WTO reaches limited deal on global trade
Defying predictions that rich and poor nations could never agree on new trade rules, the 159-nation World Trade Organization (WTO) reached agreement Saturday on a global 鈥渢rade facilitation鈥� deal. Members also agreed to grow the group, voting to approve Yemen as the 160th member.
The deal was less a breakthrough than a whittling away of trade-distorting border controls and a step toward further talks. To reach consensus, the world's trade ministers had to sharply narrow their agenda and postpone work on thorny issues, including agricultural subsidies. Heated negotiations among exhausted members dragged into an unscheduled fifth day on Indonesia鈥檚 resort island of Bali.
Nevertheless, for the first time in 12 years of WTO negotiations aimed at liberalizing world trade, the ministers signed a formal agreement on new trade rules that will pump hundreds of billions of dollars into the world economy.
鈥淔or the first time in our history, the WTO has truly delivered," Roberto Azev锚do, the WTO鈥檚 new director general, told delegates at the final session. "This package is not an end. It鈥檚 a beginning. As a consequence of our progress here, we鈥檒l now be able to move forward on the other areas of our work that have been stalled for so long.鈥�
The agreement includes measures to speed up and standardize customs and port procedures. It also includes 鈥渟pecial and differential treatment鈥� for goods and services imported from least-developed countries and, to satisfy India鈥檚 insistent demands, 鈥減ublic stockholding for food security purposes.鈥�
The potential benefits are large, according to a report from the Peterson Institute of International Economics in Washington. Just by cutting red tape at borders and other 鈥渢rade facilitation鈥� measures, it forecasts, the global economy would see an extra $960 billion in economic activity and an added 20.6 million jobs, 18 million of them in developing countries.
鈥淭he WTO has re-established its credibility as an indispensable forum for trade negotiations," the U.S. Chamber of Commerce said in a statement. "Nor is this a paper victory: Streamlining the passage of goods across borders by cutting red tape and bureaucracy could boost the world economy.鈥�
Not all observers are so sanguine. Jeronim Capaldo, senior researcher at Tufts University鈥檚 Global Development and Environment Institute, charges that the Peterson Institute forecast 鈥渙verlooks the costs of implementing trade facilitation and it relies on many unjustifiable assumptions that compromise its accuracy.鈥�
That's one challenge to Saturday鈥檚 historic WTO agreement: It may deliver far less than promised in terms of benefits. A more serious challenge is that the United States and other major trading countries may lose patience with an organization that took 12 years to reach its first agreement after watering down its objectives to make that agreement possible.
Among the issues shelved for later work, India and other developing counties are given a four-year exemption from WTO agricultural subsidy rules so that these countries can continue to subsidize poor farmers and stockpile grain in 鈥渇ood security鈥� programs. This exemption was especially important to India鈥檚 government, which faces elections in 2014 and has made food security for the poor a major campaign promise.
