By Andrew Walker
BBC Economics correspondent
Ministers from 159 countries have reached a deal intended to boost global trade at a meeting in Bali, Indonesia.
The World Trade Organization's first comprehensive agreement involves an effort to simplify the procedures for doing business across borders.
There will also be improved duty-free access for goods sold by the world's poorest countries.
The deal, which could add about $1tn to world trade, gives developing nations more scope to increase farm subsidies.
"For the first time in our history, the WTO has truly delivered," said WTO chief Roberto Azevedo, as the organisation reached its first comprehensive agreement since it was founded in 1995.
Bureaucratic barriers to commerce can be a big problem.
Africa, for example, has the longest customs delays in the world. The African Development Bank says it can take 36 hours to get goods through the customs post at the Victoria Falls crossing from Zambia into Zimbabwe.
And there are often more barriers to negotiate once goods are over the border. The highway between Lagos and Abuja in Nigeria has 69 official checkpoints.
It takes time and costs money dealing with these delays. It can be disastrous for a cargo of perishable goods. These are exactly the kind of barriers that the WTO deal is intended to tackle.
Dealing with them would certainly make it cheaper for business to move goods across borders. And if it's cheaper, they will do more of it.
"This time the entire membership came together. We have put the 'world' back in World Trade Organization," he said.
Indonesian Trade Minister Gita Wirjawan said the deal would "benefit all WTO members".
UK Prime Minister David Cameron said the "historic" agreement could be a "lifeline" for the world's poorest people, as well as benefiting British businesses to the tune of more than $1bn (£600m).
However, the "Bali package", as the WTO calls the agreement, was criticised by some development campaigners who said it was not going far enough.
Rich and poor
It is worth spelling out something what is not covered by this - tariffs or taxes on imported goods.
Dealing with them has been the bread butter of past trade rounds - but not for this deal.
The core of this agreement is what is called trade facilitation. This is about reducing the costs and delays involved in international trade. It is often described as "cutting red tape".
Some analysts suggest the benefits could be large. An influential Washington think tank has put the potential gains to the world economy at close to $1tn and 20m million jobs.
The rich countries have agreed to help the poorer WTO members with implementing this agreement.
Another important aspect of the Bali package is about enabling poor countries to sell their goods more easily. This part is about tariffs, and also quota limits on imports.
Rich countries and the more advanced developing countries have agreed to cut tariffs on products from the poorest nations.
EU trade commissioner Karel De Gucht told the BBC that if the poorest nations "have more trading capacity it will also result in more investment in logistics and infrastructure".
But campaigners describe the plan as weak.
Nick Dearden of the World Development Movement said: "If the US and EU really wanted to tackle global poverty, they would have made the least-developed-countries package much stronger."
WTO chief Roberto Azevedo: "For the first time in our history, the WTO has truly delivered"
Credibility test
Getting this deal has involved introducing some extra flexibility into the existing WTO rules on farm subsidies. India led the campaign, by insisting that it should be allowed to subsidise grain under its new food security law.
There is a strong possibility that India's policy would break WTO rules that limit farm subsidies.
A "peace clause" has been agreed, under which members agree not to initiate WTO disputes against those breaching the subsidy limits as part of a food-security programme. But it only lasts four years and there is criticism from campaigners.
John Hilary of War on Want, a UK-based group, said: "The negotiations have failed to secure permanent protection for countries to safeguard the food rights of their peoples, exposing hundreds of millions to the prospect of hunger and starvation simply in order to satisfy the dogma of free trade."
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WTO approves landmark global trade deal
By Shawn Donnan in Nusa Dua
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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Saturday, December 7, 2013
WTO agrees last-minute, historic deal worth $1tn
The World Trade Organization has reached its first ever trade reform deal to the roar of approval from nearly 160 ministers who had gathered on the Indonesian island of Bali to decide on the make-or-break agreement that could add $1 trillion to the global economy.
The approval came after Cuba dropped a last-gasp threat to veto the package of measures.
"For the first time in our history, the WTO has truly delivered," WTO chief Roberto Azevedo told exhausted ministers after the talks which had dragged into an extra day on the tropical resort island.
"This time the entire membership came together. We have put the 'world' back in World Trade Organization," he said. "We're back in business...Bali is just the beginning."
The talks, which had opened on Tuesday, nearly came unstuck at the last minute when Cuba suddenly refused to accept a deal that would not help pry open the US embargo of the Caribbean island, forcing negotiations to drag into Saturday morning.
Cuba later agreed on a compromise with the United States.
But there was skepticism how much had really been achieved.
"Beyond papering over a serious dispute on food security, precious little was progress was made at Bali," said Simon Evenett, professor of international trade at the University of St Gallen in Switzerland. "Dealing with the fracas on food security sucked the oxygen out of the rest of the talks."
The talks had begun under a cloud because of an insistence by India at the outset that it would only back an agreement if there was a compromise on food subsidies because of its massive program for stockpiling food to feed its poor.
India, which will holds elections next year, won plaudits at home for taking a stand on behalf of the world's poor.
An eventual compromise was greeted with jubilation by Trade Minister Anand Sharma. While India had insisted on a permanent exemption from the WTO rules, the final text aimed to recommend a permanent solution within four years.
But the agreement is a milestone for the 159 WTO members, marking the organization's first global trade agreement since it was created in 1995.
It also rescues the WTO from the brink of failure and will rekindle confidence in its ability to lower barriers to trade worldwide, after 12 years of fruitless negotiations.
The deal would lower trade barriers and speed up the passage of goods through customs. Analysts estimate that over time it could boost the world economy by hundreds of billions of dollars and create more than 20 million jobs, mostly in developing countries.
It still needs to be approved by each member government.
"It is good for both developed and developing members alike," US Trade Representative Michael Froman said.
A study by the Washington, DC-based Peterson Institute of International Economics estimated the agreement would inject $960 billion into the global economy and create 21 million jobs, 18 million of them in developing nations.
The deal slashes red tape at customs around the world, gives improved terms of trade to the poorest countries, and allows developing countries to skirt the normal rules on farm subsidies if they are trying to feed the poor.
The ministers had gathered with a clear warning that failure to reach agreement in Bali would turn the WTO into an irrelevance and trigger a rush towards regional and bilateral trade pacts.
It came almost 20 years to the day since a similar nail-biting conclusion to another marathon negotiation - the talks to agree the creation of the WTO itself, which wrapped up in mid-December 1993. That was the last global trade deal.
The Bali meeting was also noticeable for its lack of anti-WTO protests compared to the street battles when ministers met in Seattle 14 years ago.
The Bali accord will help revive confidence in the WTO's ability to negotiate global trade deals, after it consistently failed to clinch agreement in the Doha round of talks that started in 2001 and proved hugely over-ambitious.
As the Doha round stuttered to a halt, momentum shifted away from global trade pacts in favor of regional deals such as the Trans-Pacific Partnership that the United States is negotiating with 11 other countries, and a similar agreement it is pursuing bilaterally with the European Union.
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