21/1/2005
Global Trade Liberalization Could Reap Benefits For Developing States

Exports from developing countries could increase by as much as $175 billion if current international talks on liberalizing trade in industrial products are successful, according to a study released by the United Nations Conference on Trade and Development (UNCTAD).

But these potentially massive gains will only be realized if the eventual global agreement is development-centred and allows poorer nations to reduce short-term costs such as the loss of tariff revenues and a reduction in real wages.

The study, released this week at the start of a two-day UNCTAD meeting in Geneva, examined the possible effects of a global agreement as a result of the current round of trade liberalization talks sponsored by the World Trade Organization (WTO).

It paints a mixed picture for developing countries, with long-term gains offset by structural adjustment problems in the short-term, particularly as poorer nations reduce the often large tariffs they place on imports. Many of these States depend on tariff revenues for a large part of their government funding.

The study said the motor vehicle, electronic and non-ferrous metal sector were at greatest risk of job losses if trade in industrial products is liberalized.

But it added that in the long run there could be large employment increases in developing nations in such industries as textiles and apparel if an agreement is signed, as well as potentially massive gains to those countries’ gross domestic product (GDP).