Far from being a landmark, a recent deal reviving free-trade talks would yield only a fraction of the potential gains that would flow from removing all barriers to global commerce, a top World Bank economist said on Tuesday. When rich and poor nations reached a framework pact in Geneva on August 1 to revive the Doha round of market-opening talks, the head of the World Trade Organisation called it a historic moment. The US trade representative described it as a milestone.
Yet while the Geneva accord put Doha back on track after the September 2003 failure of WTO talks in Cancun, Mexico, World Bank analysis suggests the deal would generate global welfare gains of $94 billion a year by 2015, just a third of the $278 billion that would spring from completely freeing up merchandise trade.
"And that's actually a generous interpretation of the framework agreement. If you take a lower-bound estimate instead of a higher-bound estimate of what was in there, it's basically zero," Kym Anderson, lead economist in the World Bank's International Trade Unit, told Reuters. Ministers from the WTO's 148 members will meet in Hong Kong in December to put flesh on the bones of the Geneva accord.
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