Freer trade could bring benefits worth up to $120 billion a year to the world economy, according to a study on Thursday that dismisses growing unease about globalisation.
The report, by two economists in Australia and Britain, also suggested greater immigration to rich nations from developing countries would raise economic growth despite fears by many governments about allowing in new workers. "We think there are very large benefits to trade liberalisation and a liberalisation of migration," said L. Alan Winters, a professor at Britain's University of Sussex and co-author of the study with Kym Anderson at the University of Adelaide.
It noted protectionist sentiment and fear of globalisation are on the rise. US Democratic presidential candidates Hillary Clinton and Barack Obama, for instance, have called for a renegotiation of a trade deal with Canada and Mexico blamed by Democrats for US manufacturing job losses.
The 52-page study said cuts in farm subsidies, tariffs, a liberalisation of services and investment could bring global annual gains of up to $120 billion by 2015, including $17 billion for the poorest countries in Africa and Asia. That would be equivalent to about 0.2 percent of world gross domestic product. The benefits would far outweigh any costs.
A less ambitious deal focused on phasing out farm subsidies by developed nations would bring annual benefits of $18 billion for the rich nations by 2015, it said. In that case, developing nations would not get any overall benefits. The examples of nations such as Chile, South Korea or India suggested freer trade raises growth, Winters told Reuters.
The report urged completion of the Doha round of talks on liberalising trade. After more than six years, countries are edging towards a possible ministerial meeting that could set the stage for a final deal by late 2008. The study was commissioned by The Copenhagen Consensus, a project by Danish statistician Bjorn Lomborg into the costs and benefits of investing in solving problems such as AIDS, terrorism or climate change.
"There are many big problems in the world but trade is one of the ones where we can harm very few people and do an amazing amount of good," Lomborg, author of "The Skeptical Environmentalist", told Reuters.
He said regional trade agreements, such as the North American Free Trade Agreement linking the United States, Mexico and Canada, brought some benefits but were not as effective as a global deal. Winters said a problem with globalisation was that painful job losses were often more visible than the advantages.
"We all benefit from a three percent cut in the price of bread but a few people will lose out" if they are among less efficient producers forced out of business, he said.
The study also said migration from poor countries increasing the workforce of the rich 30 nations of the Organisation for Economic Cooperation and Development by three percent would bring gains comparable to those from freer trade. Benefits from more migrants would total between $13 and $39 trillion over 25 years, or between 28 and 221 times the one-off costs such as transport or finding housing for families.
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