[mgj-discuss] CEPR: COSTS OF WTO 'DEVELOPMENT ROUND' COULD OUTWEIGH BENEFITS FOR DEVELOPING COUNTRIES

[beeton at cepr.net]

Center for Economic and Policy Research

PRESS RELEASE
FOR IMMEDIATE RELEASE: December 15, 2005

CONTACT: Lynn Erskine 202-293-5380 x115 (in Washington, DC)
Mark Weisbrot 202-746-7264 (in Washington, DC)
Dan Beeton 852-9047-0644 (in Hong Kong)

COSTS OF WTO 'DEVELOPMENT ROUND' COULD OUTWEIGH BENEFITS FOR DEVELOPING
COUNTRIES

Statement from Mark Weisbrot, Co-Director, Center for Economic and Policy
Research

Washington, DC -- "The World Trade Organization (WTO) negotiations in Hong
Kong are being billed as a 'development round,' emphasizing the potential
benefits that new trade agreements might bring to developing countries.
But these claims exaggerate the potential gains and ignore many areas in
which developing countries are being asked to make costly concessions.

The Center for Economic and Policy Research has noted that the World Bank
projects very limited gains for developing countries, even for a very
successful Doha round. Now, current negotiations indicate that the
concessions being asked from developing countries could outweigh these
small potential benefits of an agreement. In three sectors in particular,
developing countries have much at stake:

Agriculture -- While some WTO-proponents claim that the current
negotiations are crucial for development, recent World Bank projections
suggest very limited gains of only $86 billion, or 0.8 percent of GDP from
complete trade liberalization -- with only $54 billion from agriculture.
And only $18 - $119 billion from the Doha round (a barely measurable 0.04
to 0.28 percent of developing countries' GDP) [1] Furthermore, the
elimination of rich country subsidies, while benefiting some big
agro-exporting countries and cotton farmers in Africa, would be a net loss
for developing countries as a whole, according to the World Bank's
estimates. [2]

Services -- The U.S. and EU are seeking to significantly expand the
services agreement under the WTO. A controversial 'Annex C' would allow
greater access to service markets around the world, forcing countries to
give foreign companies the same preferences as domestic providers. One
provision of this would place lower-paid workers in greater competition
with foreign workers. Meanwhile, highly paid professionals in rich
countries would continue to be protected from international competition,
despite the fact that competition would yield the largest efficiency gains
in these professions.[3]

Intellectual Property -- Intellectual property protection under the WTO
creates very large economic distortions that are extremely costly for
developing countries. These are exactly the same types of inefficiencies
that the WTO seeks to reduce by lowering trade barriers, only many times
larger. The TRIPS agreement may end up costing developing countries more
than they would gain from the removal of remaining trade barriers in the
rich countries. Developing countries must be cautious in dealing with the
continuing implementation of the TRIPS agreement. In particular, the
December 11 amendment to the TRIPS agreement regarding medicines will make
it more difficult and expensive for developing countries to have access to
life-saving medicines, as compared with the situation before TRIPS."

NOTES:
[1] Table 1.3 (page 12) and Table 1.5 (page 14) in Anderson, Kym and Will
Martin (2005). "Agricultural Trade Reform and the Doha Development Round,"
World Bank.
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/TRADE/0,,contentMDK:20716544~menuPK:207652~pagePK:148956~piPK:216618~theSitePK:239071,00.html
[2] Anderson and Martin, Table 2.8 (page 384).
[3] Dean Baker (2003). "Professional Protectionists: The Gains From Free
Trade in Highly Paid Professional Services," CEPR.
http://www.cepr.net/publications/professional_protectionists.htm

Center for Economic and Policy Research
www.cepr.net