Hostname: page-component-76fb5796d-25wd4 Total loading time: 0 Render date: 2024-04-26T16:22:26.363Z Has data issue: false hasContentIssue false
  • English
  • Français

Formulas for Failure? Were the Doha Tariff Formulas too Ambitious for Success?

Published online by Cambridge University Press:  02 January 2015

DAVID LABORDE  and
WILL MARTIN
DAVID LABORDE*
Affiliation:
IFPRI, Washington DC
WILL MARTIN*
Affiliation:
World Bank, Washington DC
*
*Email: D.Laborde@cgiar.org
**Email: wmartin573@gmail.com
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper views tariff-cutting formulas as a potential solution to the free-rider problem that arises when market opening is negotiated bilaterally and extended on a most-favored-nation basis. The negotiators in the Doha Agenda chose formulas that are ideal from an economic efficiency viewpoint in that they most sharply reduce the highest – and most economically – costly tariffs. When the political support that gave rise to the original tariffs is considered, however, this approach appears to generate very high political costs per unit of gain in economic efficiency. The political costs associated with the formulas appear to have led to strong pressure for many, complex exceptions, which both lowered and increased uncertainty about members' market access gains. Where tariff cuts focus on applied rates, it seems likely that a proportional cut rule would reduce the political costs of securing agreements. However, detailed examination of the Doha proposals with their product exceptions suggests that negotiators are likely to find cuts with exceptions politically attractive but economically costly when cuts are based on bound tariffs with different degrees of binding overhang.

Type
Review Article
Information
World Trade Review , Volume 14 , Issue 1 , January 2015 , pp. 45 - 65
Copyright
Copyright © David Laborde and Will Martin 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Anderson, J. and Neary, P. (2003), ‘The Mercantilist Index of Trade Policy’, International Economic Review, 44(2): 627–649.Google Scholar
Anderson, J. and Neary, P. (2007), ‘Welfare versus Market Access: The Implications of Tariff Structure for Tariff Reform’, Journal of International Economics, 71: 187–205.Google Scholar
Baldwin, R. and Lage, G. (1971), ‘A Multilateral Model of Trade Balancing Tariff Concessions’, Review of Economics and Statistics, 53: 237–245.Google Scholar
Baldwin, R. E. (1986), ‘Toward More Efficient Procedures for Multilateral Trade Negotiations’, Aussenwirtschaft, 41(Vol. II/III), 379–394.Google Scholar
Bouët, A. and Laborde, D. (2010), ‘Why Is the Doha Development Agenda Failing? And What Can Be Done? A Computable General Equilibrium-Game Theoretical Approach’, The World Economy, 33(11), 1486–1516.Google Scholar
Falconer, C. (2008), ‘Communication from the Committee on Agriculture’, Special Sesion, WTO, 30 April, www.wto.org/english/tratop_e/agric_e/chair_texts07_e.htm.Google Scholar
Francois, J. and Martin, W. (2003), ‘Formula Approaches for Market Access Negotiations’, World Economy, 26(1): 1–28.Google Scholar
Grossman, G. and Helpman, E. (1994), ‘Protection for Sale’, American Economic Review, 84(4): 833–850.Google Scholar
Hillman, A. (1982), ‘Declining Industries and Political-Support Protectionist Motives’, American Economic Review, 72(5): 1180–1187.Google Scholar
Jean, S., Laborde, D., and Martin, W. (2011), ‘Formulas and Flexibility in Trade Negotiations: Sensitive Agricultural Products in the World Trade Organization's Doha Agenda’, World Bank Economic Review, 24(3): 500–519.Google Scholar
Jean, S., Laborde, D., and Martin, W. (2014), ‘The Political Costs of Policy Reform’, Manuscript, World Bank.Google Scholar
Laborde, D. (2011), ‘Sectoral Initiatives in the Doha Round’, in Mattoo, A. and Martin, W. (eds.), Unfinished business? The WTO's Doha Development Agenda, London: Center for Economic Policy Research and Washington, DC: World Bank, Chapter 11.Google Scholar
Laborde, D. and Martin, W. (2011a), ‘Agricultural Market Access’, in Martin, W. and Mattoo, A. (eds.), Unfinished Business? The WTO's Doha Agenda, London: Center for Economic Policy Research and Washington, DC: World Bank, http://go.worldbank.org/L8904MG5A0.Google Scholar
Laborde, D. and Martin, W. (2011b), ‘Non-Agricultural Market Access’, in Martin, W. and Mattoo, A. (eds.), Unfinished Business? The WTO's Doha Agenda, London: Center for Economic Policy Research and Washington, DC: World Bank.Google Scholar
Laborde, D., Martin, W., and van der Mensbrugghe, D. (2011), ‘Measuring the Benefits of Global Liberalization with Optimal Aggregators of Trade Distortions’, Policy Research Working Paper 5665, World Bank, Washington, DC.Google Scholar
Martin, W. and Mattoo, A. (2011), Unfinished Business: The WTO's Doha Agenda, London: Center for Economic Policy Research and Washington, DC: World Bank.Google Scholar
Martin, W. and Messerlin, P. (2007), ‘Why Is It So Difficult? Trade Liberalization under the Doha Agenda’, Oxford Review of Economic Policy, 23(3): 347–366.Google Scholar
Schwab, S. (2006), ‘Transcript of Ambassador Susan C. Schwab, remarks on the Doha Development Agenda’, National Press Club, Washington, DC, 7 July. http://www.ustr.gov/archive/Document_Library/Transcripts/2006/July/Transcript_of_Ambassador_Susan_C_Schwab_Remarks_on_the_Doha_Development_Agenda.html.Google Scholar
Schwab, S. (2011), ‘After Doha: Why the Negotiations Are Doomed and What We Should Do About It’, Foreign Affairs, 90(3): 104–117.Google Scholar
Turunen-Red, A. and Woodland, A. (1991), ‘Strict Pareto-Improving Multilateral Reforms of Tariffs’, Econometrica, 59(4): 1127–1152.Google Scholar
Vousden, N. (1990), The Economics of Trade Protection, Cambridge: Cambridge University Press.Google Scholar
WTO (2008a), Revised Draft Modalities for Agriculture, TN/AG/W/4/Rev.4, Geneva: World Trade Organization, 6 December.Google Scholar
WTO (2008b), Draft Modalities for Non-Agricultural Market Access, TN/MA/W/103/Rev.3, Geneva: World Trade Organization, 6 December.Google Scholar
WTO (2013), Understanding on Tariff Rate Quota Administration Provisions, WTO WT/L/914, Geneva: World Trade Organization.Google Scholar
Supplementary material: File

Laborde Supplementary Material

Appendix

Download Laborde Supplementary Material(File)
File 31.6 KB