OECD Analyzes Doha Round Incentives
09 May 2013
Posted by: Author: Ulrika Lomas
Source: Ulrika Lomas (Tax-News.com, Brussels)
New research from the Organization for Economic Cooperation and Development (OECD) has emphasized the importance of concluding the Doha Round, noting that a multilateral agreement to cut red tape in international trade would dramatically reduce trading costs and add a substantial boost to the global economy.
The OECD has determined that the comprehensive implementation of all measures currently under negotiation in the World Trade Organization's (WTO) Doha Development Round would reduce total trade costs by 10 percent in advanced economies and by 13-15.5 percent in developing countries. Reducing global trade costs by just 1 percent would increase worldwide income by more than USD40bn, most of which would accrue in developing countries, the report says.
"Trade facilitation is about easing access to the global marketplace," OECD Secretary-General Angel Gurria said. "Complicated border processes and excess red tape raise costs, which ultimately fall on businesses, consumers and our economies."
"The trade facilitation negotiations offer countries a golden opportunity to reduce or eliminate these bottlenecks, cut the cost of trading, boost the flow of good and reap greater benefits from international trade," he emphasized.
The OECD report assessing the potential impact of each of the sixteen policy areas under negotiation at the WTO, including the availability of trade-related information, the simplification and harmonization of documents, the streamlining of procedures, and the use of automated processes and advanced rulings.
The study estimates the impact of addressing specific hurdles in the trade and border procedures in 133 countries while guiding governments as they prioritize trade facilitation actions. In addition, the report aims to offer a roadmap for the technical assistance and capacity-building efforts needed to ensure that emerging and developing economies make the most of trading opportunities.
OECD analysis shows that trade facilitation not only benefits importers. By reducing trade costs, facilitation also helps boosts exports significantly, thus allowing firms greater participation in the global value chains that characterize international trade.
The study's salient conclusions include that:
- In some African countries, revenue losses from inefficient border procedures are estimated to exceed 5 percent of Gross Domestic Product (GDP);
- Harmonizing and simplifying documents would reduce trade costs by 3 percent for low-income countries and by 2.7 percent for lower middle-income countries;
- Streamlining procedures would bring further trade cost reductions of 2.8 percent for upper middle-income countries, 2.2 percent for lower middle-income countries and 1 percent for advanced economies;
- Automating processes would reduce trade costs by more than 2 percent for all countries studied; and,
- Ensuring the availability of trade-related information would generate cost savings of 2 percent for advanced economies, 1.4 percent for lower middle-income countries and 1.6 percent for low-income countries.
The Doha Development Agenda, launched in 2001, seeks to achieve a global agreement to cut trade-distorting agriculture subsidies, phase out tariffs on industrial goods, open trade in services, facilitate customs operations, open trade in clean technology, adjust anti-dumping rules, and offer duty-free and quota-free access to the exports of the world's poorest countries. Talks stalled, however, when the economic crisis hit. WTO members have in recent times informally agreed to return to the negotiating table to progress the Doha Agenda at a pace that recognizes the present crisis-time challenges.