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World Bank: GEP Trade Facts Sheet

The World Bank last Friday released a report "Global Economic Prospects 2004: Realizing the Development Promise of the Doha Agenda" in Beijing and listed a GEP trade facts sheet.

Of the gains from full global liberalization of merchandise trade, reducing protection in agriculture alone would produce nearly 60 percent of the gain. Agriculture is central to the development promise of this trade round because some 70 percent of the world's poor people live in rural areas and earn their income from agriculture. Largely exempt from pre-Uruguay Round trade agreements to reduce protection, agriculture is among the most distorted sectors in international trade.

Subsidies in OECD countries amount to $330 billion-of which some $250 billion goes directly to producers. The effect is to stimulate overproduction in high-cost rich countries and shut out potentially more competitive products from poor countries. It is no wonder that agricultural exports from developing countries to rich countries grew in the 1990s at just half the rate they did to other developing countries.

OECD governments support sugar producers at the rate of $6.4 billion annually-an amount nearly equal to all developing country exports.

U.S. subsidies to cotton growers totaled $3.7 billion last year, three times U.S. foreign aid to Africa. These subsidies depress world cotton prices by an estimated 10-20 percent, reducing the income of thousands of poor farmers in West Africa, Central and South Asia, and poor countries around the world. In West Africa alone, where cotton is a critical cash crop for many small-scale and near-subsistence farmers, annual income losses for cotton growers are about $250 million a year. Rice support in Japan amounts to 700 percent of production at world prices, stimulating inefficient domestic production, reducing demand, and denying export opportunities to India, Thailand, Vietnam, and other countries.

More than 70 percent of subsidies in rich countries are directed to large (often corporate) farmers These farmers have  incomes that are higher-often substantially so-than average incomes in Europe, Japan, and, to a lesser extent, the United States.

Although tariffs on manufacturing in rich countries are on average lower than in developing countries, the tariffs rich countries charge developing countries are substantially higher than those they charge other industrial countries. For example, exporters of manufactures from industrial countries face, on average, a tariff of 1 percent on their sales to other industrial countries; exporters in developing countries pay anywhere from 2 percent if they are from Latin America (where NAFTA weighs heavily) to 8 percent if they are from South Asia.

Overall, rich countries collect from developing countries about twice the tariff revenues per dollar of imports that they collect from other rich countries. However, the problem is not solely a North-South issue. Latin American exporters of manufactures, for example, face tariffs in neighboring Latin American markets that are seven times higher than in industrial countries. In Sub-Saharan Africa, the same multiple is six; in South Asia, eight.

Services & Labor Services
Estimates suggest that, after controlling for other determinants of growth, countries that fully liberalized trade and investment in finance and telecommunications grew on average 1.5 percentage points faster than other countries over the past decade.

In 2001, remittances from permanent as well as temporary migrants provided some $71 billion to developing countries, nearly 40 percent more than all official development assistance and significantly more than net debt flows to developing countries.

If temporary movement of labor up to 3 percent of the total labor force in rich countries were permitted, developing countries would stand to gain as much as $160 billion in additional income

Trade Facilitation
One study estimated that every day spent in customs adds nearly one percent to the cost of goods. In developing countries, transit costs are routinely 2-4 times higher than in rich countries. Improvements in ports, customs and other trade-related infrastructure are necessary, both to improve trade flows now, and to meet opportunities in the future. The value of world trade could rise by hundreds of billions of dollars over coming years if such enhancements were undertaken globally.

Trade Preferences
Existing preferences do relatively little for most of the world's poor people (those living on less than $1 per day), most of whom live in China, India, Nigeria, Pakistan, Northeast Brazil, and the ASEAN countries, which may enjoy only partial preferences at best.

TRIPS & Public Health
One day's supply of patented antiretrovirals to treat a single HIV/AIDS patient can cost as much as $30 in rich countries.  Such prices are prohibitive for the nearly three billion people who live on less than $2 a day.  Generics are not always cheaper, but the threat of competition has helped to reduce prices of patented antiretrovirals supplied to developing country governments.

A Box of Boxes: Highlights of Examples and Breakouts From GEP 2004

1.0 Trade & Poverty: What Are the Links?
Chapter 1
1.1 Consumer Confidence & US Private Consumption
1.2 Financing the US Current Account Deficit: From Equity to Debt
1.3 OPEC Struggles to Achieve Higher Prices Amid Growing Supply Competition
1.4 Economic Effects of Severe Acute Respiratory Syndrome (SARS)
1.5 AIDS is Taking a Rising Toll in Sub-Saharan Africa
Chapter 2
2.1 Poor Export Performance 43 Countries
2.2 The Scourge of the Specific: Specific Tariffs
2.3 "Average Cuts:" the Cut You Have When You're Not Having a Cut
2.4 The Implications of Five Tariff Cutting Proposals
Chapter 3
3.1 The Impact of National Trade Integration & Reform on Poverty
3.2 Did Agricultural Exports Fall Solely Because of Falling Prices?
3.3 Decomposing Export Growth in Manufacturing
3.4 Decoupling Agricultural Support
3.5 Food Safety Standards: From Barriers to Opportunities
3.6 Fewer Subsidies, Stronger Agricultural Sector
3.7 The Potential Impact of Real Preferences
3.8 Rules of Origin in Preferential Schemes are Complicated - and Often Contradictory
Chapter 4
4.1 Population Aging & Migration
4.2 Temporary Labor Movement & the East Asian Crisis of 1997/98
4.3 Recent Initiatives to Facilitate Temporary Movement of Highly Skilled Workers
4.4 A Trade Facilitation Approach to Labor Mobility: NAFTA & APEC
4.5 Initiatives to Encourage Return Migration
4.6 Wages and Conditions
4.7 E-Commerce & Temporary Movement
4.8 Boosting Intra-EU Labor Mobility
4.9 Measuring Mode 4 is Still Imprecise
4.10 Key Impediments to Mode 4 Trade
4.11 Elements of a Possible GATS Visa/Permit Regime
Chapter 5
5.1 The Evolving Definition of Trade Facilitation
5.2 The Logistics Needs of a German Car Part Manufacturer in Tunisia
5.3 Tackling Corruption in Customs: Peru
5.4 Customs Reform in Lebanon
Chapter 6
6.1 EU & US Preference Programs
6.2 Major Provisions Allowing Developing Countries Greater Freedom to Use Restrictive Trade Policies
6.3 A "Development Box" for the Agreement on Agriculture

(China.org.cn September 9, 2003)



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