Modeling the Gains from Trade Liberalization

• Is Trade Pessimism Justified? Opening the “Black Box” of Trade Modeling (205 kb)
  This paper, which draws on a more in-depth analysis (Bouët, 2006), explains how the main global trade models currently in use capture the benefits from trade liberalization. Trade liberalization is expected to play a positive role both in reducing poverty and generating economic growth in developing countries, which is why numerous analysts have attempted to assess the expected benefits of trade liberalization. The main empirical tool for these assessments has been the use of multi-country Computable General Equilibrium (CGE) models. These models, however, have produced divergent results.

Subsidies and the WTO Doha Round Negotiations

• The Standstill in Subsidies - Update
  This paper takes an insider's look into the WTO negotiations on subsidies from the July Framework Agreement to the eve of the December 2005 Ministerial Conference. It paints a grim picture. Overall, progress has been incremental, and subsidy reform has faced tough resistance.

Bridging the North-South Divide

• Trade-Related Subsidies - Bridging the North-South Divide
  The Executive Summary provides a short overview of all papers in the series.

• Negotiating Subsidy Reduction in the World Trade Organization
  This paper provides an overview of the WTO, its structure, its function and its mechanisms to resolve disputes. The paper highlights the strengths and weaknesses of the present system. Author Konrad von Moltke presents a comprehensive discussion of what is lacking in the WTO and offers some suggestions on what is necessary in the future to resolve the trade and subsidy issue in an equitable and fair manner.

• Terms-of-Trade: A Criterion for Trade Disputes Settlement
  This IISD paper, written by Rosmy Jean Louis and Pumulo Roddy, provides an overview of trade-distorting subsidies and their impact in the United States, Canada and the EU. The paper focuses on the sectors where trade-distorting subsidies are concentrated and the reasons why they are used in these three places. The paper demonstrates why conventional measures like the PSE, CSE and the AMS do not, and cannot, provide the necessary information required to detect and resolve subsidy-related trade disputes. The paper argues that the terms of trade may offer a better indicator or measure to detect and resolve these disputes at the WTO. The authors developed a simple trade model to support their argument.

• Trade-Related Subsidies - Bridging the North-South Divide: An Indian Perspective
  The paper focuses on subsidy-related issues in India. The authors provide an overview of subsidies in the agriculture, energy, infrastructure and export-oriented sectors. The rationale for subsidies, based on economic, social and environmental criteria, is provided. The role of subsidies and their implications on the terms of trade is explored in the paper through an extensive review of existing literature, often drawing upon the results of general equilibrium analyses. The paper also reports on the implications of subsidies on economic, social and environmental dimensions. The authors also provide a brief overview of the impact foreign subsidies have had on selected Indian sectors.

• An Analysis and Review of Subsidies in Southern Africa: The case of SACU
  This paper aims to outline the extent to which direct and indirect subsidies are still prevalent within South Africa's economic sectors, examining in some detail their impacts on the prices of goods and services; the environment; and the overall economy. Focus is paid to the manufacturing, agriculture and energy sectors, where subsidies have played a significant role in determining output and performance in past decades. The paper shows whether any of the subsidies still prevalent in South Africa are in contravention of the WTO rules.