Kevin J. Kelley, Special Correspondent
21 March 2006
Washington, DC — East African countries will suffer job losses and an increase in poverty under the most plausible outcomes of the current world trade negotiations, a Washington-based think tank warns in a new report.
The Carnegie Endowment for International Peace bases its conclusions on sophisticated statistical modelling of likely agreements resulting from the Doha Round of trade talks, which have been underway for the past five years.
The central scenario projected in the Carnegie report involves an ambitious expansion of market access for manufactured goods and a more modest expansion of world trade in farm products, accompanied by elimination of subsidies for agricultural exports.
Based on guidelines already in place, such an agreement would require few concessions by poor countries, the report notes. And the tariff cuts under this scenario "are set at levels close to proposals that are now on the negotiating table," the 116-page study adds.
But Carnegie's key finding on a global level is that all of the plausible outcomes of the Doha Round would produce only slight overall economic gains. The report foresees a one-time increase in world income of $40 to $60 billion. "This represents an increase of less than 0.2 per cent of current global gross domestic product," the report says.
In addition, these limited global gains will involve significant benefits for a few countries and painful losses for many others, adds the study, entitled Winners and Losers.
The world's poorest coun-tries, including those in East Africa, "are among the net losers under all likely Doha scenarios," the report finds. "The results show that Bangladesh, East Africa and the rest of sub-Saharan Africa are adversely affected in almost every scenario." Kenya is specifically identified as one of the countries that would experience the greatest losses. It is included in a group of developing nations whose income would fall by about 1 per cent under Carnegie's main Doha Round scenario.
The report identifies China as the single-biggest winner, with gains ranging from 0.8 to 1.2 per cent of GDP. Developed countries would generally also gain, but not as greatly as China, the study predicts.
Benefits that would accrue to some developing countries as a result of global trade liberalisation are heavily concentrated in the manufacturing sector, the report says. But East Africa would "actually lose unskilled jobs in manufacturing industries" under the anticipated outcome of the Doha Round.
The benefits of agricultural trade liberalisation would meanwhile "flow overwhelmingly to rich countries, while developing countries actually suffer slight losses as a group," the study finds. Again, however, the losses would be felt more acutely in East Africa than in most regions of the developing world.
The key factor behind this expected result is the large proportion of East Africans who are engaged in subsistence farming. "The products of subsistence farmers are generally not competitive on global markets," the Carnegie report points out.
To reduce the scope of losses likely to be experienced by East Africa's farming sector, the report recommends that poor countries be allowed to shield agricultural products from tariff liberalisation. "Countries like India, Indonesia, and Kenya will require exceptions for the products produced by their subsistence farmers if they are to avoid increases in poverty," the study states.
Even under outcomes more favourable to the developing world, "it is clear from the Carnegie model and a close study of most other recent models that trade is not a panacea for poverty alleviation or for development more generally," the report says.
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