General Equilibrium Analysis of DDA Trade Liberalization: Assessment of Alternative Scenarios

Abstract

This paper aims to implement the simulation studies using a CGE approach to identify ideas on how to finalize the DDA negotiations by making some mutual concessions and deal with contentious issues yet to be agreed. The simulation results of this paper, which lay between those of the previous literature, indicate that the DDA negotiations will boost the global economy to a substantial degree. It reveals that the world GDP effects will amount to US$ 49.9~186.2 billion (0.12~0.45%) and the welfare gain will amount to US$ 49.7~157.7 billion. The GDP growth effects are mainly due to effects of trade expansion, which amount to US$ 265.3~382.0 billion. The simulation result also indicates that developed countries need to consider positively the arguments of developing countries on the controversial issues related to agriculture. In return for the concessions by the developed countries, the developing countries will likely accept further discussions related to the sectoral proposals and services liberalization.

Keywords: DDA, Equilibrium Analysis

JEL Classification: F13, F14, F17