What Can Least Developed Countries Really Expect from the Doha Development Agenda?

Abstract

In November 2001, a new round of multilateral trade negotiations was launched in Doha, Qatar, with a key objective of development. Although the initiative was politically laudable, doubts arise on the economic impacts of the negotiations, in particular on the Least Developed Countries (LDCs). LDCs have very specific economic features: they have been granted numerous trade preferences, their exports are characterized by a high product concentration and many of them are net food importers. Several measures such the Aid-For-Trade initiative and the Duty Free Quota Free (DFQF) regime have been proposed during the negotiations in order to compensate LDCs for potential losses that the multilateral trade liberalization could imply. Using the computable general equilibrium model, MIRAGE, the current proposals as well as more beneficial options for LDCs are examined. All of the implemented scenarios are based on detailed elements of the proposals and are designed at a much disaggregated level using the MAcMap-HS6 v.2 database. As expected, the Doha Development Agenda as defined by May 2008 does not bring significant economic benefits for LDCs and it even hurts most of them in terms of total exports and real income. Therefore, the introduction of a DFQF regime would lead to a better situation for LDCs only if the preferential access is extended to LDCs not only by the OECD members but also by major emerging economies for a very high number of products. LDCs are very diverse and have different interests in terms of sectoral and geographic extension of the DFQF access.