted average tariff levels to measure the impact of trade distortions. The biggest problem with using a trade-weighted average is that the weight on a tariff line declines as the tariff increases, since imports are reduced. The result is that very high tariffs may have vanishingly small weights even when their trade-distorting impacts are large. Laborde, Martin, and van der Mensbrugghe (2009b) approach this problem by focusing on the relationship between a tariff expenditure aggregator and a tariff revenue aggregator. The tariff expenditure aggregator on a certain set of goods is defined as the uniform tariff that, to maintain the initial utility level associated with consumption of goods in this set, requires the same level of expenditure on imported commodities in the group as the observed vector of disaggregated commodity-specific tariffs. The tariff revenue aggregator for that same set of goods is defined as the uniform tariff that will yield the same tariff revenue as the observed vector of disaggregated tariffs for those goods. For a single country, the tariff expenditure aggregator and the tariff revenue aggregator can be introduced, respectively, into the expenditure function and the tariff revenue equation and solved to find import weights that correspond to a uniform tariff. At the global level, however, the solution is not so easy because global supply might not equal global demand when hypothetical single-country uniform tariffs replace the actual differentiated tariff structure of each country. For example, when the reduction of a high tariff in a country results in a more rapid decline in expenditures than in tariff revenues, the country experiences a gain in real income with205 © Peterson Institute for International Economics | www.piie.com

out any corresponding decrease in income elsewhere, even though global spending has dropped. This complication is resolved by drawing on Anderson (2009), who recognized that quantity indices at domestic prices are different from those at world prices.1 An appropriate correction restores global market clearing and allows for the aggregation method to be applied in a global model. The key parameter that the authors assume to carry out their aggregation calculations is the elasticity of substitution between products identified by tariff lines. The elasticity of substitution is often defined as the ratio of the change in quantities demanded for two inputs in a production function with respect to the change in the ratio of prices for the two inputs.2 In this context, the demand for inputs normally reflects their marginal product in making the final good. The elasticity of substitution describes how easily one input in the production process can be substituted for another input.3 As an example, suppose two goods are demanded at quantities x and y when their prices are px and py. The elasticity of substitution, σ, between these goods would then be defined as:

 x ÷ y   σ =−  p  d x  ÷  p   y

 x  y y  ypx  (G.1) =− xpy  px  px  d  p  py y    x In equation G.1, d is the change operator; for example, d   means  y d 

x

d 

the change in x relative to y. The negative sign in equation G.1 serves

 px    p   y

to express σ values as positive values, since an increase in the 

 x quantity ratio. It is  y   

price ratio normally means a decrease in the 

usually assumed that the elasticity of substitution remains constant over a wide range of price ratios. Laborde, Martin, and van der Mensbrugghe (2009b) considered σ values of 2 and 5. In our judgment, a σ value of 2 is conservative, and we are inclined to accept the higher value of 5. 1. In Anderson’s framework, expenditure on aggregate good j at domestic prices must equal expenditure on the good at world prices plus the revenue from the tariff. 2. “Definition: Elasticity of Substitution,” Deardorff’s Glossary of International Economics, 2001, available at www-personal.umich.edu/~alandear/glossary/ (accessed on December 16, 2009). 3. “Definition: Elasticity,” in Economics A-Z, Economist, 2010, available at www.economist. com (accessed on March 10, 2010).

206  Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

Applying their aggregation approaches with an elasticity of substitution equal to 2, the authors estimate that the benefits of global trade liberalization are increased by at least 50 percent, compared with estimates based on standard trade-weighted tariff averages (the sort we use in our calculations). With an elasticity of substitution equal to 5, the authors estimate that GDP gains for the world would total $161 billion from the Doha formula cuts with flexibilities just for agriculture and NAMA, even if some goods are exempted from the formula cuts (Laborde, Martin, and van der Mensbrugghe 2009a, table 10). When flexibilities are not allowed and with an elasticity of substitution equal to 5, GDP gains leap to $271 billion (Laborde, Martin, and van der Mensbrugghe 2009a, table 10). Table G.1 offers a comparison between our estimates of global GDP gains resulting from agriculture and NAMA tariff cuts ($63 billion, allowing for flexibilities) and the estimates made by Laborde, Martin, and van der Mensbrugghe (2009a), with and without flexibilities, and allowing for lower and higher elasticity of substitution values. In this table, the estimates made by Laborde, Martin, and van der Mensbrugghe (2009a) are also expressed as a percentage of our estimate of $63 billion. We conclude from this comparison that our calculations of the payoff from agriculture and NAMA liberalization are conservative.

