Ten years of Doha: What to show and what to look forward to

Lionel Fontagné

25 November 2011



By June 2011, as negotiations on the Doha Development Agenda (DDA) were confronted by the seemingly irresolvable problem of sectoral initiatives in industrial goods, it was still hoped that agreement could be reached on a ‘least developed Countries (LDC) plus’ package including trade facilitation.1 Currently, this looks to be in doubt, despite the eighth WTO Ministerial Conference in December 2011 being expected to discuss a more productive way forward in the negotiations. In order to understand the reasons for the impasse, we have simulated the economic impact of what’s on the table of the DDA negotiations (Decreux and Fontagné 2011).

What’s on the table

The negotiation is addressing a long list of topics, but mainly agriculture, non-agricultural market access (NAMA), and services. Trade facilitation, defined as the simplification and the harmonisation of trade procedures is also often seen as a low-hanging fruit.

Regarding agricultural products, export subsidies must be phased out and distortive internal farm support will be reduced. Tariffs will be reduced in bands, using two different schemes depending on the development level of importers; the higher the initial bound tariff, the larger will be the cut. Special provisions are introduced for small and vulnerable economies, for recently acceded members and importantly for LDCs, asked to bind, but not to reduce their tariffs. For political economy reasons sensitive agricultural products can be selected, as applying systematic formulas necessarily leads to severe cuts for the most protected products. Such tariff lines will be less subject to liberalisation provided that multilateral tariff quotas at a limited tariff rate are open. Developing countries can also choose special products without additional tariff quotas.

All NAMA products are affected by reductions of bound tariffs using a Swiss formula imposing a more severe cut on the highest tariffs. The reduced tariff is computed as the ratio a.t/(a+t) with a the coefficient of the formula and t expressed in percent. The coefficient in the formula (8% for developed countries and 20% to 25% for developing ones) is also the maximum tariff after implementation. Developing countries are conceded sensitive products for a certain percentage of the lines.

A recent and rather contentious addition to the agenda, pushed by the US administration and partially endorsed by the European Commission, is the introduction of sectoral initiatives for chemical products, electronic products and machinery, as well as environmental products. The objective is to reintroduce some ‘reciprocity’ in the exchange of concessions between emerging economies and developed ones.

Negotiators interests can hardly be reconciled

The consequences of such agreement, involving cuts that differ by country and by product, cannot be assessed without recourse to quantitative and detailed representation of the world economy. We use the Computable General Equilibrium model MIRAGE representing the world economy at the sectoral level. We measure border protection at the most detailed level possible (HS6 product, importer, exporter), and through computation of the liberalisation resulting from a tariff-cutting formula. In 2012 and subsequent years, depending on the requested timing of phasing out of the protection, scenarios are implemented. Finally, we compare situations for the world economy between 2013 and 2025, with and without liberalisation.

A first scenario depicts the joint effect of modalities for agriculture and the NAMA. A second scenario adds a 3% reduction to protection for trade in certain services, limited to certain importers. A third scenario combines liberalisation of trade in goods and services with a rather ambitious trade facilitation scenario assuming a division by two of the processing time exceeding the median level, for each category of trade costs. The remaining scenarios, including sectoral initiatives, will be benchmarked against this third scenario.

The overall impact of scenario 1 amounts to 0.09% of world GDP annually ($70 billion) in 2025, and an additional 1.25% trade in goods and services ($230 billion). Given the very conservative assumption on the reduction of trade barriers in services, it is adding $15 billion gains in world GDP (scenario 2). When we add the gains from trade facilitation (scenario 3) we can expect a further $68 billion annual increase in world GDP from 2025 onwards. A large part of the additional gains would accrue to developing economies.

The ultimate impact of the Round in welfare terms, shown in Figure 1 for a selection of influential players in the DDA, is hardly creating the conditions of success. The most influential negotiating countries gain little and they may be reluctant to further open their markets in crisis times.

Advanced economies’ offensive interests in industry cannot be satisfied. The sectoral initiative on chemicals, machinery and electronics has a large impact on trade (scenario 4): an additional $145.6 billion increase in trade in industrial goods, when it is added. The distinct initiative for environmental goods has negligible impact on trade ($23.6 billion or an additional 8%), due to limited product coverage (scenario 5). These initiatives, which clash with the principle of Special and Differential Treatment for emerging countries, can ultimately be associated with terms-of-trade losses reducing the appeal of a deal for countries opening their industrial markets quite unilaterally, like India.

Sub-Saharan African countries do not liberalise overall (or only to a very small extent), due to the combined presence of LDCs, “Paragraph 6 Annex b” countries and other flexibilities conceded to developing countries. Sub-Saharan Africa also benefits from little additional market access, due to preferential schemes already conceded in some important markets. This works to decrease some of the sub-Saharan African countries’ export prices, leading to terms-of-trade losses. Introduction of trade facilitation would yield large gains for this region but even the compromise of an ‘interim package’ that would have addressed the specific needs of the LDCs, complemented with an agreement on trade facilitation securing gains for SSA countries, is now out of reach.


Against such background, a new kick should be given to the negotiations in December. The cost of not signing a final agreement is not just the reversal of the (rather modest) gains of success. In the case of failure, a resurgence of protectionism, either within the strict boundaries of WTO rules (eg an increase in tariffs up to their bounds), at the fringes of it (generalising contingent protection), or outside of it (unilateral increases in protection) would have a cost corresponding to a multiple of the gains considered here. A move towards regionalism (already visible) would be unavoidable, with associated trade diversion effects. Lastly, the credibility of the regulatory architecture developed under the umbrella of the WTO would be put at risk were negotiations to fail.

Table 1. World GDP and exports long run changes from the baseline (Percent and $US billion)





World exports




$US billion








World GDP




$US billion




Note: Long run is 2025. Changes are in constant (2004) dollars, relative to 2025 economic values.

Note: (1) agriculture + NAMA;  (2) agriculture + NAMA + services; (3) agriculture + NAMA + services + trade facilitation.

Source: Decreux and Fontagné (2011)

Figure 1. Long run change in welfare for selected regions (%)

Note:  (2) agriculture + NAMA + services; (3) agriculture + NAMA + services + trade facilitation; (4) scenario (3) + sectorals except environmental goods; (5) scenario (3) + zero tariffs initiative on environmental goods.

Source: Decreux and Fontagné (2011)


Decreux, Y and L Fontagné (2011), “Economic Impact of Potential Outcome of the DDA”, CEPII WP No 2011-23.

Pangestu, Mari (2011), “There is no Plan B – only Plan A: Towards Completing Doha”, in R Baldwin and S Evenett, Next Steps: Getting Past the Doha Round Crisis, A VoxEU.org Publication, 28 May.


1 See for instance the Indonesian Trade Minister Mari Pangestu on this site (Pangestu 2011).



Topics:  International trade

Tags:  WTO, Doha Development Agenda

Professor of Economics in the Paris School of Economics, Université Paris I Panthéon Sorbonne