The challenge of reducing international trade and migration barriers

Circulated also as CEPR Discussion Paper 6760, London, March 2008 and as World Bank Policy Research Working Paper 4598, April 2008, Washington DC. The paper is available also at www.copenhagenconsensus.com/Default.aspx?ID=967The net economic and social benefits of reducing most government subsidies and opening economies to trade are enormous relative to the costs of adjustment to such policy reform. While barriers to trade in most goods and some services including capital flows have been reduced considerably over the past two decades, many remain. Such policies harm most the economies imposing them, but the worst of the merchandise barriers (in agriculture and textiles) are particularly harmful to the world’s poorest people, as are barriers to worker migration across borders. Addressing this challenge would therefore also assist in meeting several of the other challenges identified in this project, including malnutrition, disease, poor education and air pollution. This chapter focuses on how costly those anti-poor trade policies are, and examines possible strategies to reduce remaining distortions. Three opportunities in particular are addressed. The most beneficial prospect is the Doha Development Agenda of the World Trade Organization (WTO). If that proves to be too difficult politically to bring to a conclusion in the near future, the other two prospects we consider are sub-global preferential reforms such as the Free Trade Area of the Americas (FTAA) initiative, and the freeing up of the international movement of workers. The chapter begins by defining the challenge. It then summarizes the arguments for removing trade and migration distortions, along with critiques by skeptics, before discussing the various opportunities for reducing subsidies and trade barriers and explaining why we chose to focus on the above-mentioned three.Kym Anderson and L. Alan Winter