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Remove trade barriers for high gains: WTO

BS Economy Bureau in New Delhi

Elimination of barriers to merchandise trade in both industrialised and developing countries can result in welfare gains ranging from $250 billion to $620 billion annually.

Of this, about one-third to half will accrue to developing countries, according to the World Trade Organisation annual report on developments in the international trading environment.

In his first annual report to members, director-general Supachai Panitchpakdi said serious obstacles to trade remained in agriculture and textiles.

Removal of agricultural support would raise global economic welfare $128 billion annually, with $30 billion to developing countries, the report said.

The rapid growth associated with a global reduction in protection could reduce the number of people living in poverty by as much as 13 per cent by 2015.

Despite agriculture's small and diminishing contribution to gross domestic product in most developed economies, it receives a disproportionate amount of assistance in the form of subsidies and protection at the border. Such assistance distorts markets at home and the world.

Organisation for Economic Cooperation and development countries' total support of $311 billion to domestic agriculture in 2001 dwarfs the $50 billion these countries spend annually on development assistance, the report points out.

Serious obstacles to trade remain in market access, it adds. While average bound and applied Most Favoured Nation tariffs in developed countries are low, tariff "peaks", and escalation can constitute major impediments to poorer countries' development and industrialisation.

These tend to be concentrated in agricultural products, textiles and clothing, and other manufactures in which developing countries have a potential comparative advantage.

Since agricultural products and textiles and clothing account for more than 70 per cent of poor countries' exports, the potential benefits from the reduction and elimination of peaks and escalation are large, it states.

The report further says progressive liberalisation of trade in services is a core objective of the ongoing negotiations mandated under Article XIX of the General Agreement on Trade in Services.

It is expected that the gains from liberalising services are substantially greater than those from liberalising trade in goods.

While the members' agreement in Doha on the Doha Development Agenda reconfirmed their commitment to multilateralism, regional alternatives are a significant challenge to the multilateral trading system.

When fully in line with WTO provisions, regional trade agreements can complement the strengthening and liberalisation of world trade.

But by discriminating against third world countries and creating a complex network of trade regimes, such agreements pose systemic risk to the global trading system.

Around 240 such agreements are currently in force and there can be close to 300 by 2005.

A noteworthy development in this regard during the past year or so has been the pursuit and conclusion of regional agreements by some Asian countries that had previously eschewed them, notwithstanding the successful launching of new multilateral negotiations.

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