Multilateral Agricultural Trade Liberalization: The Contrasting Fortunes of Developing Countries in the Doha Round

Abstract

An applied general equilibrium model is used to assess the impact of multilateral trade liberalization in agriculture, with particular emphasis on developing countries. We use original data, and the model includes some specific features such as a dual labor market. Applied tariffs, including those under preferential regimes and regional agreements, are taken into account at the detailed product level, together with the corresponding bound tariffs on which countries negotiate. The various types of farm support are detailed, and several groups of developing countries are distinguished. Simulations give a contrasted picture of the benefits developing countries would draw from the Doha development round. The results suggest that previous studies that have neglected preferential agreements and the binding overhang (in tariffs as well as domestic support), and have treated developed countries with a high level of aggregation have been excessively optimistic about the actual benefits of multilateral trade liberalization. Regions like sub-Saharan Africa are more likely to suffer from the erosion of existing preferences. The main gainers of the Doha round are likely to be developed countries and Cairns group members.

Keywords: CGE model, Doha Round, agriculture, tariff preferences, domestic support

JEL Classification: F12, F13, D58, Q17