Bali deal process highlights WTO's fractured nature

Bali deal process highlights WTO's fractured nature

It took just over 12 years of negotiations before the 159 nations in the World Trade Organisation (WTO) managed to reach an agreement on a modest set of new rules for global trade. The agreement concluded on the Indonesian island of Bali last Saturday eases barriers to trade by simplifying Customs procedures and making them more transparent.

Even then, the official party intended to celebrate the accomplishment was marred by a series of skirmishes that nearly derailed the entire event and dragged out the signing until many of the delegates had already left the country.

As a result, a ministerial meeting that was supposed to move the agenda forward served instead to highlight again a series of challenges for global trade.

The agenda for the multilateral trade meeting had been deliberately selected from the broader set of issues under discussion since 2001. Officials thought that by tossing out the wider, more difficult parts of the negotiating mandate, including agriculture and services, it might be easier to get an agreement.

Instead, they picked one small portion for closure on trade facilitation. This involves moving goods more cheaply and easily across borders. It was selected because it was seen as a win-win topic; no country could really object to pushing forward this element of the agenda.

However, some countries did indeed complain about being legally bound to make commitments on trade facilitation. To make this more palatable, they asked for and received a small set of additional concessions. These included a set of promises to help improve access for cotton and other goods and services for least-developed countries.

The main stumbling block in Bali proved to be another modest concession over agriculture. WTO rules allow some kinds of subsidies but not others, as subsidies can distort markets.

The problem is that some countries are increasingly interested in stockpiling food. However, depending on how such programmes are run and the size of purchases, governments can quickly exceed the maximum allowable subsidies, resulting in market distortions.

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