Economic Benefits of the Doha Round for The Netherlands

This study provides insights into the nature and magnitude of the impacts of the WTO Doha Round for international trade and the resulting welfare improvements. We use a global computable general equilibrium model. The most important aspects of the model can be summarized as follows: (i) it covers all world trade and production; (ii) it allows for scale economies and imperfect competition; (iii) it includes intermediate linkages between sectors; (iv) and it allows for trade to affect capital stocks through investment effects. The last point means that we model medium to long-run investment effects. The inclusion of scale economies and imperfect competition implies agglomeration effects like those emphasized in the recent economic geography literature. The model uses GTAP (version 5) data. The increase in global income from trade liberalisation is estimated at between $200 billion in the middle term to $650 billion in the long run, taking into account the effects of trade-stimulated investment. The analysis underlines the importance of trade policy reform by developing countries for achieving these benefits. About one quarter of the global gains can only be realized if developing countries actively participate. At the same time, developing countries can achieve high gains relative to their current income levels. A third of the estimated benefit of $220 to $600 billion is attributable to trade facilitation, a third to agricultural liberalisation and the remaining third approximately equally to both reductions in industrial tariffs and liberalisation in services. Leaving aside trade facilitation and services liberalisation, industrialised countries have the most interest in seeing agricultural liberalisation in other OECD economies as well as a reduction in industrial tariffs by developing countries. For developing countries, the benefits arise primarily from trade liberalisation with other developing countries.