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SAN-Feature Service
SOUTH ASIAN NEWS-FEATURE SERVICE
Washington, July 01, 2006
OP-ed : More Trade, Less Poverty
By SUSAN SCHWAB
Economists have determined over and over again that the more ambitious
the opening of trade flows, the greater the results.
SAN-Feature Service : - The atmosphere is charged with political
pressure and historical significance as trade ministers and negotiators
representing World Trade Organization members gather this week. With time
running out for a successful conclusion of the Doha Development Round,
speculation has intensified about what the U.S. and other WTO members will
be willing to do to achieve success. I reaffirm here that the U.S. is
committed to an ambitious and comprehensive outcome by the end of the year.
As President Bush declared last week at the U.S.-EU summit, the Doha Round
is too important to fail.
We regard it as our generation's opportunity to attack the
scourge of poverty by opening trade flows between all nations in
agricultural goods, industrial products and services. Half-measures that
would leave millions in poverty -- people who might otherwise have been
helped -- and that would dampen potential economic opportunities for people
in all countries, should not be acceptable.
Economists have determined over and over again that the more
ambitious the opening of trade flows, the greater the results. The data also
make it clear that the most effective way for developed countries to assist
developing countries through trade is to lower agricultural tariffs.
Earlier this month, the Organization for Economic
Cooperation and Development issued a study that looked at the impact of 50
percent cuts in tariffs, agricultural export subsidies, and domestic support
programs of OECD countries. The study concluded that this degree of trade
liberalization in agricultural goods alone would account for 59 percent of
the total potential global economic gains from expanded trade in all types
of goods.
But more importantly, the OECD study, like a comparable World
Bank study, concluded that market access -- meaning tariff cuts -- accounted
for the lion's share, or nearly 79 percent, of the potential benefits of
agricultural trade liberalization. These and other studies have buttressed
U.S. determination to keep WTO members focused on making meaningful
improvements in agricultural market access. Simply stated, that is where the
gains are for developing countries.
Of course, expanded market access is not solely the burden of
developed countries. Developing countries, particularly the more advanced
developing countries, must also muster the political will to bring down
barriers. This applies across all sectors as well. As important as
agriculture is to the Doha Round negotiations, we must remember that 75
percent of annual global trade is in manufactured goods.
The record on how trade can spur development is compelling.
The World Bank has estimated that, in the 1990s, per capita real income grew
three times faster for developing countries that significantly lowered trade
barriers (5 percent) than for other developing countries that lowered
barriers less (1.4 percent). Just as important, the income gains were
enjoyed by people at all income levels.
The World Bank also estimates that eliminating trade barriers
in goods alone (not including trade in the rapidly growing services sector),
could boost incomes in developing countries by at least $142 billion a year.
That figure exceeds the combined total of $80 billion in foreign economic
assistance by G-7 countries last year and a current G-7 proposal for $42
billion for developing country debt relief. Right now, around 70 percent of
the duties on goods that developing countries pay go to other developing
countries. The only way for the development potential so clearly evidenced
by the World Bank studies to be realized is for these tariffs to come down
to promote further South-South trade.
The United States put forward an offer last fall to make meaningful
cuts in trade-distorting domestic agricultural supports if other countries
would reciprocate with deep cuts in tariffs and trade-distorting domestic
support. So far, our trading partners have not matched our ambition -- but
it is not too late.
Multilateral trade rounds over the last 60 years have led us to this
week. The need for meaningful trade liberalization has never been greater
and the potential benefits of expanded trade have never been more compelling.---SAN-Feature
Service
Susan Schwab is U.S. trade representative. The op-ed by Schwab was first
published in The Wall Street Journal .
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