The Bali Package & the WTO

WASHINGTON, DC: When the 160 members of the World Trade Organization met at Bali in December 2013, the international community finally seemed to be on the same page with regard to global trade. The politicised nature of the Doha Conference could finally be labelled as a shadow of the past, with this meeting breathing life into an organisation that had been withering away for two decades. However, in July when the members met to rubber stamp the Bali package, the illusion of progress was quickly put to bed by India’s veto.

In a move that shocked many, India tried to strong arm the international community by rejecting the agreement in a bid to improve its negotiating power on an unrelated topic: food security. Their demand for being allowed to stockpile food and subsidised prices, although against recent global efforts to reduce trade-impairing food subsidies, was accepted by the US and EU at Bali, as a temporary arrangement till 2017. Despite receiving such significant concessions, India chose to reverse its earlier support for the Bali Package, perhaps without fully grasping the consequences it would have internationally and domestically.

In terms of substance, the Bali Package called for a global customs reforms that would streamline the inefficient and restrictive red tape that exists in most developing countries. It was estimated to add $1 trillion to the global economy and 21 million jobs, most of them in developing countries. For the first time, there were genuine efforts on a global scale to take steps that would greatly benefit developing countries. By blocking this accord, many claim that Modi is acting as a nationalist.

Narrowing the lens to the subcontinent, the failure of this accord will have substantial repercussions for the business-friendly governments in both India and Pakistan that promised to put both countries on the path towards greater trade relations and regional cooperation. This would have given the neighbouring countries the opportunity to act as a single economic bargaining power on the global platform, a necessity to counter the growing weight of other regional blocs. However, this political promise seems restricted to the realm of idealism due to the failure of both sides to take necessary steps.

Lengthy customs procedures cost Pakistan a significant amount of revenue and hinder trade expansion. The Bali Package would have been the ideal reform because of the global assistance on offer from the WTO for domestic incorporation of the accord.

Another significant implication is that once again, India has shown itself to be an unreliable trade partner. The international community has often criticised Pakistan and India for failing to honour the commitments of previous governments in the respective countries, and India has exhibited that attribute once again. States and foreign firms have described this tumultuous situation as a major factor in limiting investment in these countries and until this politicisation of economic ties is not eradicated, global mistrust will continue to hinder domestic growth in the subcontinent.

This seems to spell the end for the WTO as a platform for international cooperation. However, the international seems more intent than ever to push ahead with these reforms and continue trade liberalisation and facilitation. Many countries, along with the International Chamber of Commerce, have urged the member nations to push ahead with these efforts without India. However, if this does materialise, there remains the risk of India benefiting as a “free-rider”. Another possible path is greater multilateral and regional cooperation such as the 12-nation Trans-Pacific Partnership (TPP) led by the US, along with a deal between the US and the EU.

Mohammad Taimur Ali Ahmad

School of Foreign Service, Georgetown University,

Published in The Express Tribune, August 15^th, 2014.

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