The World Bank report that came out recently to bolster up the free-trade case at the Hong Kong talks is a book of 425pp, and it's not easy to pin clear statistics down since it is arguing in favour of an agenda and mostly presenting data in synthetic form (from what I've had time to see). What further complicates things is that it offers a whole string of scenarios, and the supposed results depend on which scenario is chosen.
But here are some points from the general presentation:
The potential gains from further global trade reform are huge. <snip> Freeing all merchandise trade and eliminating agricultural subsidies are estimated to boost global welfare by nearly $300 billion a year by 2015. <snip> Developing countries could gain disproportionately from further global trade reform. The developing countries would enjoy 45 percent of the global gain from completely freeing all merchandise trade (table 1.3a), well above their current share of one-fifth of global GDP. Their welfare would increase by 1.2 percent, compared with an increase of just 0.6 percent for developed countries.
Note that the projected $300bn per annum gain is not between now and 2015, but from 2015 on. Second, that it has been arrived at counting completely freeing all merchandise trade and not just agricultural trade.
Poverty could be reduced under Doha. Under the full merchandise trade liberalization scenario, extreme poverty--those earning no more than $1 a day-- would drop by 32 million in developing countries in 2015 relative to the baseline level of 622 million, a reduction of 5 percent. The majority of the poor by 2015 are projected to be in Sub-Saharan Africa, where the reduction would be 6 percent. Under the Doha scenarios reported in table 1.8, the poverty impacts are far more modest. The number of poor living on $1 a day or less would fall by 2.5 million in the case of the core Doha scenario 7 (of which 0.5 million are in Sub-Saharan Africa) and by 6.3 million in the case of Doha scenario 8 (of which 2.2 million are in Sub-Saharan Africa). This corresponds to the relatively modest ambitions of the merchandise trade reforms as captured in these Doha scenarios. If only agriculture was reformed (Doha scenario 1), there would be much less poverty alleviation globally and none at all in Sub-Saharan Africa. This shows the importance for poverty of including manufactured products in the Doha negotiations.
Under the Doha scenarios reported in table 1.8, the poverty impacts are far more modest. The number of poor living on $1 a day or less would fall by 2.5 million in the case of the core Doha scenario 7 (of which 0.5 million are in Sub-Saharan Africa) and by 6.3 million in the case of Doha scenario 8 (of which 2.2 million are in Sub-Saharan Africa). This corresponds to the relatively modest ambitions of the merchandise trade reforms as captured in these Doha scenarios. If only agriculture was reformed (Doha scenario 1), there would be much less poverty alleviation globally and none at all in Sub-Saharan Africa. This shows the importance for poverty of including manufactured products in the Doha negotiations.
Note the emphasized (by me) sentence. The obliteration of African poverty (in particular) does not depend on a simple opening-up of agricultural markets. It's the World Bank saying that.
I'm glad Kevin P Gallagher has written this, I hope he crunched the numbers right, and I hope there'll be further discussion of this in the FT and elsewhere.
I'm okay with loaning them money, even if they don't pay it back, but we in the West need to focus on ways to help the people instead of setting them up to fall down again.
However, if we're going to talk about trade, we need to talk about real trade and not the mercantilist nonsense that pass for trade with countries like China. We also need to talk about America and Europe getting serious about opeing up markets that are difficult, politically, to open (like dropping America's huge agricultural subsidies).
If we're going to open trade, but not allow these countries to export what they specialize in, then all the "trade" in the world won't make a damned bit of difference. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
