IT was touch and go, over a period of six intense days at Bali early December. In the end, the World Trade Organization’ Bali Ministerial delivered a trade liberalization package - the first ever deal that the WTO could craft ever since it came into being in 1995.
This came about in the backdrop of a 12-year stalemated Doha Development Agenda (DDA) and a spaghetti bowl of regional trade agreements being pursued widely.
The Doha Development Agency was launched in Doha in 2001. As negotiations on the DDA progressed, the poor realized that the rich want only better market access while paying lip service to development, hence the continuing stalemate.
Western agriculture subsidies was always the spoiler. Europe inter alia wanted new deals on investment, competition, transparency in government procurement, and trade facilitation as a trade off against reforms of their farm subsidy regime. However, many in the developing world were opposed to all the four issues and the Cancun Ministerial of 2003 collapsed without any conclusion.
The Cancun collapse was salvaged in Geneva in July, 2004 and it was agreed that DDA negotiations should continue, but retaining only trade facilitation among the four issues.
Low hanging fruits
Among other issues, trade facilitation featured at the Bali Ministerial as part of the Doha Lite deal, as a way forward to harvest low hanging fruits of the DDA and move forward. As expected the level of ambition between the rich and the poor are always at cross roads and thus the text on trade facilitation was not a consensus one, but it was sorted out in the end.
That was possible after the agreement on public stockholding of food grains breaching the 10 percent subsidy limit was crafted without tying it down to a four-year peace clause but until a permanent solution is found.
As India’s trade minister, Anand Sharma, triumphantly said: “A historic day for the WTO. India’s food security concerns are addressed.”
The US was recalcitrant, as it has little appetite for the DDA and has therefore been pursuing two mega regional deals. India’s hard stand made pundits feel that she is walking into a trap and thus negotiators will go back empty handed. Miraculously a deal was struck at Bali.
The US wanted the accord on trade facilitation badly, which was the trade off that India used for its demand on food security flexibility.
However, trade facilitation. ie, cutting down the red tape in customs procedures is a win-win deal, which was welcomed by all. This deal is expected to generate about US$1 trillion gain to all countries, of which most will accrue to the developing world.
In the end multilateralism stood its ground, which is the best way forward for all. The scene will now shift to Geneva, where negotiators will work out the nuts and bolts of what they have agreed at Bali, and tackle the unfinished agenda of the DDA over 2014 and beyond.
