39650 Trade, Doha, and Development00 Public Disclosure Authorized A Window into the Issues Richard Newfarmer Public Disclosure Authorized Editor Public Disclosure Authorized THE WORLD BANK Trade Department Poverty Reduction and Economic Management Vice-Presidency Washington D.C. Public Disclosure Authorized TRADE, DOHA, AND DEVELOPMENT: A WINDOW INTO THE ISSUES Copyright © 2006 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First Printing: November 2005 1 2 3 4 5 07 06 05 The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the International Bank for Reconstruction and Development/The World Bank and its affiliated organizations, or those of the Executive Directors of The World Bank or the governments they represent. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, Fax: 202-522-2422, email: [email protected]. ISBN-10: 0-8213-6437-5 ISBN-13: 978-0-8213-6437-6 eISBN: 0-8213-6438-3 DOI: 10.1596/978-0-8213-6437-6 Cover photo by Chris Stowers. Library of Congress Cataloging-in-Publication Data has been requested. ii Table of Contents Foreword ............................................................................................................. vii Uri Dadush Acknowledgments ............................................................................................... ix Acronyms and Abbreviations ............................................................................... xi Setting the Stage 1. Through the Window: Beacons for a Pro-Poor World Trading System .......... 15 Richard Newfarmer 2. The Multilateral Trading System: Mid-Flight Turbulence or Systems Failure? ... 27 Elwyn Grainger Jones and Carlos A. Primo Braga 3. Doha Policies: Where are the Pay-offs? .......................................................... 43 Kym Anderson, Will Martin and Dominique van der Mensbrugghe 4. Estimating the Benefits: Why Numbers Change ............................................. 59 Dominique van der Mensbrugghe Agriculture:The Heart of the Doha Round 5. Agriculture: The Key to Success of the Doha Round ..................................... 77 Kym Anderson and Will Martin 6. Market Access Barriers in Agriculture and Options for Reform ...................... 85 Kym Anderson, Harry de Gorter and Will Martin 7. Domestic Support in Agriculture: The Struggle for Meaningful Disciplines ... 97 Harry de Gorter and J. Daniel Cook 8. Export Subsidies: Agricultural Policy Reform and Developing Countries ..... 109 Harry de Gorter 9. Cotton and Developing Countries: Implications for Development................ 119 John Baffes 10. Sugar Policies: Opportunity for Change ...................................................... 129 Donald Mitchell Manufacturing and Services Trade: Opening Markets for the Future 11. Market Access for Nonagricultural Products: In Search of a Formula ......... 139 Will Martin and Maros Ivanic iii TRADE, DOHA, AND DEVELOPMENT: A WINDOW INTO THE ISSUES 12. Life after Quotas? Early Signs of the New Era in Trade of Textiles and Clothing ............................................................................................... 151 Paul Brenton and Mombert Hoppe 13. Services in a Development Round: Proposals for Overcoming Inertia ........ 161 Aaditya Mattoo Trade Facilitation, Trips and the Regulatory Agenda 14. Trade Facilitation: Progress and Prospects for the Doha Negotiations....... 175 Gerard McLinden 15. Intellectual Property and Public Health: The WTO’s August 2003 Decision in Perspective ............................................................................. 187 Carsten Fink 16. The Debate on Geographical Indications in the WTO ................................ 197 Carsten Fink and Keith Maskus Dealing with Special Development Concerns 17. More Favorable Treatment of Developing Countries: Ways Forward ............ 209 Bernard Hoekman 18. The Value of Trade Preferences for Africa ................................................... 219 Paul Brenton and Takako Ikezuki 19. WTO Accession: Moving the Goal Posts? ................................................. 227 Simon Evenett and Carlos A. Primo Braga Regional Trade Agreements: The Second Front of Negotiations 20. Regional Trade Agreements: Designs for Development .............................. 243 Richard Newfarmer 21. NAFTA at 10 Years: Lessons for Development ........................................... 255 Daniel Lederman, William Maloney and Luis Servin 22. Beyond Cotonou: Economic Partnership Agreements in Africa .................. 263 Larry Hinkle, Mombert Hoppe and Richard Newfarmer 23. Enhancing Trade Preferences for LDCs: Reducing the Restrictiveness of Rules of Origin ........................................................................................... 277 Paul Brenton 24. Tightening TRIPS: Intellectual Property Provisions of U.S. Free Trade Agreements ...................................................................................... 285 Carsten Fink and Patrick Reichenmiller 25. Compensating Lost Revenue in Regional Trade Agreements ..................... 301 Peter Walkenhorst iv 26. Regionalism vs. Multilateralism. ................................................................. 309 Dominique van der Mensbrugghe, Richard Newfarmer and Martha Denisse Pierola Aid for Trade: Working on the Supply Side and Managing Adjustment 27. Aid for Trade ............................................................................................... 319 Julia Nielson 28. Preference Erosion: The Terms of the Debate.............................................. 329 Bernard Hoekman, Will Martin and Carlos A. Primo Braga 29. From Marrakesh to Doha: Effects of Removing Food Subsidies on the Poor ...................................................................................................... 341 Donald Mitchell and Mombert Hoppe 30. Sanitary and Phytosanitary Regulation: Overcoming Constraints .............. 353 Steve Jaffee 31. The World Bank in Trade: The New Trade Agenda..................................... 371 Richard Newfarmer and Dorota A. Nowak v Foreword s 2005 comes to an end, debate over the Doha Development Agenda is becoming heated. The international community faces a relatively simple Achoice in Hong Kong in December: will nations overcome powerful, if narrow, interest groups at home to promote more rapid economic growth in the future, or will they be unable to reach a meaningful agreement, leading to an uncer- tain future for the Doha Round and the world trading system? The choice nations collectively make at the upcoming ministerial meeting of the World Trade Organization (WTO) is important to development. For decades the global trading system has been stacked against growth in developing countries. The products that the poor produce—mainly agricultural products and labor-inten- sive manufactures—face disproportionately high barriers to trade. And their chief asset, their own labor, faces greater restrictions to global mobility than any other asset. This situation has arisen because previous rounds of multilateral trade nego- tiations reduced protection on manufacturing products, the primary interest of the early members of the negotiating club representing the dominant countries. Now the membership of the WTO has grown to include most developing countries. It is for this reason that the Doha Round is important: It has given all countries of the world the opportunity to work collectively on barriers of interest to developing countries and to the world’s poor. Although the choice is simple, it is not easy. The underlying details of the issues are notoriously complex. Observers have a difficult time penetrating the veil of legal and economic opacity that envelops the negotiations. The details are suf- ficiently technical and multifarious that experts in one area are often unaware of technical details in another. And details make the difference between opening markets and merely appear- ing to do so through a vacuous agreement that looks good on the surface but does little or nothing to widen opportunities for poor traders in the global market place. This book provides succinct analyses of the most critical issues facing negotiators, highlighting the choices that most affect development. It is a window into the issues. The WTO negotiations are not the only ones shaping