Table G.1

Global GDP gains from agriculture and NAMA tariff cuts: Estimates of Laborde, Martin, and van der Mensbrugghe in dollars and as a percentage of this study’s estimate of $63 billion without flexibilities σ=2

σ=5

Billions of dollars

Percent

Billions of dollars

Percent

Doha formula tariff cuts, not allowing flexibilities

202

221

271

330

Doha formula tariff cuts, allowing flexibilities

121

92

161

156

σ = elasticity of substitution Source: Laborde, Martin, and van der Mensbrugghe (2009a); authors’ calculations.

APPENDIX G  207 © Peterson Institute for International Economics | www.piie.com

© Peterson Institute for International Economics | www.piie.com

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Messerlin, Patrick A., and Erik van der Marel. 2009. Leading with Services: The Dynamics of Transatlantic Negotiations in Services. Policy Brief (July). Paris: Groupe d’Economie Mondiale at Sciences Po (GEM). Available at http://gem.sciences-po.fr. METI (Japan Ministry of Economy, Trade, and Industry). 2009a. Market Access for Non-Agricultural Products: Japan’s Submission on “Zero-for-Zero” and “Harmonization.” Available at www.meti.go.jp/english (accessed on May 22, 2009). METI (Japan Ministry of Economy, Trade, and Industry). 2009b. Summary of New Proposal on Environmental Goods and Services. Mimeo transmitted to the authors on July 13, 2009, at the Peterson Institute for International Economics, Washington. Novy, Dennis. 2009. Gravity Redux: Measuring International Trade Costs with Panel Data. Working Paper. Coventry, UK: Department of Economics, University of Warwick. Available at www2.warwick.ac.uk. OECD (Organization for Economic Cooperation and Development). 2003a. The Sources of Economic Growth in OECD Countries. Paris. OECD (Organization for Economic Cooperation and Development). 2003b. Quantitative Assessment of the Benefits of Trade Facilitation. Document TD/TW/WP(2003)31/FINAL. Paris. OECD (Organization for Economic Cooperation and Development). 2008. Indicators of Product Market Regulation. OECD Statistics. Paris. OECD (Organization for Economic Cooperation and Development). 2009. Methodology for Deriving the Services Trade Restrictiveness Indices. Paper prepared for the OECD Experts Meeting on the STRI, OECD Trade and Agriculture Directorate, July 2–3, Paris. Scollay, Robert, and John P. Gilbert. 2001. New Regional Trading Arrangements in the Asia Pacific? Policy Analyses in International Economics 63. Washington: Institute for International Economics. Shepherd, Ben, and Sebastien Miroudot. 2009. Leveraging Trade in Services to Consolidate Global Economic Recovery: An Agenda for the G-20. Policy Brief (September). Paris: Groupe d’Economie Mondiale at Sciences Po. Available at http://gem.sciences-po.fr. Simpson, John. 2009. A Tour of the Ongoing Work of the World Trade Organization on Trade Facilitation: The Trader’s Perspective. In Global Enabling Trade Report 2009, ed. Robert Z. Lawrence, Margareta Drzeniek Hanouz, and John Moavenzadeb. Geneva: World Economic Forum. Available at www.weforum.org (accessed on July 9, 2009). Transparency International. 2002. Global Corruption Report. Berlin. UN CEFACT (United Nations Centre for Trade Facilitation and Electronic Business). 2001. Compendium of Trade Facilitation Recommendations. Geneva. www.unece.org/cefact. Vastine, Robert. 2008. Negotiating the Liberalization of Trade in Services in the WTO: Promise and Reality. Paper presented at the 17th Annual Frontiers in Service Conference, Center for Excellence in Service, University of Maryland, October 3. Wang, Zhi, Shashank Mohan, and Daniel Rosen. 2009. Methodology for Estimating Services Barriers. Rhodium Group and Peterson Institute for International Economics. Unpublished. On file with authors. WEF (World Economic Forum). 2002. Global Competitiveness Report 2001­–02. Geneva. Wilson, John S., Catherine L. Mann, and Tsunehiro Otsuki. 2005. Assessing the Benefits of Trade Facilitation: A Global Perspective. World Economy 28, no. 6 (June): 841–71. World Bank. 2007. International Trade and Climate Change: Economic, Legal and Institutional Perspectives. Washington. World Bank. 2009. Doing Business Report 2009. Washington. Available at www.doingbusiness. org (accessed on July 13, 2009).

