Bali Update: What has happened since the WTO Ministerial?

WTO LogoAfter having pulled the members together to achieve consensus to make some decisions at the WTO Bali Ministerial in December, 2013, months later WTO Director-General Azevêdo issued a warning against revisiting those decisions.

The “Bali Package” adopted at the Ministerial consists of a number of small deals pulled from the broader Doha Agenda for negotiating a new set of rules to govern international trade:

  1. Decision on duty-free, quota-free (DFQF) access for products of least-developed countries.
  2. Decision to simplify preferential rules of origin for least-developed countries to make it easier for them to qualify for DFQF entry into the importing countries.
  3. Decision operationalizing the “services waiver” that will grant least-developed countries preferential access to other countries’ services markets.
  4. Decision on a “monitoring mechanism” to analyze and review implementation of special and differential treatment rules for developing countries.

The Agreement on Trade Facilitation, in particular, is seen as the most important component of the Bali Package. It Importsintroduces requirements for members to improve the efficiency, effectiveness, and transparency of their customs procedures. The anticipated benefits are a 10%-15% reduction in the costs of international trade. For developed countries, these changes hold the promise of increasing trade flows and revenue collections. Furthermore, the Agreement contains promises of technical assistance and capacity building for developed countries to help them to make the required investments associated with implementing the Agreement.

At this point, the text adopted in Bali remains a draft. Though its substance is not expected to change substantially, its text will become final only when it is adopted by the WTO General Council. This adoption is currently scheduled to occur at the meeting of July 31, 2014.

Meanwhile, however, India has raised the concerns of food security and indicated that it wants to see more progress on this issue. At Bali, the members agreed to continue discussions to arrive at a permanent solution on how to treat agricultural subsidies. Meanwhile, they instituted a “peace clause” of four years during which such programs by developing countries that meet certain criteria are to be shielded from trade challenges, even if they negatively impact other countries’ trade. This issue is of prime importance to India who wants to see progress on this issue. India wants this “peace clause” to be made permanent and believes that, like the Trade Facilitation Agreement, this should become part of the Bali Package.

Such a proposal is likely dead-on-arrival, however. Developed countries such as the United States, have agricultural subsidies programs that they would dearly love to be able to protect from complaints by other WTO members. They consider India’s economy to be too big to be eligible for this type of protection.

We can expect the long-running “negotiations” over the difficult issue of agricultural subsidies to continue for some time. (To be continued -)

Bali Present: WTO 9th Ministerial Delivers

Bali Opens (www.wto.org)

Bali Opens
(www.wto.org)

In our last post, Hopeful Watching: The WTO 9th Ministerial in Bali, we discussed the high hopes with which the Doha Development Round had been launched, its shrinking agenda, and the hope that some consensus would emerge that could lead to a deal focused around the hopes and aspirations of developing countries.

Just in time for the holidays, after round-the-clock discussions that extended into an additional all-nighter of negotiations, the “Bali Package” was delivered. It consists of the following small deals pulled from the broader Doha Agenda:

On Agriculture, the thorny issue of Food Security led to a “peace clause” for four years during which food stockpiling programs by developing countries which meet certain criteria will be shielded from trade challenges, even if they negatively impact other countries’ trade, while they negotiate a permanent solution. This outcome, where it’s now advanced developing countries, notably India, that are seeking protection for their agriculture subsidies represents a complete turn-around from the original focus of the Doha Round – elimination by developed countries of their programs of subsidies. This issue, perhaps more than any other, indicates the extent to which the Doha agenda has evolved since 2001.

The consensus around Development Issues emerged in the form of Members’ commitments to implement four previous decisions:

New WTO Member

Bali Closes (www.wto.org)

Bali Closes
(www.wto.org)

In other business, thirteen years after submitting its application to join the WTO, Yemen was formally welcomed into its ranks. Once Yemen ratifies the terms of its accession, it will become the WTO’s 160th member. It is also the seventh (7th) LDC to join the WTO. Implementation of the Development Decisions (above) will improve the terms on which LDC products access world markets whether or not they join the WTO.

Post-Bali Package?

The Bali Package also includes hopeful language about returning to the other issues on the Doha Agenda. These include market access for manufactured goods, more substantive agreements on agriculture and an agreement on services. However, on services, for example, separate negotiations have already begun to conclude the Trade in Services Agreement (TISA). These talks are being pursued on a plurilateral basis, i.e. a sub-set of WTO members, allowing them to bypass the pesky requirement to achieve consensus among all (now 160) WTO members. It is therefore more realistic to conclude that the Bali Package has already delivered all that can be reaped from the Doha Agenda.