World Trade Organisation agrees historic deal to boost global trade

wto   The WTO’s Bali Ministerial Conference concluded a day later than scheduled on 7 December 2013 with agreement on a package of issues designed to streamline trade, allow developing countries more options for providing food security, boost least developed countries’ trade and help development more generally.

In addition to the Bali Package, ministers formally adopted a number of more routine decisions at the end of a five-day meeting opened by Indonesia’s President Susilo Bambang Yudhoyono, which also saw Yemen accepted as a new member.

“We did it!” said Indonesia’s Trade Minister Gita Wirjawan, who chaired the conference. “We achieved what many said could not be done. President Susilo Bambang Yudhoyono told us on Tuesday that the mystique of Bali would have a positive effect on our negotiations. This is the place where deals get done. I am delighted that Bali has not let us down.”

“For the first time in our history: the WTO has truly delivered,” said WTO Director-General Roberto Azevêdo. “I challenged you all, here in Bali, to show the political will we needed to take us across the finish line. You did that. And I thank you for it.”

The Bali Package is a selection of issues from the broader Doha Round negotiations. Echoing calls from many delegations, Mr Azevêdo, said members’ attention should now turn the rest of the round, known semi-officially as the Doha Development Agenda.

“With the Bali package you have reaffirmed not just your commitment to the WTO — but also to the delivery of the Doha Development Agenda,” Mr Azevêdo said. “The decisions we have taken here are an important stepping stone towards the completion of the Doha round.

“And it is very welcome that you have instructed us to prepare, within the next 12 months, a clearly defined work program to this end.”

The deal on the Bali Package was struck after intensive consultations almost round the clock from Wednesday 4 December until the early hours of Friday 6 December, followed by overnight meetings of heads of all delegations the following night.

Happiness and sadness

Ministers and other delegates greeted the agreement enthusiastically, with repeated clapping and cheering. But the conference was also tinged with sorrow at the news of the death of former President Nelson Mandela.

Mr Azevêdo, Mr Gita, and numerous ministers and delegates paid tribute to Mr Mandela as an inspiration for all, including in the pursuit of the WTO’s difficult goals. Mr Gita quoted him: “It always seems impossible, until it’s done.”

‘Flexible time’

Mr Azevêdo had worked with ministers on a handful of sticking points individually and in small groups, before revised drafts were circulated for all members to consider. These were finally agreed by consensus on 7 December after meetings were scheduled and rescheduled.

“In the WTO, the concept of time is a flexible one,” WTO spokesman Keith Rockwell said when asked by journalists on 6 December about the meeting extending beyond its original schedule. “I think it will be a long day.”

During those final critical hours, almost all members said the package should be adopted in full, even if they were not completely happy with some parts of it.

They said the package was needed because of the benefits it would give directly, but also because it would reinvigorate the WTO and its trading system, and provide the momentum to conclude the Doha Round, which was launched in 2001 and has seen little progress since 2008 until work intensified on the Bali Package this year.

However a small group of countries — Cuba, Bolivia, Nicaragua, Venezuela — recorded serious reservations about what they considered to be imbalances in the package in favour of richer countries, and the absence of provisions barrng discrimination in the form of trade embargoes on goods in transit.

Their concern about embargoes delayed consensus on the package until a compromise was struck in the form of a sentence upholding the principle of non-discrimination in goods in transit was added to the final declaration.

The Bali Package has sometimes been described as the first major agreement among WTO members since it was formed in 1995 under agreements from the 1986-94 Uruguay Round negotiations. The most significant for global commerce is the trade facilitation part of the package, which is about cutting red tape and speeding up port clearances.

Much of the rest of the package focuses on various issues related to development, including food security in developing countries and cotton and a number of other provisions for least developed countries.

The package also includes a political commitment to reduce export subsidies in agriculture and keep them at low levels, and to reduce obstacles to trade when agricultural products are imported through quotas.