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WTO (World Trade Organization). 2005. Market Access for Non-Agricultural Products: Tariff Liberalization in the Chemicals Sector. WTO Document TN/MA/W/58. Geneva. WTO (World Trade Organization). 2008a. World Trade Report 2008: Trade in a Globalizing World. Geneva. WTO (World Trade Organization). 2008b. Services Signalling Conference: Report by the Chairman of the TNC. WTO Document JOB (08)/93. Geneva. WTO (World Trade Organization). 2008c. Fourth Revision of Draft Modalities for Non-Agricultural Market Access. WTO Document TN/MA/W/103/Rev.3. Geneva. WTO (World Trade Organization). 2008d. Revised Draft Modalities for Agriculture. WTO Document TN/AG/W/4/Rev.4. Geneva. WTO (World Trade Organization). 2009a. Information Technology: Schedules of Concessions. Geneva. Available at www.wto.org (accessed on June 15, 2009). WTO (World Trade Organization). 2009b. Information Technology: Schedules of Concessions. United States, files 182-00, 182-01, 182-02, 182-03, 182-04, and 182-05. Available at www. wto.org (accessed on June 15, 2009). WTO (World Trade Organization). 2009c. WTO Negotiations on Trade Facilitations Compilation of Members’ Textual Proposals. WTO Document TN/TF/W43/Rev.19. Geneva. Zahrnt, Valentin. 2009. How States Perceive the Costs of Trade Liberalization in the WTO. Aussenwirtschaft 64, no. 3: 269–91.

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Index

administrative integrity, 190 ad valorem tariffs, services trade barriers and, 117–20 aggregate measure of support (AMS), 21b aggregation calculations, of trade distortions, 205–207 agriculture, 2–3, 18–30, 105 applied rates, 18–20, 19t, 23–24, 47t–54t, 106 “water levels,” 19, 28, 43t–46t, 106 bound rates, 18–19, 19t, 24, 24t, 37t–42t box score, 11b developed versus developing countries, 13 export subsidies, 21b–22b, 27, 59t–60t GDP gains, 5, 5n, 10t, 35t, 35–36, 107, 112, 207, 207t methodology for calculating concessions, 17, 20b–22b reciprocity measure gains, 25–28, 26t, 57t–65t recommendations, 106, 108 tariff cuts, 18, 25, 26t, 28–30, 41t–42t, 55t–56t, 66t trade gains, 5, 6t, 8t, 28–30, 69t–74t anticoncentration clause, 31b–32b antidumping procedures, 3 applied rates, 17 agriculture, 18–20, 19t, 23–24, 47t–54t, 106 chemicals, 87, 129, 131t–132t electronics and electrical goods, 94t, 140, 168t–169t

environmental goods, 98t, 177, 180t–181t information technology, 92t, 139, 160t–161t NAMA, 30t, 30–33, 33t, 47t–54t services, 83, 84t “water levels” (See “water levels”) Argentina reciprocity measure gains, 57t–58t tariff rates, 47t Asia-Pacific Economic Cooperation (APEC), 2n Australia, reciprocity measure gains, 57t–58t automobiles, environment-friendly, 100 Blue Box payments, 21b border process quality, 189–90 bound rates, 17, 20b agriculture, 18–19, 19t, 24, 24t, 37t–50t environmental goods, 177 NAMA, 30, 30t, 32, 33t, 37t–50t services, 83 Brazil agriculture reciprocity measure gains, 25, 26t, 27–28, 62t–65t tariff rates, 19t, 24, 24t, 37t–47t, 51t–56t, 66t, 69t–74t trade gains, 29–30 chemicals, 88t–89t, 129, 131t–138t electronics and electrical goods, 94t–95t, 168t–175t

