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Market Access : the Heart of the DDA

Kenneth HEYDON

OECD Trade Directorate

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Border protection down...merchandise trade up

Average tariff level (industrial goods, left axis) and trade volume index (1950 = 100, right axis)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1945

1947

1949

1951

1953

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

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1995

1997

Ave

rag

e ta

riff

leve

l

0

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

Trad

e vo

lum

e in

dic

es

1947GATT's

establishement

1962Pre-Kennedy

Round

1972Post-Kennedy

Round

1987Post-Tokyo

Round

1994Post-Uruguay

Round

AVERAGE TARIFF LEVELWORLD MERCHANDISE TRADE VOLUME, 1950=100

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OECD Study Welfare gains in developed and developing countries from tariff

reductions and trade facilitation

67.22

90.05

55.22

83.51

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

Liberalization only by developed countries Full liberalization by all countries

US

$ b

illio

n

Developed

Developing

54.9% 51.9%

45.1%

48.1%

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OECD Study Initial differences between bound and applied tariffs (by sector)

Average difference between bound and applied rates, 1998 (% points)

0

5

10

15

20

25

30

35

40

45

5

OECD study Sectoral origins of welfare gains going to developing countries from full

tariff liberalisation

Primary Agriculture, 7.19

Processed Agriculture, 19.80

Other Manufacturing, 13.81

Textiles & Clothing, 22.62

Natural Resources, 2.13

Chemical Products, 3.91

Wood Products, 0.46

Motor Vehicles and Parts, 27.31

Other Machinery, 2.76

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Which farms benefit from support?share of 25% largest farms in …

0

20

40

60

80

100

Pe

rce

nt

TotalSupport

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Services make up a major and growing portion of the world economy

In 2000, the estimated total value of world services was some US$ 1.4 trillion.

In 2000, services made a major contribution to the GDP of both developed and developing countries:

– services to GDP ratio in DCs ranged from 39% in Nigeria to 89% in Hong Kong, China

– average services to GDP ratio in the 49 LDCs was 10% with peaks of 50%

69.51

62.03

52.71

43.7

66.34

0

10

20

30

40

50

60

70% GDP

OECDcountries

Uppermiddleincome

countries

Low ermiddleincome

countries

Lowincome

countries

World

Services, value added (2000)

Source: World Development Indicators

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Gains from trade liberalisation

Note: Estimates vary on the basis of the size of initial barriers, theoretical frameworks, modeling techniques and datasets used

Studies World gains from services liberalisation

Brown and Stern (2001)

US$ 90 billion

short run impact of full liberalisation of services trade and FDI in a multiregion, multisector general equilibrium model of trade and investment under conditions of imperfect competition, increasing returns to scale, and product differentiation (assumption of perf. int.l capital mobility and fix. world capital stock)

US$ 703 billion

long run impact of full liberalisation of services trade and FDI in a multiregion, multisector general equilibrium model of trade and investment under conditions of imperfect competition, increasing returns to scale, and product differentiation (assumption of less than perfect capital mobility and increasing world capital stock)

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Scenario results on income effects

Taking into account country, sector and trader diversity the larger gains from trade facilitation should accrue to

developing countries

0.0%

0.5%

1.0%

OECD FormerSovietUnion

Middle East& NorthAfrica

LatinAmerica &Caribbean

Non-OECDAsia-Pacific

Sub-saharanAfrica

Rest ofworld

% o

f G

DP

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Backing up Trade Policy Reform

Regulatory Reform

Institutions for Conflict Resolution– property rights– anti trust– social insurance

Sound Macro-economic Management

Labour Market Flexibility

Technical Assistance & Capacity Building