Fed: European Commission says WTO round would deliver dollars

AAP General News (Australia)
12-02-1999
Fed: European Commission says WTO round would deliver dollars

CANBERRA, Dec 2 AAP - The European Commission today put a price on trade liberalisation,
saying it could deliver an annual welfare gain for the world of up to $US400 billion ($A612.37
billion).

"The study suggests that all regions could emerge as beneficiaries from a new trade
round," the study by the European Commission to Australia and New Zealand said.

"The study finds that further trade liberalisation could bring about an annual welfare
gain for the world of up to $US400 billion."

It argues that developing countries could emerge as major beneficiaries of a new multilateral
trade round, being sought by Australia in Seattle at the World Trade Organisation talks.

The study considered two situations whereby global welfare could receive a boost -
a 20 per cent and a 50 per cent global cut in protection.

"Each scenario was combined with a WTO agreement on trade facilitation, which it is
assumed leads to an additional reduction (conservatively estimated at one per cent) in
the transactions costs associated with international trade," the commission report said.

The result would be up to $US220 billion ($A336.8 billion) in welfare gains with a
20 per cent cut, and $US400 billion ($A612.37 billion) if protection levels were cut by
half.

"The lion's share of the welfare gains accrue outside the major industrialised nations,
with developing countries the major beneficiaries," it said.

All regions - including Europe - would benefit, it said.

"Trade protection shifts the economy to a less efficient mix of production, consumption
and investment, and can also create an anti-export bias by encouraging resources which
were previously allocated to exporting activities to move into sectors which produce for
the protected domestic market.

"In other words, trade protection slows down growth and reduces economic welfare."

AAP lm/mfh/it/jnb

KEYWORD: WTO EUROPE

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