The agreement on trade facilitation reached by members of the World Trade Organisation (WTO) at the ninth ministerial meet at Bali last week is the most important decision on world trade in the last many years.
It will also set the tone for the trade body’s agenda in the coming years. While the agreement on food security addresses the concerns of India and many other developing countries, the trade facilitation agreement has a wider scope. It concerns all countries, big and small and poor and rich. It has shown that the Doha round of trade talks is not dead. Ever since they started in 2001, they have broken down many times and were sometimes pronounced beyond recovery. But the Bali package has proved that the WTO and its agenda are still relevant.
The trade facilitation agreement envisages implementation of measures by all countries to reduce the costs of trade through simplification of customs rules and procedures. Though the idea sounds simple and non-controversial it took over 10 years for all counties to agree on that. Some countries do not have the infrastructure and facilities to implement the new procedures. They will be helped by others. The agreement can help cut global trade costs by 10 per cent and increase benefits to the global economy by $ 400 billion to $ 1 trillion. Developing countries will stand to gain much from the increased trade. More trade means more production in industry and agriculture, more employment and more income for individuals, companies and governments. After the adoption of the package by the WTO’s general council, countries will have to make necessary legislative and procedural changes.
The WTO and its new director-general, Roberto Azevedo, have emerged with some credibility from the Bali deal. The inability to make any progress on a multilateral trade agreement had forced many countries to enter into bilateral and regional trade agreements. Such limited deals would only hurt the common interests of all countries. India has also been also working on some regional trade agreements. While the Bali deal may be considered a good, though late, beginning, the major challenges of the Doha round still remain. It seems the attempt is now to address the less contentious issues first. This strategy has however been tries before also. Progress and success will depend on how sensitive the rich countries are to the needs and concerns of the developing world.