The WTO, developing countries and the Doha Development Agenda: prospects and challenges for trade-led growth, by Basudeb Guha-Khasnobis (New York: Palgrave Macmillan, 2004, pp. 344)

✍ Scribed by Ricardo A. López

• Publisher: John Wiley and Sons
• Year: 2006
• Tongue: English
• Weight: 36 KB
• Volume: 18
• Category: Article
• ISSN: 0954-1748
• DOI: 10.1002/jid.1269

✦ Synopsis

Since the creation of the WTO, developing countries have been increasingly unhappy with the world trading situation. Although these countries are not against freer trade, they believe that what they have received has been less than what they have been forced to offer. This situation has led many poor countries to express their concerns about the development credibility of the WTO regime. The Doha round recognizes these concerns and promises to seek a good outcome from a development perspective for developing countries. It is then crucial for the sustainability of the system that less developed countries get more influence on the WTO but also understand the consequences of changing aspects of WTO regime.

This collection of essays presents a clear picture of the current world trading situation in both agriculture and manufacturing and offers quantitative estimates of trade and welfare effects of further liberalizing industrial countries' markets. Thus, it is an invaluable source of information and arguments for policy makers in developing countries. The book describes, in a very detailed manner, several trade issues such as tariffs, OECD domestic support policies, the 'everything but arms' (EBA) initiative, and export subsidies. One unsurprising conclusion is that developed nations still have much to do in terms of liberalizing trade, especially in agricultural products. The most important contribution of this volume is, however, the quantification of welfare effects of reducing or completely eliminating the remaining trade barriers. The essays demonstrate convincingly that poor countries can gain not only from lower trade barriers in industrial countries but also from liberalizing their own economies.

There are 10 chapters in this book. Chapters 1 and 2 provide an overview of the main issues. Chapter 1, by Guha-Khasnobis, is an excellent discussion about the causes of the turbulent times the WTO is living and the role of the Doha Round in seeking a good outcome for poor countries. It also summarizes the main arguments and findings from the rest of the essays contained in the book. Chapter 2, by Hoekman, emphasizes that it is crucial to recognize the political economy of reform, which involves, amongst other things, convincing domestic stakeholders that there are positive benefits from trade reforms via the WTO. This is an interesting and very valid point, which sometimes is dismissed by academics. But it is evident for anyone living in a developing country that lack of domestic support has been an important barrier for further liberalizing trade.

Chapters 3-6 are devoted to agriculture. Anderson, in Chapter 3, explains that farm product markets are the most costly of all goods market distortions in world trade. Estimates show that almost half of economic gains from removing barriers to trade still in place after all Uruguay Round commitments have been implemented come from agricultural and food policy reform in the OECD. But not all gains result from liberalization by developed countries; a significant portion of welfare gains would come from trade liberalization in farm products by developing countries. Chapter 4, by Dimaranan, Hertel and Keeney, reports a very interesting simulation exercise in which OECD domestic support for farm households is analysed. The conclusion is that developing countries should gain from further market access to agricultural markets in the OECD while, at the same time, permitting these rich countries to continue domestic support payments. This is a remarkable result; it suggests that developing countries can gain from trade reform in the OECD and that this reform can be politically acceptable in the OECD. In other words, there is a strong argument for developing countries to continue seeking improvements in market access to the OECD economies.

Chapter 5, by Ghosh, is a well-done and clearly written essay on the impact of trade liberalization on rice producers in India. It might be, however, too specific for many readers. The conclusion is that