Doha Merchandise Trade Reform: What Is at Stake for Developing Countries?

The LINKAGE model of the global economy and the latest Global Trade Analysis Project (GTAP) database (version 6.05) are used to examine the impact of current merchandise trade barriers and agricultural subsidies and possible reform outcomes of the World Trade Organization's (WTO's) Doha Development Agenda. The results suggest that moving to free global merchandise trade would boost real incomes in Sub-Saharan Africa proportionately more than in other developing countries or in high-income countries, despite the terms of trade loss in parts of that region. Particular attention is given to agriculture, as farmers constitute the poorest households in developing countries but the most assisted in rich countries. Net farm incomes would rise substantially in Sub-Saharan Africa and other developing country regions, alleviating rural poverty. Partial liberalization could move the world some way toward those desirable outcomes, the more so the more developing countries themselves cut applied tariffs, particularly on agricultural imports. This article (a) summarizes the costs of current merchandise trade distortions to developing and other economies; (b) examines some scenarios that might emerge as part of an eventual Doha agreement consistent with the 2005 Hong Kong Ministerial Declaration [World Trade Organization (WTO) 2005], particularly with respect to agriculture; and (c) draws implications for the strategies developing countries might adopt in the WTO's Doha Round of multilateral trade negotiations.