WTO trade agreement hangs in balance at Bali meetings

Wednesday, December 4, 2013

BALI, Indonesia - Top trade officials began talks Tuesday that will either produce an eleventh-hour deal to help the global economy by as much as $1 trillion orhurt the World Trade Organization’s relevance as a forum for negotiations.

After more than a decade of inertia in WTO talks, negotiators are close to a slimmed down deal, but there is no finished document to sign for the dozens of trade ministers attending a meeting on the Indonesia resort island of Bali. With an agreement so close, some have been urging the trade ministers to take the unusual step of completing the negotiations themselves.

An agreement on simplifying customs procedures could help revive the WTO’s broader Doha Round of trade negotiations, sometimes known as the development round because of sweeping changes in regulations, taxes and subsidies that would benefit low-income countries.Still, WTO ministerial meetings are designed for enshrining done deals, not technical negotiations, so producing an agreement at a four-day conference would be unprecedented.

“Even though still possible, the chances of reaching a deal are rather slim,” said Matthias Helble, a global trade expert at the Asian Development Bank Institute and former WTO adviser.

The goal of the Doha Round, so called because it began in the Qatari capital in 2001, is to create unified rules for the 159 member economies of the WTO in myriad areas: lowering import taxes on hundreds of goods, limiting market-distorting subsidies for farm produce and creating one standard for customs procedures that would make it easier for goods to move across borders.

The idea is that if all countries play by the same trade rules, then all countries will benefit. With fewer trade barriers, goods and services of all types would be more affordable, creating more employment and business opportunities. The WTO estimates that easing customs barriers would increase total world trade to $23 trillion from its current estimate of $22 trillion.

Critics of the WTO rules, though, say they may hinder countries from setting their own priorities in environmental protection, worker rights, food security and other areas. And they say sudden reductions in import tariffs can wipe out industries, causing job losses in rich and poor countries.

“We know it is not an easy task,” said Brazil Foreign Minister Luiz Alberto Figueiredo Machado. “But we are now here, and we are here to do something. We are willing to do our best effort to leave Bali with an adopted package.”

Because all WTO members must agree on every aspect of the dozens of points of contention for a broad trade agreement, progress has been slow. The recent negotiations meant to revive the talks are on trade facilitation, only part of the agenda but still sweeping and complex.

In the meantime, the U.S. and other countries have been developing separate regional trade deals. Many such pacts already exist. The newest, largest of them in the works - the Trans-Pacific Partnership among the U.S. and 11 other Pacific Rim economies, and a U.S.-European Union free-trade deal - would give developed economies fewer incentives to forge WTO deals.

That’s why another meeting with no deal after more than a decade of trying could signal the twilight of the WTO’s significance as a forum for trade negotiations. It has thrived in its other a major role, as arbitrator of trade disputes, where countries can file complaints against each other for distorting world commerce by using tools such as subsidies to create an unfair advantage.

“Failure in Bali will have grave consequences for the multilateral trading system,” WTO Director-General Roberto Azevedo said.

Business, Pages 25 on 12/04/2013