It’s a deal

“We did it.” With those words, the Chairman of the 9th Ministerial Meeting of the World Trade Organisation (WTO), Gita Wirjawan, ushered in a new dawn for global trade yesterday.

At the Bali Convention Centre, the Indonesian Trade Minister triumphed the agreement on a package of issues designed to streamline trade.

The deal, according to the WTO, could add $1 trillion to the world economy. Called the Bali package, it aims to allow developing countries more options for providing food security as well as to boost the prospects of least developed countries’ in trade.

The breakthrough deal is a milestone not just for the WTO but also for Samoa, attending its first Ministerial meeting as a member since accession last year.

Deputy Prime Minister Fonotoe Pierre Lauofo and his Associate Minister for Trade Negotiations, So’oalo Mene were among Ministers from the organisation’s 159 member governments engaged in intensive consultations almost round the clock.

They started from Wednesday until 3am on Friday. At that point, it appeared that a deal at Bali was unlikely due to objections raised by India on food security and concerns by the Latin American bloc led by Cuba of the draft package.

But by Saturday afternoon, the United States and India compromised on food subsidies while Cuba dropped its earlier opposition.

With that, leaders at the meeting heralded a new beginning for global trade.

“We achieved what many said could not be done,” said Mr. Wirjawan.

“President Susilo Bambang Yudhoyono told us on Tuesday that the mystique of Bali would have a positive effect on our negotiations.

This is the place where deals get done. I am delighted that Bali has not let us down.”

Mr. Wirjawan said the deal would provide more certainty to business.

“These countries will benefit from increased access to markets,” he said, adding it would make it easier for least developed countries to export goods.

The man in charge of the World Trade Organisation, Roberto Azevedo was equally delighted about the first major trade deal in the WTO’s 18-year history.

“For the first time in our history: the WTO has truly delivered,” Mr. Azevêdo told the conference. “I challenged you all, here in Bali, to show the political will we needed to take us across the finish line. You did that. And I thank you for it.

“With the Bali package you have reaffirmed not just your commitment to the WTO — but also to the delivery of the Doha Development Agenda.

“People all around the world will benefit from the package you have delivered here today: the businesses community; the unemployed and the underemployed; the poor; those who rely on food security schemes; developing country farmers; developing country cotton growers; and the least-developed economies as a whole.

“But beyond that: we have reinforced our ability to support growth and development; we have strengthened this organization; and we have bolstered the cause of multilateralism itself.” American Trade Representative Michael Froman hailed the agreement, calling it an important step toward advancing the Doha agenda.

“The WTO has entered a new era,” he said.

“WTO members have demonstrated that we can come together as one to set new rules that create economic opportunity and prosperity for our nations and peoples.”

Mr. Azevêdo had worked with ministers on a handful of sticking points individually and in small groups, before revised drafts were circulated for all members to consider.

These were finally agreed by consensus on 7 December after meetings were scheduled and rescheduled.

“In the WTO, the concept of time is a flexible one,” WTO spokesman Keith Rockwell said when asked by journalists on 6 December about the meeting extending beyond its original schedule. “I think it will be a long day.”

During those final critical hours, almost all members said the package should be adopted in full, even if they were not completely happy with some parts of it.

They said the package was needed because of the benefits it would give directly, but also because it would reinvigorate the WTO and its trading system, and provide the momentum to conclude the Doha Round, which was launched in 2001 and has seen little progress since 2008 until work intensified on the Bali Package this year.

However a small group of countries — Cuba, Bolivia, Nicaragua, Venezuela — recorded serious reservations about what they considered to be imbalances in the package in favour of richer countries, and the absence of provisions barring discrimination in the form of trade embargoes on goods in transit.

Their concern about embargoes delayed consensus on the package until a compromise was struck in the form of a sentence upholding the principle of non-discrimination in goods in transit was added to the final declaration.

The Bali Package is the first major agreement among WTO members since it was formed in 1995 under agreements from the 1986-94 Uruguay Round negotiations.

The most significant for global commerce is the trade facilitation part of the package, which is about cutting red tape and speeding up port clearances.

Much of the rest of the package focuses on various issues related to development, including food security in developing countries and cotton and a number of other provisions for least developed countries.

The package also includes a political commitment to reduce export subsidies in agriculture and keep them at low levels, and to reduce obstacles to trade when agricultural products are imported through quotas.

What the WTO says about the Bali package:

TRADE FACILITATION

The trade facilitation decision is a multilateral deal to simplify customs procedures by reducing costs and improving their speed and efficiency.

It will be a legally binding agreement and is one of the biggest reforms of the WTO since its establishment in 1995 — other agreements struck since then are on financial services and telecommunications, and among a subset of WTO members, and agreement on free trade in information technology products.

The objectives are: to speed up customs procedures; make trade easier, faster and cheaper; provide clarity, efficiency and transparency; reduce bureaucracy and corruption, and use technological advances.

It also has provisions on goods in transit, an issue particularly of interest to landlocked countries seeking to trade through ports in neighbouring countries.

Part of the deal involves assistance for developing and least developed countries to update their infrastructure, train customs officials, or for any other cost associated with implementing the agreement.

The benefits to the world economy are calculated to be between $400 billion and $1 trillion by reducing costs of trade by between 10per cent and 15per cent, increasing trade flows and revenue collection, creating a stable business environment and attracting foreign investment.

The text adopted in Bali is not final, although the substance will not change. It will be checked and corrected to ensure the language is legally correct, aiming for the General Council to adopt it by 31 July 2014.

AGRICULTURE AND COTTON

Agreement on the agriculture part of the Bali Package required sorting out two issues.

Much of the focus was on shielding public stockholding programmes for food security in developing countries, so that they would not be challenged legally even if a country’s agreed limits for trade-distorting domestic support were breached.

The proposed solution will be interim, and much of the discussion was about what would happen at the end of the interim period. The outcome of consultations was for the interim solution to exist until a permanent one is agreed, with a work programme set up aiming to produce a permanent solution in four years.

The other issue was about “tariff quota administration“, how a specific type of import quota (a “tariff quota” where volumes inside the quota have a lower duty) is to be handled when the quota is persistently under-filled.

Members have agreed on a combination of consultation and providing information when quotas are under-filled.

The one remaining issue to be settled was which countries would reserve the right not to apply the system after six years: they will be Barbados, Dominican Republic, El Salvador, Guatemala and the US.

Meanwhile, three texts remained unchanged from the versions negotiated in Geneva. One is on adding some development and land-use programmes to the list of general services that are candidates for being allowed without limit because they cause little trade distortion.

Another is a strong political statement to ensure export subsidies and other measures with similar effect are low. A third deals with improving market access for cotton products from least developed countries, and with development assistance for production in those countries.

DEVELOPMENT ISSUES

Four documents remained unchanged from their Geneva versions.

Duty-free, quota-free access for least developed countries to export to richer countries’ markets.

Many countries have already implemented this, and the decision says countries that have not done so for at least 97% of products “shall seek to” improve the number of products covered.

Simplified preferential rules of origin for least developed countries, making it easier for these countries to identify products as their own goods, and qualify for preferential treatment in importing countries.

A “services waiver”, allowing least developed countries preferential access to richer countries’ services markets.

A “monitoring mechanism” consisting of meetings and other methods for monitoring special treatment given to developing countries.