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Date Published:Oct 1, 2004
Countries can still reap substantial economic benefits from external opening – an estimated 0.3 % increase in income over 20 years for each .01 increase in the ratio of trade to GDP. Non–economic effects of trade are more complicated. Taking the case of SO2 pollution, trade can be on net beneficial, while for CO2 the outlook is worse, absent effective global governance, due to the international free rider problem. The paper considers what should be priorities for the form and content of trade negotiations. The conclusion is to favor multilateral negotiations, as in the WTO. The author's back–of–the–envelope attempt to take into account dynamic gains says that the increase in welfare from a truly successful Doha Round might be 2% of global income. Environmental issues increasingly need to be addressed through multilateral institutions as well; they cannot be addressed through the assertion of national sovereignty.
Working Paper 04–07, Weatherhead Center for International Affairs, Harvard University, October 2004.