‘Bali Package’: WTO finally delivers

Friday, 13 December 2013 00:00 -     - {{hitsCtrl.values.hits}}

WTO officials would have heaved a sigh of relief at the last minute developments at the WTO Ministerial Conference held in Bali, which was scheduled to end on 6 December, but extended for another day, which saw a deal being struck at last. Called the ‘Bali Package,’ agreement was reached 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. The package also includes a political commitment to reduce export subsidies in agriculture, keep them at low levels and to reduce obstacles to trade when agricultural products are imported through quotas. The most significant part for global commerce in this package is said to be in trade facilitation, as the agreement is expected to reduce red tape and speed up port clearances. The objectives of this agreement are to make trade faster, cheaper, provide clarity, efficiency and transparency, and reduce bureaucracy and corruption. This multilateral agreement, which is expected to simplify Customs procedures by reducing costs and improving their speed and efficiency, is considered to be one of the biggest reforms of the WTO since its establishment in 1995. The reduction in costs of trade by this agreement, which is calculated to be between 10%-15%, is expected to benefit global commerce by a figure between $ 400 billion and $ 1 trillion and increase trade flows and revenue collection while creating a stable business environment and attract foreign investment. According to the WTO, this agreement will benefit particularly developing countries which will have access to assistance to improve their systems and procedures and most of the economic benefits from trade facilitation will flow to developing countries. The subject of food security included in the agriculture agreement was a thorny issue for some developing countries, India in particular. The issue of shielding public stockholding programs for food security in developing countries so that they would not be legally challenged even if a country’s agreed limits for trade distorting domestic support were breached was so thorny that there was concern whether the Bali package could be delivered. The proposed solution to this issue is an interim period to exist until a permanent solution is agreed upon with a work program set up aiming to come up with a permanent solution in four years. The Bali package is a major success for the WTO, which has struggled for over a decade to bring a conclusion to the Doha Development Agenda. To pick out a few issues such as trade facilitation, agriculture was an attempt to salvage the Doha development agenda without totally abandoning it and this is what the Bali package did. In the words of the new Director General of the WTO: “For the first time in our history, the WTO has truly delivered. We have put the ‘World’ back into the World Trade Organization.” The text adopted in Bali will now be sent to the General Council for adoption by end of July 2014. The WTO is one international organisation where all members, whether big or small, developed or developing, have equal rights. At a time when preferential trade agreements outside the WTO have increased due to the inability to strike a multilateral deal through the WTO, the Bali package is a major boost for the credibility of the WTO and its role as the pre-eminent forum for multilateral trade negotiations. (Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)

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