Doha proposals would lead to heavy losses, few benefits

Original Publication Date: 
31 October, 2006

The proposed deals of the Doha Round negotiations to date would cause developing countries generally to incur much more costs than the negligible benefits that would go to a few, and the present pause in the negotiations should be welcomed so that a rethinking of the negotiations can be undertaken.

This view of the stalled Doha talks was presented today by an American economist, Kevin Gallagher, at a North-South Policy Dialogue held at the United Nations building in Geneva. The two-day dialogue was organized by the South Centre, the German Marshall Fund of the United States and the Washington-based Centre of Concern.

"The WTO's Doha draft deals were anti-development," said Gallagher, who is at Boston University's Department of International Relations and also at Tuft University's Global Development and Environment Institute.

Gallagher said that official estimates of gains to developing countries were very small.

"Developing countries were asked to exchange these small benefits for real losses, including significant adjustment costs and the loss of policy space," he remarked. "I thus welcome that the Round was stalled, so that the proposals on the table can be reviewed."

Gallagher said that the World Bank had originally given high estimates of the gains from the Doha Round. A week before the WTO's Cancun Ministerial in 2003, the Bank estimated that developing countries would benefit by $539 billion (and the whole world by $852 billion).

However, the Bank had revised its projections of benefits downwards to only $90 billion for developing countries (and $539 billion worldwide). And only 8 developing countries would get over half the developing countries' share of benefits.

For agriculture, on the assumption that there would be full trade liberalization, the developing countries would have a one-time gain of $56 billion (or only $11 per capita) which is only 0.5% of their GDP. Most of the gains would go to a few big developing countries.

However, as the Doha Round will not result in full liberalization, the benefits of the World Bank's "likely" Doha Round scenario (for manufacturing plus agriculture) would be only $16 billion for developing countries, or $3.13 per person and equivalent to only 0.16% of GDP. The $16 billion benefit would be from $7.1 billion in manufacturing and $9 billion in agriculture.

The worldwide benefit (including to developed countries) would be $96 billion. Thus, developing countries (with $16 billion) would get only a small share of the benefits.

In terms of developing countries and regions, the World Bank's likely Doha scenario showed that of the total $16 billion gain to developing countries, there would be one-time gains to Brazil ($3.6 billion), China ($1.7 billion), India ($2.2 billion), Argentina ($1.3 billion) and South Africa ($0.4 billion).