Poorest and developing nations are likely to be losers in the ongoing global trade talks because of their incapability to compete with the developed countries in the fields of agriculture and industry, a study said, reports BDNEWS.
According to the study, "Winners and Losers" carried out by Sandra Polaski, a researcher with the Washington-based Carnegie Endowment for International Peace, the so-called Doha Development Round will not actually benefit the poor nations as initially promised.
"The losers include many of the poorest countries in the world, such as Bangladesh and the countries of Sub-Saharan and East Africa," said the study.
It said there are both net winners and net losers under different scenarios, and the poorest countries are among the net losers under all likely Doha scenarios.
The 116-page study is based on unemployment models in developing countries that separate agricultural labour markets from urban unskilled labour markets.
Polaski, a former State Department trade official, worked with a team headed by Zhi Wang, a renowned statistical modeller who also previously worked for the US government. They discussed their conclusions in Washington Wednesday.
Polaski's main finding is that free trade will produce only modest gains at the global level, on the order of a one-time rise in world income of between 40 to 60 billion US dollars, or an increase of less than 0.2 per cent of current global gross domestic product (GDP).
The report said the adjustment costs to which countries expose themselves when they commit to the free trade policies promoted by the industrialised nations could in fact be greater than the benefits.
The Carnegie Endowment report said one of the reasons developing nations are likely to suffer under the proposals currently on the table is that, many of the most economically powerful countries will continue to insist that any agreement must accommodate their interests.
"As a result, the Doha Round will probably achieve only modest changes in any sector," says the study.
It said at the country level, maximum gains or losses are about one per cent of GDP for the most affected economies.
The report predicted that the biggest winner would be China, with gains ranging from 0.8 to 1.2 per cent of GDP under different scenarios.
The biggest losers are many Sub-Saharan African countries, already among the world's poorest, which could actually see a loss in income in the region of one per cent.
On the all-important question of agricultural goods, the study found that because many poor nations are net food importers and rely on low-productivity, small-scale subsistence farming, which is generally not competitive in global markets, the benefits of agricultural trade liberalisation would flow overwhelmingly to rich countries.
Poor nations will also lose relative advantages that now exist under preferential trade deals, the study said.
A few countries could gain in the agriculture sector, notably Brazil, Argentina, and Thailand, but more will suffer losses from agricultural liberalisation.
The losers include many of the poorest countries in the world, such as Bangladesh and the countries of East Africa. Middle Eastern and North African countries, Vietnam, Mexico and China would also experience losses.
"It is important not to overstate the possible gains from the Doha Round, as has been done by many political leaders, commentators, and activists," recommended the study.
The Doha Round, so named for a meeting in the capital of Qatar in 2001, has stalled over a number of trade issues, and several meetings since have failed to jumpstart it.
In Hong Kong, developed countries agreed to extend duty-free and quota-free market access for most exports of LDCs. But their most competitive products can still be excluded.
The study also suggested that developing countries should require very long phase-in periods and a careful sequencing of sectoral liberalisation measures, to allow for the effect of new trade rules on their less diversified economies.
The United Nations Conference on Trade and Development (UNCTAD) also carried out a study and presented it at the 10th session of the UNCTAD Commission on Trade in Goods and Services, and Commodities, last month.
Referring to case studies done by UNCTAD of the experiences of adjustment to trade reforms in eight countries that include Bangladesh, Brazil, Bulgaria, India, Jamaica, Malawi, the Philippines and Zambia, its Adviser Laird said there were one or two positive cases but in many other cases the countries suffered important job losses and reduced growth rates, as a result of trade liberalisation.
Laird also warned that unlike developed countries, the developing countries were not prepared to deal with the adjustment costs as there was an absence of social policies and safety nets such as unemployment benefits or retraining for workers displaced by liberalisation.
He also said that a recent World Bank (WB) publication on globalisation and workers in developing countries also found that after trade reforms, there was lower growth and negative effects on jobs.