Date & time
Monday 08 February 2010
Seminar Room D, Coombs Building, Fellows Road, ANU
Will Martin (World Bank)
Many trade negotiations involve large cuts in high tariffs, with flexibilities allowing much smaller cuts for an agreed number of politically-sensitive products. The effects of these flexibilities on market access opportunities are difficult to predict, creating particular problems for developing countries in assessing whether to support a proposed agreement. Some widely-used ad hoc approaches to identifying likely sensitive products?such as the highest-bound-tariff rule?suggest that the impacts of a limited number of such exceptions on average tariffs and on market access are likely to be minor. We use a rigorous specification based on the apparent objectives of policy makers in setting the pre-negotiation tariff. Applying this approach with detailed data allows us to assess the implications of sensitive-product provisions for average agricultural tariffs; for economic welfare and for market access under the Doha negotiations. We conclude that highest-tariff rules are likely to seriously underestimate the impacts on average tariffs, and that treating even two percent of tariff lines as sensitive is likely to have a sharply adverse impact on economic welfare. The impacts on market access are also adverse, but much smaller, perhaps reflecting the mercantilist focus of the negotiating process.