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Historic WTO breakthrough in Bali: bucking the protectionist trend

Historic WTO breakthrough in Bali: bucking the protectionist trend Anthony Harrington

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On 7 December, in an historic $1 trillion deal, the commerce ministers from 159 countries took steps to make it easier for goods to flow across borders around the world. This is the first ever tariff-lowering global agreement in the history of the World Trade Organization (WTO), since it was founded on 1 January 1995. The deal comes after more than a decade during which the member states making up the WTO have failed again and again to make any real headway in lowering the barriers to international trade, turning the WTO into nothing more than a court for the (usually partial) resolution of bi-lateral trade disputes between its members. The last "success" the WTO could claim was the Doha Declaration, on 20 November 2001, when the member states adopted an ambitious program leading towards the abolition of barriers to international trade.

While the WTO has met time after time since Doha, the real headway in removing protectionist barriers to trade, until this latest meeting in Bali, has come from regional trade blocs making their own regional deals between their participating members, or through bilateral trade arrangements on a country-by-country basis. For some, the progress made by these regional free trade zones has been such as to make the WTO almost irrelevant, particularly since the global stage has been dominated by protectionism and currency wars as countries sought to grow their way out of the 2008 global crash. The "beggar thy neighbour" spirit that saw countries seeking to depreciate their currencies in order increase their own exports at the expense of everyone else was hardly conducive to lowering tariffs and other barriers to trade. In fact, the protectionism that emerged after the 2008 crash was the polar opposite of the deal reached in Doha. For a long time, the Doha development agenda looked dead in the water. It has been revitalized by the Bali Accord, but while the agreement reached by WTO members on 7 December 2013 falls short of the grand vision in the Doha Declaration, it should still be celebrated as an historic achievement. The relief felt by senior WTO officials is plain to see in the comment of the WTO director, general Roberto Azevedo, at the closing ceremony in Bali. He told the assembled commerce ministers:

"For the first time in our history, the WTO has truly delivered. We're back in business [...] Bali is just the beginning."

Undoubtedly the biggest stumbling block to getting any agreement at the WTO is that deals have to be agreed unanimously. Reportedly, the historic agreement struck at Bali was almost derailed by a grand-standing play by Cuba, seeking to get the US to lift its embargo on the island. Of course, from a non-US perspective, the embargo is a barrier to the flow of trade between Cuba and other WTO members, so the Cubans were quite within their rights to raise it as an issue. India too, had real issues that it wanted to have sorted out before any deal was agreed and doubtless there were plenty of other grudges and grievances that could have been elevated into a deal-breaking confrontation. However, for the first time in 18 years, common sense finally prevailed and, probably to everyone's astonishment and to the relief of many, the Bali accord became a reality.

The deal covers many different facets, including eliminating agricultural food subsidies to farmers in the more advanced developing economies, since these subsidies effectively lock out farmers from emerging countries getting any chance to export their products. The deal is a “trade facilitation” agreement which looks to set common customs standards around the world and which looks, too, to open advanced markets to exporters from the world’s least developed economies.

Implementing and policing the implementation of the Bali Accord is going to be another issue entirely, but at least the WTO now has a deal to prosecute!

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Further reading on food security and exporting

Tags: Bali , Cuba , Doha , Doha Declaration , India , International Trade , tariffs , US , World Trade Organisation , WTO
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