A recent report “The Shrinking Gains from Trade: A Critical Assessment of Doha Round Predictions”, (Frank Ackerman, Global Development and Environment Institute., Tufts University, USA), reviews the two most widely used models for predicting the benefits of trade liberalization; the Global Trade Analysis Project (GTAP) model and the World Bank LINKAGE model.

These models have recently been used to predict benefits in the hypothetical situation of complete trade liberalization and the results show more modest benefits than previous forecasts.

According to the GTAP model, the total calculated benefit of trade liberalization is $84 billion, which signifies $14 per year or $.04 per day per capita.  However, the benefits are unevenly distributed with more than 70% of these benefits in developed countries.  Liberalization is estimated to be worth $57 per person in developed countries and less than $5 per person in developing countries.  

The LINKAGE model predicts higher benefits but a displays the same general trend with a discrepancy between the benefits for developed and developing countries.  

The GTAP model predicts that of the developing counties five would receive more than two thirds of the benefits.  China and Vietnam will benefit in textiles whilst Brazil, Argentina and India in agriculture.

The LINKAGE model predicts that Thailand, Mexico and Turkey would also benefit.  These eight countries are predicted to receive half of the total benefits for the developing countries.

An additional point of interest within these studies is that 85% of the benefits for the developed countries would be for Europe, Japan, Korea, Taiwan, Honk Kong and Singapore.  The United States and Canada would receive moderate benefits.

Further models have predicted the possible benefits of the Doha Round agreements and WTO Ministerial in Hong Kong this December.  The “Doha Scenario” would reduce benefits to the whole world to one third of their maximum potential and would tilt benefits more strongly towards developed countries (due to faster tariff reduction).  The Doha Round is predicted to be worth $79 per year, or $.20 per day, for each person in developed countries, whilst in developing countries, $3 per year, or less than a penny per day, for each person.

Based upon the definition of poverty (as less than $2 per day) the model predicts a reduction of total poverty, resulting from Doha negotiations, of 0.3%, the equivalent of helping 6 million people.