215 © Peterson Institute for International Economics | www.piie.com

environmental goods, 98t, 177, 180t–187t GDP gains, 12 information technology, 92t–93t, 139, 160t–167t NAMA flexibility options, 77t–78t reciprocity measure gains, 34, 62t–65t tariff rates, 30, 30t, 33, 33t, 37t–47t, 51t–56t, 67t, 69t–74t, 106 trade gains, 34 recommendations, 108 services, 84t–85t, 126t–128t trade facilitation, 202t–203t trade gains, 12 Canada, reciprocity measure gains, 57t–61t chemicals, 3, 86–90, 105 GDP gains, 87–90, 89t, 90, 90n global trade in, 86, 89t tariff rates, 87, 129, 131t–138t trade gains, 5, 6t, 8t, 87–90, 88t, 106, 129–30, 133t–138t Chemical Tariffs Harmonization Agreement (CTHA), 86, 86n China agriculture reciprocity measure gains, 25, 26t, 62t–65t tariff rates, 19t, 24, 24t, 37t–47t, 51t–56t, 66t, 69t–74t trade gains, 29–30 chemicals, 87, 88t–89t, 87, 129, 131t–138t electronics and electrical goods, 91, 94t–95t, 96, 140, 168t–175t environmental goods, 98t, 100, 177, 180t–187t GDP gains, 12 information technology, 91, 92t–93t, 96, 139–40, 160t–167t NAMA flexibility options, 75t–76t GDP gains, 36 reciprocity measure gains, 33–34, 62t–65t tariff rates, 30, 30t, 32–33, 33t, 37t–47t, 51t–56t, 67t, 69t–74t, 106 trade gains, 34 recommendations, 108 services, 84t–85t, 126t–128t trade facilitation, 202t–203t trade gains, 12 Colombia, tariff rates, 47t computable general equilibrium (CGE) model

216

GDP growth ratios, 110–11, 113t–115t trade facilitation, 102, 189–91 computers. See information technology (IT) corruption perceptions index, 190 customs procedures, 102, 190, 191, 201t dataset, 3, 3n–5n, 14t–15t GDP growth ratios, 110, 113t–114t services trade, 119–21, 123t–124t tariff rates, 17, 20b–22b, 31b–32b de minimis level, 21b developed countries. See also specific country gains for (See also specific sector) versus developing countries, 13 developing countries. See also least developed countries; specific country gains for (See also specific sector) versus developed countries, 13 openness ratio for, 111, 111n recommendations, 108 digital goods, 91 dispute settlement cases (WTO), 90n Doha Development Agenda, 13 Doha Round failure scenario, 2, 105 length of, 1, 105 reasons for completion of, 1–2, 105 Doha Round box score, 6–7, 11b dollar ratio, 111n, 111–12, 112n domestic farm subsidies, 18, 21b, 23–24, 28, 57t–58t duty-free, quota-free (DFQF) treatment, 33, 83, 108 e-business usage, 191–92 economic growth, drivers of, 110 elasticity import, 28, 68t, 100, 100n price, NAMA products, 87n, 96n, 100, 100n of substitution, 206–207 electronics and electrical goods, 3, 90–96, 105 GDP gains, 91–96, 95t global trade in, 91n, 94t–95t product list, 148t–159t tariff rates, 94t, 140, 168t–169t trade gains, 5, 7t, 9t, 91–96, 94t, 96, 106, 140, 170t–175t environmental goods, 3, 96–101, 105 GDP gains, 99t, 100–101 global trade in, 97, 98t–99t product list, 177, 178t–179t tariff rates, 98t, 177, 180t–186t

