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WTO Bali Declaration: what does it mean?

Written by Yurendra Basnett


The WTO Ministerial in Bali has just reached a deal on some of the following areas of negotiations: a package for Least Development Countries (LDCs), Trade facilitation, and Agriculture. But what does it all mean for developing countries in general, and for LDCs in particular? The Bali Ministerial was preceded by intense negotiations in Geneva on the Doha Round. By the evening of 2 December, when officials were rushing to catch their flights to Bali, no ‘Bali package’ was in sight – the result of continued disagreements on trade facilitation and agriculture. The goal for Bali was, therefore, to find a ‘safe landing zone’ on all three areas of negotiations. The outcome of Bali should be measured not just on whether such a landing zone was found but, more importantly, whether it will allow the negotiations to take-off again and reach their final destination: the conclusion of the Doha Development Round.
The LDC package
has been the least controversial of the three negotiation areas, largely because the contents of the package are best endeavours rather than binding commitments. WTO members reaffirmed their commitment to duty free, quota free (DFQF) market access for LDCs. But the actual developmental benefits remain questionable. Limited export basket of LDCs means anything less than 100% coverage is of little practical use. Tariffs are falling rapidly, so the benefits of DFQF are eroding rapidly. Improvements in rules of origin and non-tariff barriers would have been more beneficial to LDCs as these are the barriers that really block market access. A 15-year service waiver (WTO members can provide preferential markets access on trade in services to LDCs without having to do the same to the rest of the membership) was agreed at the 2011 WTO Ministerial Conference in Geneva, and Bali has helped to set the course for its operationalisation. On the whole, however, there has been little improvement in the LDC package since 2011 Ministerial Conference.

Negotiations on trade facilitation (TF)– reducing the cost of trading – entailed making binding commitments in customs procedures and regulations. Improvements in TF are a ‘no-brainer’, but we need to distinguish between ‘improvements’ and ‘commitments’. Commitments made in the WTO are binding and subject to legal action if they are not adhered to. Meeting trade facilitation commitments will require investment, and many will be capital intensive. Developing countries, and in particular LDCs, will need finance and technology to upgrade and improve TF. Section 2 of the Bali Declaration provides assurance that developing countries and LDCs will be supported in building capacities to implement the agreement.

The reaffirmation of commitments on Aid for Trade (AfT) is to be welcomed. After the Global AfT review in Geneva in July, we had called for such a reaffirmation at the very minimum. The new AfT work programme in the WTO is to be framed by the post-2015 global development agenda – a shift from the Hong Kong Ministerial declaration on AfT that will have implications for the 2006 AfT Task Force recommendations on AfT operationalisation. In the 2013 European Report on Development, we discussed the role of trade in the post-2015 global development agenda, and how AfT can help. Bali has also presented an opportunity for the future of AfT to be more streamlined and more focused on addressing the high cost of trading in LDCs.

Negotiations on agriculture, more specifically on food-stock holding, presented the main action in Bali. There were two viewpoints on the price benchmark for the valuation of the volume of food stocks countries can legally hold. India’s position was to use current prices, which would mean amending the agriculture agreement of the Uruguay Round and would not be acceptable to other members. Alternatively, India proposed an interim arrangement until a more permanent solution is found. Here, the United States proposed a ‘sunset clause’ of four years – a time-line that India did not accept. A final deal was struck to have an interim mechanism until a permanent solution is found, which means that more negotiation is still required to find a permanent solution.

So where do we go from Bali? When WTO negotiations stalled in 2008 it looked as if the Doha Round had gone into coma. One positive turn of events in Bali is that members are now actively negotiating. So while the Doha Round is coming out of its coma, it is still very much in the intensive-care unit. WTO membership has also increased, with Yemen coming on board in Bali after more than decade of accession negotiations. This growing membership had provided one celebratory note in the otherwise stalled negotiations of the previous two Ministerials, but it can’t continue to be the only source of celebration. The rise of regional and mega-regionals is being pointed to as a challenge to the future of the multilateral trading system. But Ministers in the plenary sessions in Bali were quick to put this down and present arguments on why WTO still remains important for global economic governance.

A deal in Bali has certainly helped to breathe life into the Doha Development Round. The symbolism of the Bali declaration is perhaps more important than the outcome as it covers only a small portion of the Doha Development Agenda and much ground still needs to be covered. Country delegation members I spoke to expressed that the conclusion of the Doha Round is now in sight. But there was also a sober realisation that, whatever the final agreement is, it will not encompass the ambitious Doha Development Agenda in its entirety. It will be a leaner version that is already being referred to as ‘Doha lite’.