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Rich-country negotiators would do better for themselves and for the developing world, if they keep in view that their own countries could benefit by directing agricultural subsidies away from production subsidies for large farmers towards income subsidies to relatively small family farms, delivered in the form that is decoupled from output.

New Delhi , Sept. 3

THE World Bank on Wednesday warned the trade negotiators that delivering a Doha deal that spurs development would not be "easy" as they might "well have to transcend the mercantilist mind-set".

In its Global Economic Prospects Report (GEP), 2004 released here by the Bank's Lead Economist Mr Aaditya Mattoo and Senior Economist and Mr Dominique Van Der Mensbrugghe, the bank has urged all segments of the global community must keep their focus on potential gains, not only from "winning concessions" from foreign partners, but also on the gains from domestic reforms that "pay for" foreign concessions.

Rich-country negotiators would do better for themselves and for the developing world, if they keep in view that their own countries could benefit by directing agricultural subsidies away from production subsidies for large farmers towards income subsidies to relatively small family farms, delivered in the form that is decoupled from output.

Middle-income country negotiators have to keep in view that their telecommunications and financial services could be much more efficient and less expensive if more competitors were allowed to enter well-regulated markets.

Providing a simple scenario that shows how lower trade barriers in agriculture and smaller tariff peaks could promote growth and poverty reduction, the report said under his scenario, rich nations would cut tariffs to 10 per cent in agriculture and to five per cent in manufacturing, with developing countries reciprocating with tariff cuts to 15 and 10 per cent in agriculture and manufacturing respectively. All countries eliminate agricultural export subsidies, decouple domestic subsidies to minimize the trade distortions and eliminate specific tariffs, quotas and anti-dumping duties. This formula generates gains which amount to about three-quarters of those from full liberalisation, it said.

If these reforms were implemented progressively over five years to 2010 and accompanied by a realistic productivity response, developing countries would gain nearly $350 billion in additional income by 2015 Rich countries would benefit too, with gains on the order of $170 billion. All of this would mean that there would be 144 million fewer people living below $2 per day by 2015, the report said.

In a foreword to the report, the World Bank Chief Economist, Mr Nicholas Stern, said as the Doha round is the first trade round for many new WTO members, including the world largest developing economy, China, it has the opportunity to remove many of the inequities in the global trading system that put developing countries at a disadvantage in their trade. He singled out three trade barriers viz, agriculture, tariff peaks in manufactured products of export interest to developing countries and temporary migration of personnel from the developing world as service providers to the developed world. It said poor countries also gain from remittance sent home by

Temporary migrants and returning workers bring new sills back to the sending country. In 2001, remittances from permanent as well as temporary migrants provided some $71 billion to developing countries, nearly 40 per cent more than all official development assistance.

The bank report said if temporary movement of labour up to 3 per cent of the total labour force in rich countries were permitted, developing countries would stand to gain as much as $160billion in additional income.

Laying out the principal elements of a pro-poor outcome for the Doha Agenda, the reports said agricultural reform in advanced countries remains at the heart of a development round.

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