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Tuesday, Oct 21, 2014

World

WTO Doha deal would make world $11t richer by 2030: economists

AFP | Tuesday, Oct 21, 2014

GENEVA - Sealing a global free trade deal would add US$11 trillion (S$13.96 trillion) to the world economy and pull 160 million people out of poverty by 2030, economists said in a study published Tuesday.

Member states of the World Trade Organisation launched negotiations in 2001 in the Qatari capital Doha for a global deal on slashing trade tariffs and removing subsidies, but have failed to reach an agreement.

Economists commissioned by think-tank Copenhagen Consensus Centre said however in a series of studies published Tuesday that such a global agreement would be an extraordinary investment.

Implementing the deal would not be free, the economists said but for every dollar spent on putting in place the agreement, countries could reap at least US$2,000 in benefits.

"The costs are very small," Australian economist and lead author of the studies, Kym Anderson, told AFP.

And the biggest winners would be developing countries, which tend to have the highest trade barriers -- with around US$3,400 in return for every dollar spent there, they said.

"Our crude estimates show that by 2030, there will be 160 million fewer people in extreme poverty if (Doha) is implemented," Anderson said.

"You would end up with a huge gain," he added.

The WTO itself had estimated last year that a global trade deal could add several hundred billion dollars, or even over a trillion dollars, to the annual sum of global commerce.

But over a decade of negotiations have borne no fruit as developed countries refuse to slash subsidies to farmers while developing nations refuse to bring down tariffs imposed on industrial goods.

"There will be losers," acknowledged Bjorn Lomborg of the Copenhagen Consensus Centre, referring for instance to some European farmers who might see subsidies vanish.

But they would by far be outweighed by winners, especially in developing countries, he said.

"This could fundamentally change the world. We could make the world about 10 per cent richer in 2030 than it would otherwise be, and make every person in the developing world US$1,000 better off."

Lomborg and Anderson said they hoped the analysis would provide "a huge argument" for those pushing to restart the discussions on global free trade.

Economists Santiago Fernandez de Cordoba of the United Nations Conference on Trade and Development (UNCTAD) and David Vanzetti of Australia National University meanwhile said in a reaction to the economists' study that economic growth alone was not enough to ensure broader development.

"Investment is the key. Capital needs to be allocated correctly and used productively. Governance is critical," they wrote.

If Doha remains elusive, the analyses showed Asia-focused regional free trade agreements could also rake in nearly US$2,000 in benefits for every dollar spent.

However, such deals would exclude Africa and thereby "leave out the best opportunity to lift people out of poverty," Lomborg said.

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