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 -)

Hopeful Watching: The WTO 9th Ministerial in Bali

Trade ministers from around the world are once again meeting in an attempt to conclude the Doha Development Round of trade negotiations. The WTO’s Ninth (9th) Ministerial Conference opened December 3rd, 2013 in Bali, Indonesia and is scheduled to conclude on December 6th.

When they last met at the WTO’s Eighth (8th) Ministerial Conference in Geneva (December 15th – 17th, 2011), the trade ministers left the meeting with no clear path toward concluding the Doha Round negotiations.  Launched in November, 2001, the negotiations began with an apparent commitment to liberalize trade while addressing the longstanding concerns of developing countries, particularly continued agricultural subsidies by developed countries. Since then, however, the outcomes contemplated when the Round was launched are no longer an option. Several factors account for this reality:

Emerging Issues: Trade issues and concerns, particularly for the developed countries that drive the agenda, have changed since the launch of the Doha Round in 2001. At the top of these issues is recovering from the economic depression and identifying and addressing the new protectionist approaches by which countries attempt to gain a competitive, if unfair, advantage. Issues such as currency manipulation and climate change compete for attention, and at times make the 12-year old Doha agenda seem obsolete. At the same time, the unaddressed issues remain and developing countries have refused to take on new obligations while their concerns remain unaddressed.

Shrinking WTO Agenda: In compromise, the Doha Round negotiating agenda has been shrinking. The agenda in 2011 had shrunk from the goal of reaching agreement on a comprehensive deal to four main areas — agricultural market access, market access for industrialized goods, trade in services, and trade facilitation (streamlining customs and port procedures).  Two years later, it’s been further distilled to focus on areas of primary interest to developing countries – agriculture, trade facilitation, and special and differential treatment, particularly for least developed countries.  To keep the business interests in the developed world engaged, however, pressure is being placed on emerging countries, notably the “BRICS”, to lower tariffs and give greater access to their markets, even in a seemingly neutral area such as trade facilitation.  Meanwhile, the emerging countries continue to identify with other developing countries, particularly with respect to the technical and other non-tariff barriers that their goods face upon entry to developed country markets.  Without such compromises, however, it is unclear that developed countries will be willing to sign off on a deal.

Consensus around Development

In fact, however, a renewed focus on “development” may be what’s needed. There is already some consensus about what needs to be done for the “poorest of the poor” countries – the LDCs. For the broader group of developing countries, removal of negotiations on services is already a disappointment but any progress on addressing non-tariff barriers to developed country markets would be welcomed. And the election this year of Brazil’s Roberto Azevêdo as the current WTO Director-General  provides some hope that he can bridge the divide that exists between developed and developing countries.

Hoping against hope, we watch the progress of the 9th Ministerial.