Ministers from around the world sealed the first global trade deal in a generation on Saturday in a move hailed as a tonic for both the global economy and the battered credibility of the World Trade Organisation.
Almost two decades after the WTO was founded ministers from its 159 member countries approved a “trade facilitation” agreement to set common customs standards and ease the flow of goods through borders around the world. They also took decisions on a range of issues from how the WTO should respond to government food security programmes to securing better market access to the rich world for the globe’s least developed economies.
Business groups immediately praised the trade facilitation deal as a needed stimulus for the global economy. The International Chamber of Commerce estimates it will lower the cost of doing trade by as much as 10-15 per cent and add $1tn to global output.
But those benefits are likely to take years to materialise and the more immediate impact was in a badly needed boost for the 159-member WTO’s credibility. Years of stalled talks have caused many to grow cynical about its capacity to deliver anything.
“For the first time in its history the WTO has delivered. We are back in business,” Roberto Azevêdo, the Brazilian who took over as director-general of the WTO in September, told reporters after the deal.
“Today we have saved the WTO,” said Karel Degucht, the European trade commissioner.
Mr Azevêdo shepherded three months of intensive negotiations leading up to the deal and he drew a standing ovation from members after the deal was done. Many WTO members praised Mr Azevêdo for his work to deliver the deal and restoring faith to a system that was demoralised when Pascal Lamy, the Frenchman who led it for eight years, left at the end of August.
Michael Froman, the US trade representative, said the new director-general had played a “critical role to bring us to this point” and also praised the Brazilian’s creation of a “new WTO”.
Approval of the deal came after Mr Azevêdo helped end a stand-off between India and the US over how the WTO should treat government food programmes for the poor and how they buy grains from farmers. Working with Indonesia’s trade minister, Mr Azevêdo also overcame a bid by Cuba and three allies to block to have the WTO call for the lifting of the 53 year old US trade embargo on the Caribbean island.
But his biggest task now will be building on the success in Bali and using it to tackle the big issue of what to do next with the 12-year-old and long-stalled Doha Round.
“Bali is just the beginning,” Mr Azevêdo said on Saturday.
The ministers in Bali called on WTO negotiators in Geneva to use the next 12 months to draft a work plan for the future.
Likely to feature in that debate are discussions over whether to tackle the Doha Round in smaller bites or resume efforts to finish it as a whole. Some countries are also keen to see new “21st century” issues added to the 12-year-old agenda like investment and competition and even how to treat flows of data around the world.
“This jump starts the post-Bali agenda,” said Jeffrey Schott, a trade expert at the Peterson Institute for International Economics.
But it also had illustrated two important things about the current dynamics within the WTO, he said.
Even as some accuse the US of abandoning the WTO to pursue regional and sectoral agreements outside its confines the hard work done in Bali by Mr Froman and his team to secure a deal had illustrated that Washington still cared about the multilateral institution, Mr Schott said.
This week’s events in Bali had also shown, he said, how the big emerging economies no longer acted as a bloc within the WTO. Brazil, China, and Russia all pushed for a deal to be done even as India threatened to block it, a stance even small developing economies in Africa had expressed frustration with.
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