Figuring Out the Doha Round © Peterson Institute for International Economics | www.piie.com

trade gains, 5, 7t, 9t, 98t, 100–101, 106, 177, 182t–187t European Union agriculture GDP gains, 35t, 35–36 reciprocity measure gains, 26t, 27–28, 57t–65t tariff rates, 19t, 37t–46t, 51t–56t, 66t, 69t–74t, 106 trade gains, 29 chemicals, 86–87, 86n, 88t–89t, 129–30, 131t–138t electronics and electrical goods, 94t–95t, 168t–175t environmental goods, 98t, 100, 180t–187t GDP gains, 9 information technology, 92t–93t, 139, 160t–167t NAMA GDP gains, 35t, 35–36 reciprocity measure gains, 33, 62t–65t tariff rates, 30t, 37t–46t, 51t–56t, 67t, 69t–74t, 106 trade gains, 34 recommendations, 108 services, 84t–85t, 86, 120, 126t–128t trade facilitation, 11, 202t–203t trade gains, 9, 11 export gains, 5, 8t–9t export subsidies, agriculture, 21b–22b, 27, 59t–60t farm subsidies, 18, 21b, 23–24, 28, 57t–58t fish subsidies, 3 “flexibilities,” 1, 2, 207 NAMA options, 36, 75t–79t foreign direct investment (FDI) flows, services trade barriers and, 117 foreign direct investment (FDI) to GDP ratios, 110, 110n formula cuts, 1, 106, 207. See also agriculture; nonagricultural market access box score, 11b environmental goods, 97, 100 metrics, 4b “free safeguard,” 19 free trade agreements (FTAs), 33, 82 GATS (General Agreement on Trade in Services), 82–83, 119, 121 GATT articles, trade facilitation, 101–103, 191–92

GDP gains, 3, 5. See also specific country or sector box score, 11b developed versus developing countries, 13 global (See global GDP gains) methodology for, 4b, 109–12, 113t–115t Global Express Association, 101 global GDP gains, 5, 5n, 10t, 108 agriculture, 36, 207, 207t data on, 112n estimating, 111–12, 207 NAMA, 36, 207, 207t global trade chemicals, 86, 89t electronics and electrical goods, 91n, 94t–95t environmental goods, 97, 98t–99t information technology, 90, 91n, 92t–93t sample country statistics, 4–5, 14t–15t services, 81–82, 126t Global Trade Analysis Project (GTAP) framework, 110–11, 118, 189 global trade gains, 5, 8t–9t gravity model services trade barriers, 117–18, 121n trade facilitation, 102–103, 191–92 Group of 20 (G-20), 2n commitment to Doha Round, 2, 108 sample countries, 4–5, 5n, 14t–15t growth ratios, GDP coefficients, 109–12, 113t–115t “half deviation,” 20b Harmonized Commodity Description and Coding System (HS code), 17n, 91, 97n hidden import barriers, 190 Hong Kong ministerial (December 2005), 34, 82 “iceberg” representation, of trade transaction costs, 189 imports, benefits of, 3 India agriculture reciprocity measure gains, 25, 26t, 62t–65t tariff rates, 19t, 24, 24t, 37t–46t, 48t, 51t–56t, 66t, 69t–74t trade gains, 29–30 chemicals, 88t–89t, 129, 131t–138t electronics and electrical goods, 94t–95t, 168t–175t

