Almost a decade has passed since developing countries’ delegates walked from the negotiating tables and protesters took to the streets in Seattle 1999, as they saw their interests and concerns at best neglected and at worst undermined. Since then, the industrialized countries have pledged to put development first, explicitly making it the aim of the following round started in Doha, Qatar, in late 2001, dubbed the “Doha Development Agenda.” The on-going Doha of multilateral trade-negotiations at the World Trade Organization (WTO) ground to a halt in Cancun in 2003, experienced further hiccups in Hong Kong in 2005, and appears destined to stall for a while longer.

The authors briefly discuss its theoretical foundations to highlight the inappropriateness of pure trade theory for policy making and the often dubious empirical evidence of development gains from free trade, especially the efforts of the trade modeling community to advance the free trade agenda.

They conclude that contrary to the conventional wisdom that “free trade” is always good for development, economic theory offers a wide array of views on the issue, particular in connection with the development of mainly agricultural economies. Standard models used to estimate how the benefits from further liberalization are distributed are flawed in important ways, and ignore the risks of labor displacement, economic downturn and increasing debt in the developing world. Widely recognized power imbalances in the WTO also undermine developing countries’ potential “gains from trade”. Many of the poorest countries are already expected to be net losers following further trade liberalization, and much more than “Aid for Trade” will be needed to ensure that the Doha round is truly developmental.