WASHINGTON, Nov 1: Removing barriers to trade, the topic of WTO meetings in Doha in early November, could significantly boost the long-term prospects of developing countries, many of which are suffering from the fall-out of the September 11 attacks and worldwide slowdown. A new World Bank report paints a grim picture of the short-term outlook for poor nations because of the simultaneous downturn in the US, Europe and Japan. Growth in developing countries is expected to fall to 29 per cent in 2001, nearly half the 55 per cent recorded in 2000 Latin America, East Asia, and Sub-Saharan Africa are particularly hard hit this year. Nonetheless, if industrial countries begin to recover by mid-2002, as the report projects, growth in developing countries may edge up to 37 per cent in 2002. Reshaping the world’s trade system and reducing barriers to trade could accelerate medium-term growth and reduce poverty around the world, concludes Global Economic Prospects and the Developing Countries 2002: Making Trade Work for the World’s Poor, the Bank’s yearly report on prospects for developing countries. Expanding trade could well increase annual GDP growth by an additional 0.5 per cent over the long run and by 2015 lift 300 million people out of poverty in addition to the 600 million escaping desperate poverty with normal growth. Developing countries stand to gain an estimated $15 trillion of additional income in the 10 years after liberalization policies are begun; developed countries would see their incomes rise by some $13 trillion. The report proposes a four-part policy agenda to “reshape global trade architecture to promote development”: launching a Development Round in the WTO, promoting global cooperation to expand trade outside the WTO, encouraging new policies in high income countries to provide assistance that will expand trade, and advocating for trade reforms within developing countries to accelerate development. Global prospects: short-term risks are high, but long-term prospects are favourable. The outlook for 2002, though subject to unusually high risks, is that the global economy will recover: Developing countries are expected to grow by 37 per cent if the external environment holds, up from 29 per cent in 2001, while it is expected that the world economy will grow by 16 per cent.

The report shows that the impacts of the economic downturn on the world’s six developing regions vary significantly, often mirroring export patterns.

The report says that, despite the tough circumstances in 2001, the long-term prospects for developing countries are promising. This is to a large extent due to improved macroeconomic management, rising savings, increased openness, and greater diversification. Average per capita growth of 36 per cent is forecast for 2005-2015 for developing countries and 25 per cent for high-income nations.

Citing the cost of subsidies to agriculture imposed by rich nations, which amount to estimated $1 billion a day, or more than six times all development assistance to poor nations, the authors list numerous barriers that adversely affect developing countries, including subsidies, high tariffs on selected products of developing countries, and tariff codes of high-income countries that discourage forward processing in developing countries. They call for high income countries to grant duty-free, quota free access to their markets for the low-income developing countries.

Trade in merchandise growth outpaced growth in GDP by nearly 3 to 1 during the 1990s. Data reveal an average annual increase of 63 per cent in the volume of global merchandise trade (1990-1999) compared to global GDP growth of 21 per cent per year over the same period. Exports grew faster than domestic demand in every major region. Yet the poorest “least developed countries” lagged, in part because the LDCs remain dependent on agriculture and labor-intensive manufactures. World demand for these products is growing less rapidly and they face trade barriers that are two-three times those of other products.

Transport receives special attention in the report. If developed countries were to allow freer competition in international shipping, costs to developing countries could be lowered by more than 20 per cent, given that existing private restrictions, some of which enjoy semi-official sanction, reduce competition and drive up prices.

On intellectual property, the authors recommend “rebalancing” the Uruguay Round Agreement on Trade-Related Intellectual Property Rights (TRIPS) agreement the global agreement that gave patent holders new trade rights to allow developing countries, especially low-income developing countries, access to drugs and products essential to development at competitive prices.

The report argues for reshaping the global architecture of world trade to promote development and poverty reduction. The authors focus on four policy areas:

Using the WTO ministerial to launch a “development round” of trade negotiations that would reduce global trade barriers, especially to poor countries and to the products the poor produce.

Engaging in global collective action to promote trade outside the negotiating framework of the WTO.

Adopting pro-trade development policies of high-income countries unilaterally.

Enacting new trade reform in developing countries, particularly in the area of domestic policies that impact south-south trade.

Outside of the WTO, the Bank, together with other international financial institutions and agencies, can provide “aid for trade” through stepped up development assistance in several areas. One way this is being done is through the “Integrated Framework,” or IF. Set up by bilateral donors, the IF provides trade-related technical assistance to LDCs. Help can come in the form of policy advice that feeds into poverty reduction strategy papers (PRSPs) or ‘integration studies’ that underpin country assistance strategies. In the final analysis, however,it is developing countries themselves that have to undertake these reforms.