INDEX © Peterson Institute for International Economics | www.piie.com

217

environmental goods, 98t, 177, 180t–187t GDP gains, 12 information technology, 92t–93t, 139, 160t–167t NAMA flexibility options, 79t reciprocity measure gains, 34, 62t–65t tariff rates, 30, 30t, 32–33, 33t, 37t–46t, 48t, 51t–56t, 67t, 69t–74t, 106 trade gains, 34 recommendations, 108 services, 84t–85t, 126t–128t trade facilitation, 202t–203t trade gains, 12 Indonesia, tariff rates, 48t information technology (IT), 3, 90–96 GDP gains, 91–96, 93t global trade in, 90, 91n, 92t–93t product list, 141t–147t tariff rates, 92t, 139, 160t–167t trade gains, 5, 7t, 9t, 91–96, 92t, 139–40, 162t–167t Information Technology Agreement (ITA), 90–91, 92t–93t, 139 goods covered by, 141t–147t “insurance” gains, 18 internet access, 192 Japan agriculture GDP gains, 35t reciprocity measure gains, 26t, 27–28, 57t–58t, 62t–65t tariff rates, 19t, 37t–46t, 51t–56t, 66t, 69t–74t trade gains, 29 chemicals, 88t–89t, 129, 131t–138t electronics and electrical goods, 94t–95t, 168t–175t environmental goods, 97, 98t, 180t–187t GDP gains, 11–12 information technology, 92t–93t, 139–40, 160t–167t NAMA GDP gains, 35t reciprocity measure gains, 33, 62t–65t tariff rates, 30, 30t, 37t–46t, 51t–56t, 67t, 69t–74t, 106 trade gains, 34 services, 84t–85t, 126t–128t trade facilitation, 202t–203t trade gains, 11 Korea

218

reciprocity measure gains, 57t–58t tariff rates, 48t least developed countries (LDCs). See also specific country agriculture tariff rates, 18, 24, 37t–42t, 43t–46t, 51t–56t, 69t–74t duty-free quota-free treatment for, 33, 83, 108 NAMA tariff rates, 34, 41t–46t, 51t–56t, 69t–74t reciprocity measure gains, 62t–64t recommendations, 108 lock-in effect, 18, 22–23, 27, 83 “logistics duties,” 189 Malaysia, tariff rates, 48t market access agriculture (See agriculture) nonagricultural (See nonagricultural market access) sector initiatives, 3, 10t, 81–104 (See also specific sector) Mercosur, 24n Mexico, tariff rates, 49t most favored nation (MFN) applied rates. See applied rates multilateral trading system, rules-based, viability of, 2 nonagricultural market access (NAMA), 2–3, 30–36, 105 applied rates, 30t, 30–33, 33t, 47t–54t “water levels,” 19, 28, 32, 43t–46t, 108 bound rates, 30, 30t, 32, 33t, 37t–42t box score, 11b developed versus developing countries, 13 different negotiating scenarios, 36, 75t–79t GDP gains, 5, 5n, 10t, 35t, 35–36, 106–107, 112, 207, 207t methodology for calculating concessions, 17, 31b–32b price elasticity, 87n, 96n, 100, 100n reciprocity measure gains, 26t, 33–34, 62t–65t recommendations, 106, 108 sector agreements, 34, 34n tariff cuts, 26t, 41t–42t, 55t–56t, 67t trade gains, 5, 6t, 8t, 34, 69t–74t, 106–107 nontariff barriers (NTBs), 4b agriculture, 25–27, 26t, 28–29, 62t–64t, 66t, 69t–74t

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NAMA, 34 Norway, reciprocity measure gains, 57t–61t openness indicators, services trade, 117 openness ratio, for developing countries, 111, 111n ordinary least squares (OLS) method, 118, 121n Organization for Economic Cooperation and Development (OECD) Product Market Regulation indicators, 118–20 trade facilitation study, 102, 189–91 overall trade-distorting domestic support (OTDS), 23, 27 overinclusiveness, 97n Pakistan, tariff rates, 49t partial equilibrium analysis chemicals, 129, 131t–132t services, 122, 127t–128t Philippines, tariff rates, 49t port efficiency, 103, 103n, 191, 201t, 203t “positive list” of IT products, 91 preferential duty rates, 17 price elasticity, NAMA products, 87n, 96n, 100, 100n private-sector support, 107–108 Product Market Regulation indicators, 118–20 recently acceded members (RAMs), 19n agriculture tariff lines, 20b, 22b reciprocity measure, 4b agriculture, 25–28, 26t, 57t–65t methodology for, 109–12, 113t–115t NAMA, 26t, 33–34, 62t–65t regression models GDP growth ratios, 110–11, 113t–115t services trade barriers, 118 regulatory environment, 191, 201t restrictiveness indices, services trade, 118–20, 123t–124t scientific instruments. See information technology (IT) sector agreements, 3, 10t, 81–106. See also specific sector GDP gains, 112 recommendations, 106–108 semiconductors. See information technology (IT) “sensitive” products, 17, 17n, 20b services, 3, 81–86, 105–106

