Breaking down the world's trade barriers would generate $157 billion extra in global income by 2019, new research showed on Thursday, while combining the most ambitious farm reform proposals from the United States and EU would yield $103.7 billion.
But adopting Brussels' plan to exempt 8 percent of politically sensitive farm goods from big cuts in duties would dramatically lower the gains available, according to Antoine Bouet and David Orden, senior research fellows at the International Food Policy Research Institute in Washington.
Overhauling global farm trade is at the heart of World Trade Organisation talks, which seek to open up markets and help lift millions of Third World inhabitants out of poverty by boosting their economies.
But two weeks ahead of a WTO ministerial meeting in Hong Kong - where all 148 member countries will be represented - the talks are deadlocked as the United States and Europe struggle to breach differences in their farm trade proposals.
Bouet and Orden created and compared two possible outcomes from ongoing negotiations on ways to cut agricultural subsidies and tariffs. They took the most ambitious parts of the American and EU proposals for their first scenario.
These included, from the United States, suggestions for tiered tariff cuts between 55 and 90 percent, caps on tariffs of 75 and 112.5 percent for developed and developing countries, respectively, and allowing only 1 percent of "sensitive products" to be shielded from big cuts in duties.
From Europe's proposal, they included the suggestion that least-developed countries be given duty-free access to developed nations' markets. Export subsidies would be eliminated and trade-distorting domestic farm support cut by 20 percent.
"Global welfare increases by $103.7 billion, 66 percent of the gain from full liberalisation," Bouet and Orden said in the text of a presentation obtained by Reuters.
"Much of these gains come from lower agricultural protection in wealthy countries," they wrote.
By contrast, should WTO countries agree to adopt the least ambitious aspects of the proposals, the benefit would be only $41.5 billion, just 26 percent of the total gains available.
This scenario is based on adopting the EU's proposed tiered tariff cuts between 35 and 60 percent, allowing tariffs to be capped at 150 percent and 225 percent and allowing 8 percent of sensitive products to be shielded from big tariff cuts. There would be no cuts in applied domestic support and least-developed countries would not get duty-free access to developed markets.