Formulas for Failure? : Were the Doha Tariff Formulas Too Ambitious for Success?
This paper views tariff-cutting formulas as a potential solution to the free-rider problem that arises when market opening is negotiated bilaterally and extended on a most-favored-nation basis. The negotiators in the Doha Agenda chose formulas that...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/06/24619553/formulas-failure-doha-tariff-formulas-too-ambitious-success http://hdl.handle.net/10986/22176 |
| Summary: | This paper views tariff-cutting formulas
as a potential solution to the free-rider problem that
arises when market opening is negotiated bilaterally and
extended on a most-favored-nation basis. The negotiators in
the Doha Agenda chose formulas that are ideal from an
economic efficiency viewpoint in that they most sharply
reduce the highest and most economically-costly tariffs.
When the political support that gave rise to the original
tariffs is considered, however, this approach appears to
generate very high political costs per unit of gain in
economic efficiency. The political costs associated with the
formulas appear to have led to strong pressure for many,
complex exceptions, which both lowered and increased
uncertainty about members’ market access gains. Where tariff
cuts focus on applied rates, it seems likely that a
proportional cut rule would reduce the political costs of
securing agreements. However, detailed examination of the
Doha proposals with their product exceptions suggests that
negotiators are likely to find cuts with exceptions
politically attractive but economically costly when cuts are
based on bound tariffs with different degrees of binding overhang. |
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