Benefits Of Free Trade Lower Than Earlier Estimate Says World Bank

The World Bank has scaled back its estimate of the overall gain to the global economy from the elimination of tariffs and subsidies, an official has said.

The bank's most recent estimate compiled last month now shows a gain of 290 billion dollars from a move to "free trade," compared with a 2003 report than showed a benefit of 500 billion dollars.

The gains, while still hefty, cast a new light on global trade talks as members of the World Trade Organization race to complete talks on the Doha round of talks to reduce trade barriers.

"If we assume full liberalization, which means remove all tariffs and subsidies, the world total gains would be about 290 billion dollars," World Bank Economist Richard Newfarmer told.

But Newfarmer pointed out that even the Doha round would not provide full trade liberalization. "When you look at what doha will give us, it's obviously a lot less" than 290 billion dollars.

The bank's new estimate said that developing countries would get somewhere between 20 billion and 48 billion dollars of the gain, depending on the plan adopted by WTO members.

Newfarmer said the revision comes as a result of new calculations but also the recent changes in global tariffs such as the disappearance of textile quotas in 2005.

"We moved the data base from 1997 to 2001 which came out earlier this year and incorporated important changes in policies," he said.