box score, 11b developed versus developing countries, 13 GDP gains, 5, 10t, 85t, 86, 107, 112 global trade in, 81–82, 126t lack of progress on, 1, 82, 107–108 measures of, 81n, 81–82, 117–21, 123t–124t multilateral precedents, 82 recommendations, 108 tariff equivalent barriers, 120–21, 125t, 127t–128t tariff rates, 83, 84t trade gains, 5, 6t, 8t, 84t, 86, 107, 121–22, 127t–128t services infrastructure, for trade facilitation, 103n, 103, 191–92, 201t, 203t Services Trade Restrictiveness Indices (STRI), 118–20 software. See information technology (IT) South Africa, tariff rates, 49t South-South trade, 33 “special” products, 17, 17n, 20b Special Safeguard Mechanism (SSM), 24–25, 108 substitution, elasticity of, 206–207 Swiss formula, 30, 31b, 91–96, 100, 100n Switzerland, reciprocity measure gains, 57t–61t Taiwan, tariff rates, 50t tariff equivalent barriers, service trade, 120–21, 125t, 127t–128t tariff expenditure aggregator, 205–206 tariff rate quotas (TRQs), 18, 20b, 61t tariff rates. See also applied rates; bound rates; specific sector cuts in impact calculations, 4b trade elasticity to, 28, 68t, 100, 100n downward harmonization of, 17 methodology, 17, 20b–22b, 31b–32b trade-weighted averages, problems with, 205–207 “water levels” (See “water levels”) tariff revenue aggregator, 205–206 telecom equipment. See information technology (IT) Thailand reciprocity measure gains, 57t–58t tariff rates, 50t tiered formula, 18n, 20b, 22b “topped up” reforms, 11b, 81–104, 108. See also sector agreements; specific sector

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219

trade distortions, measuring, 205–207 trade elasticity, to tariff cuts, 28, 68t, 100, 100n trade facilitation, 3, 101–104, 106 box score, 11b commitments to, 190 developed versus developing countries, 13 GDP gains, 5, 10t, 104, 107, 112, 189, 202t measures of, 189–92 “narrow definition” of, 203t recommendations, 108 summary of Doha Round proposals, 193t–200t trade gains, 5, 7t, 9t, 104, 107, 191–92, 201t–202t trade gains, 3–4, 6t–7t. See also specific country or sector benefits of, 110–11 box score, 11b developed versus developing countries, 13 global, 5, 8t–9t, 108 impact on GDP (See GDP gains) metrics, 4b trade transaction costs (TTCs), 189–90 Turkey, tariff rates, 50t unilateral liberalization, negotiating credits for, 22–23 United States agriculture GDP gains, 35t, 35–36 reciprocity measure gains, 25–28, 26t, 57t–65t tariff rates, 19t, 23, 37t–46t, 51t–56t, 66t, 69t–74t, 106

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trade gains, 29 chemicals, 86, 86n, 88t–89t, 87, 129–30, 131t–138t electronics and electrical goods, 94t–95t, 96, 140, 168t–175t environmental goods, 97, 97n, 98t, 100, 180t–187t GDP gains, 9 information technology, 92t–93t, 139, 160t–167t NAMA GDP gains, 35t, 35–36 reciprocity measure gains, 33, 62t–65t tariff rates, 30, 30t, 33, 37t–46t, 51t–56t, 67t, 69t–74t, 106 trade gains, 34 recommendations, 108 services, 84t–85t, 86, 120, 126t–128t trade facilitation, 202t–203t trade gains, 7–9 Uruguay Round chemicals, 86 length of, 105 services sector, 82–83, 123t–124t “water levels” agriculture tariff rates, 19, 28, 43t–46t, 106 environmental goods, 177 NAMA tariff rates, 19, 28, 32, 43t–46t, 108 services, 83 World Bank, services trade barriers study, 83 World Trade Organization (WTO) benefits of negotiations in, 2–3 credibility as negotiating forum, 2 disagreements in, 1 dispute settlement cases, 90n

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