Trade facilitation

The trade facilitation decision is a multilateral deal to simplify customs procedures by reducing costs and improving their speed and efficiency. It will be a legally binding agreement and is one of the biggest reforms of the WTO since its establishment in 1995 — other agreements struck since then are on financial services and telecommunications, and among a subset of WTO members, and agreement on free trade in information technology products.

The objectives are: to speed up customs procedures; make trade easier, faster and cheaper; provide clarity, efficiency and transparency; reduce bureaucracy and corruption, and use technological advances. It also has provisions on goods in transit, an issue particularly of interest to landlocked countries seeking to trade through ports in neighbouring countries.

Part of the deal involves assistance for developing and least developed countries to update their infrastructure, train customs officials, or for any other cost associated with implementing the agreement.

The benefits to the world economy are calculated to be between $ 400 billion and $1 trillion by reducing costs of trade by between 10% and 15%, increasing trade flows and revenue collection, creating a stable business environment and attracting foreign investment.

The text adopted in Bali is not final, although the substance will not change. It will be checked and corrected to ensure the language is legally correct, aiming for the General Council to adopt it by 31 July 2014.

Agriculture and cotton

Agreement on the agriculture part of the Bali Package required sorting out two issues. Much of the focus was on shielding public stockholding programmes for food security in developing countries, so that they would not be challenged legally even if a country’s agreed limits for trade-distorting domestic support were breached.

The proposed solution will be interim, and much of the discussion was about what would happen at the end of the interim period. The outcome of consultations was for the interim solution to exist until a permanent one is agreed, with a work programme set up aiming to produce a permanent solution in four years.

The other issue was about “tariff quota administration“, how a specific type of import quota (a “tariff quota” where volumes inside the quota have a lower duty) is to be handled when the quota is persistently under-filled. Members have agreed on a combination of consultation and providing information when quotas are under-filled. The one remaining issue to be settled was which countries would reserve the right not to apply the system after six years: they will be Barbados, Dominican Republic, El Salvador, Guatemala and the US.

Meanwhile, three texts remained unchanged from the versions negotiated in Geneva. One is on adding some development and land-use programmes to the list of general services that are candidates for being allowed without limit because they cause little trade distortion.

Another is a strong political statement to ensure export subsidies and other measures with similar effect are low. A third deals with improving market access for cotton products from least developed countries, and with development assistance for production in those countries.

Development issues

Four documents remained unchanged from their Geneva versions.

  • Duty-free, quota-free access for least developed countries to export to richer countries’ markets. Many countries have already implemented this, and the decision says countries that have not done so for at least 97% of products “shall seek to” improve the number of products covered.
  • Simplified preferential rules of origin for least developed countries, making it easier for these countries to identify products as their own goods, and qualify for preferential treatment in importing countries.
  • A “services waiver”, allowing least developed countries preferential access to richer countries’ services markets.
  • A “monitoring mechanism” consisting of meetings and other methods for monitoring special treatment given to developing countries.

Decisions on the WTO’s regular work

The Ministerial Conference adopted five decisions on the WTO’s regular work. They can be found here. They are the following:

In intellectual property, members agreed not to bring “non-violation” cases to the WTO dispute settlement process — “non-violation“ is shorthand for the technical question of whether there can be legal grounds for complaint about loss of an expected right under the WTO’s intellectual property agreement, even when the agreement has not been violated.

A similar extension was agreed in electronic commerce, members agreed not to charge import duties on electronic transmissions. The Work Programme also encourages continued discussions on electronic commerce in relation to commercial issues, development and new technology.

Ministers decided to give special consideration to issues of small economies. Ministers instructed the Committee on Trade and Development to consider proposals on small economies and make recommendations to the General Council.

Ministers reaffirmed their commitment to Aid for Trade, an initiative that assists developing countries, and in particular least developed countries, trade. They welcomed progress on Aid for Trade since its launch in 2005 and mandated the Director-General to continue support of the programme.

Ministers directed their Geneva delegations to continue examining the link between trade and transfer of technology and make possible recommendations on steps that might be taken to increase flows of technology to developing countries. The mandate was given at the 2001 Doha declaration. (WTO)

 

 

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