18 years in the making: WTO clinches first global trade agreement

Pact includes commitments to simplify customs procedures and limit agriculture subsidies.

NUSA DUA/ INDONESIA:

Commerce ministers capped days of hard negotiations on Saturday by approving a World Trade Organisation (WTO) agreement on international commerce they hailed as a ‘historic’ boost for the trade body.

The accord reached in Bali marks the first global agreement struck by WTO since its 1995 founding.

“For the first time in our history, the WTO has truly delivered,” WTO Director-General (DG) Roberto Azevedo told a closing ceremony. “We have put the ‘World’ back into the World Trade Organisation,” he told delegates.



The pact includes commitments to facilitate trade by simplifying customs procedures. The Washington-based Peterson Institute for International Economics estimated in a report this year the customs measures could create $1 trillion in economic activity and 21 million jobs if properly implemented.

The package also included pledges to limit agricultural subsidies, and policies to aid least-developed countries.

WTO officials have conceded however that uncertainty surrounded how effectively the measures would be implemented, especially in underdeveloped countries.

Analysts said the hard-fought nature of the talks indicated how difficult it could be for the body to make real progress on the Doha Round.



Failure in Bali “would have dealt a massive blow to the institution’s prestige,” said Simon Evenett, an international trade expert at Switzerland’s St. Gallen University. “But Bali revealed much about how difficult are negotiations between the large trading nations on big-ticket commercial items and there is no sign they are going to get any easier.”

“With this landmark accord on trade facilitation and other issues, the WTO has re-established its credibility as an indispensable forum for trade negotiations,” the US Chamber of Commerce said in a statement.

The agreement was reached after more than four days of haggling in Bali that stretched past the conference’s scheduled Friday close and overnight.

“The decisions we have taken here are an important stepping-stone toward the completion of the Doha Round,” Azevedo said.

Protectionist disputes among the WTO’s members have foiled agreement.

Azevedo has expressed concern over the rise of alternative regional trading pacts that he fears could render the WTO obsolete if the body did not start clinching major worldwide agreements. The Bali negotiations teetered repeatedly on the brink of collapse due to various differences.

India – which aims to stockpile and subsidise grain for its millions of poor – had demanded that such measures be granted indefinite exemption from WTO challenge.  The United States, which implements large farm supports of its own, and others had said India’s grain policy could violate WTO limits on subsidies.

A later hurdle emerged as four Latin American countries objected to the removal in the accord’s text of a reference to the US embargo on Cuba. Compromise wording smoothed over those hurdles.

As the Doha Round has faltered, alternative regional pacts have emerged between major trading nations, such as the 12-country Trans-Pacific Partnership (TPP) spearheaded by Washington. TPP negotiators started their latest meeting in Singapore on Saturday as they.

Azevedo has said such alliances could have ‘tragic’ consequences on poor nations by denying them a place at the trade-rules table.

But Kevin Gallagher, a globalisation expert at Boston University, said the hard fight in Bali for modest results indicated the WTO’s battle for relevance was far from over. “Rather than honouring the multilateral process, powerful nations will move to regional trade deals such as the TPP to advance harmful proposals that were rejected at the WTO,” he said.

Published in The Express Tribune, December 8^th, 2013.