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On April 13, GMF’s Trade & Development program hosted Dr. Thomas Hertel, founding director of the Global Trade Analysis Project (GTAP), for a discussion on “Putting Development Back into Doha: Poverty Impacts of a WTO Agreement.”  Dr. Hertel argued that for WTO negotiations to positively affect development, ambitious tariff cuts are necessary in both developed and developing countries.  These measures, he said, should come with complementary domestic policies that enable poor people to take advantage of new market opportunities.          Currently on leave from Purdue University, Dr. Hertel, together with colleague Alan Winters, has coordinated a series of World Bank studies to assess how the outcome of the Doha Round is likely to impact poverty at global, national, and household levels.  The project uses updated GTAP data and a general equilibrium modeling framework, and builds upon parallel research by fellow World Bank economists Kym Anderson and Will Martin.  Dr. Anderson spoke at a February 23 Trade & Development luncheon on “Agricultural Trade Reform and the Doha Development Agenda.”   At the GMF event, Dr. Hertel highlighted key findings from 13 country case studies that looked at domestic factors like labor markets, price transmission mechanisms, and household-level poverty impacts: 

• A Brazilian study, for example, found that multilateral trade reforms would increase employment and reduce poverty in Brazil’s poorer regions.  Though poverty would increase in two wealthier, more industrialized regions, overall rates of inequality and poverty would fall nationwide.
  
• A study of cotton reforms in Zambia showed that complementary domestic policies, such as improved extension services for poor farmers, could significantly boost real incomes by linking poor households to world markets.
  
• In contrast, if a country suffers from poor infrastructure and high domestic marketing costs, as a study for Mexico demonstrated, the remote rural poor are likely to realize much lower gains from changes in border prices.

On balance, the research Dr. Hertel presented predicts that expected trade reforms will reduce poverty in the near term, but not as drastically as many hope.  Moreover, even as some regions and households stand to gain under trade liberalization, others will lose; this underscores the need to consider distributional impacts from such factors as employment shifts and price changes.  Dr. Hertel recommended that both rich and poor countries open up their own markets in a meaningful way and pursue complementary domestic policies to support pro-poor development.  The discussion stressed the value of providing trade facilitation and capacity building assistance to enhance the participation of poor countries in more open markets.  The event also highlighted the importance of improving agricultural productivity and rural education in developing countries.