WTO makes a small deal

The 9th ministerial meeting of the WTO concluded in Bali with a modest but unbalanced outcome. While the rich countries managed to clinch the trade facilitation agreement which they have long sought, developing countries' concerns were less firmly secured. Martin Khor sums up the outcome.

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THE Ministerial Conference of the World Trade Organisation in Bali ended with a small deal, hailed by many for reviving the WTO as a viable venue for trade talks. The results are however very modest, and there are also imbalances in gains and losses.

The conference was mainly conducted behind closed doors, with the WTO Director-General Roberto Azevedo holding meetings issue by issue with a few countries. Participants were given the final draft only a few hours before a final plenary meeting.

Most of the week was spent on the 'food security' issue, with the Director-General being the go-between between the United States and India.

India was the most prominent among the developing countries that wanted to change the present WTO rules on agricultural subsidies that hinder the ability of governments to purchase and stock staple foods from farmers.

It was agreed that a permanent solution involving changes to the rules would take more time, so Bali discussed an interim measure - a 'peace clause' whereby WTO legal cases will not be taken against countries having a public food stockholding programme.

The issue was how long this peace clause would last. India, backed by many developing countries, wanted it to last till the permanent solution is found. The US and others wanted the peace clause to expire in four years.       

The final agreement was that the WTO would negotiate a permanent solution within four years, and countries will refrain from taking cases until that solution is found. 

Thus the 'food security' developing countries won the battle of duration, but in reality the peace clause is of limited value. 

First, it applies only to the WTO's Agriculture Agreement; countries can still sue under another agreement on subsidies.

Second, the peace clause applies only to 'existing programmes'. Thus countries that have no programme and want to start one will not be covered.

Third, there are cumbersome conditions, including the country providing a lot of information and notifying that it has reached its allowed subsidy limit, that may make it not worthwhile to use the peace clause.

What is more important is that serious work be done to find a permanent solution.

On another agriculture issue, the WTO failed to live up to the deadline set by the 2005 Ministerial Conference to eliminate export subsidies by 2013. Instead the weak Bali decision on export competition regretted the missed deadline and undertook to maintain progress.

Trade facilitation pact

With the food issue cleared, the Bali conference was able to adopt a trade facilitation treaty which obliges all countries to streamline their customs procedures and upgrade their technology and infrastructure so that imported goods can be cleared faster and more easily.

The new obligations can be easily met by developed countries that already have the measures and technology, but are onerous on poorer countries that don't have the capacity.  

The trade facilitation agreement will be of greater benefit to those countries which are net exporters as their goods will clear faster in other countries. Net importers can be expected to see their imports rising faster than their exports, with adverse effects on their trade balance, a concern raised by some developing countries. 

Developing countries are able to designate which specific obligations they need more time to implement, and there is also promise of technical assistance for them, but there is only a more vague and less explicit commitment to provide them with 'financial assistance'.

The Bali meeting also approved decisions to assist least developed countries on market access, rules of origin, cotton and services. However, the decisions are not binding and thus have little practical benefit.  These LDC decisions should be seen as a starting rather than an end point, with further negotiations for future decisions that are more useful.

Overall the Bali deal lacks balance, as the  trade  facilitation  treaty advocated by developed countries is binding (with those  not  fulfilling  their  obligations facing WTO legal cases) while the decisions  on  LDC  issues and export subsidies favoured by developing countries are not binding in nature, while on food security only an interim measure (peace clause) with limited value was obtained.                                                                                   

Martin Khor is Executive Director of the South Centre, an intergovernmental policy think-tank of developing countries, and former Director of the Third World Network.

*Third World Resurgence No. 281/282, January/February 2014, p 23