Written By: Dr Zafar Mehmood
After many ups and downs during the intensive consultations between developed and developing countries, the 9th Ministerial Conference of the World Trade Organization (WTO) concluded successfully in Bali, Indonesia on December 7, 2013. WTO Members have adopted a number of ministerial decisions on several important issues of the Doha Round, including agriculture allowing developing countries more options for food security, development/ Less Developed Country (LDC) issues to boost trade and Trade Facilitation designed to streamline the activity.
This is the first major agreement that has been reached by the WTO Members ever since it was established in 1995. Other agreements struck since then are on financial services and telecommunications, and among a subset of WTO members, and an agreement on free trade in information technology products.The Bali Package comes on the back of the Doha Development Agenda (DDA), which was launched in 2001. The Bali Package is a small but a significant component of the DDA setting out a path for a successful conclusion of the DDA at some future date.
The most significant for international trade is the Trade Facilitation part of the Bali Package, which is about speeding up customs procedures; making trade easier, faster and cheaper; providing clarity, efficiency and transparency; reducing bureaucracy and corruption, and using 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 countries and the least developed countries to update their trade infrastructure, train customs officials, or for any other cost associated with implementing the agreement.
The benefits to the world economy from the Bali Package are calculated to be between $ 400 billion and $1 trillion by reducing costs of trade by 10 to 15 %, increasing trade flows, creating a stable business environment and attracting foreign investment. Pakistan will also benefit from this pie if it takes timely actions. The agreement's positive spin-off will be in terms of growth, creation of more jobs and enhancement of revenue for governments. Much of the rest of the Bali Package focuses on various issues related to development, including food security in developing countries and cotton and a number of other provisions for the least developed countries. Agreement on the agriculture, a part of the Bali Package, required sorting out two issues. Much of the focus of negotiations was on shielding public stockholding programmes for food security in developing countries, so that they would not be challenged legally through the WTO Dispute Settlement Mechanism even if a country's agreed limits for trade-distorting domestic support were breached.
Pakistan fully supported agricultural development schemes to enhance food security and develop food stocks but the ones that are based on transparent, predictable and market based policies that do not distort production and international trade. In this context, it may be noted that 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 Bali Package asks member countries to open up their agricultural subsidy regime for scrutiny and not use its subsidy regime to distort agricultural trade through exports. The Bali Package allows improving market access for cotton products from the least developed countries, and with development assistance for production enhancement in those 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. Agriculture subsidies and import quotas are widespread in the European Union that hurts exports of agricultural products from countries like Pakistan. Therefore, any development in this context will be in our benefit. The other issue was about “tariff quota administration”; that is, 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. This will increase transparency in the use of import quotas.Under development issues, four documents remained unchanged from their Geneva versions. These include:
• Duty-free, quota-free access for the 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 the 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 the 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.Finally, the Ministerial Conference adopted five decisions on the WTO's regular work. They are the following:
• In intellectual property, members agreed not to bring “non-violation” cases to the WTO dispute settlement process – “non-violation“ is shorthand for the technical question of whether there can be legal grounds for complaint about loss of an expected right under the WTO's trade related intellectual property agreement, even when the agreement has not been violated.
• A similar extension was agreed in electronic commerce, members agreed not to charge import duties on electronic transmissions. The Work Programme at the WTO also encourages continued discussions on electronic commerce in relation to commercial issues, development and new technology.
• Ministers decided to give special consideration to issues of small economies. Ministers instructed the Committee on Trade and Development to consider proposals on small economies and make recommendations to the General Council of the WTO.
• Ministers reaffirmed their commitment to Aid for Trade, an initiative that assists developing countries, and in particular the least developed countries' trade. They welcomed progress on Aid for Trade since its launch in 2005 and mandated the Director-General of the WTO to continue support of the programme.
• Ministers directed their Geneva delegations to continue examining the link between trade and transfer of technology and make possible recommendations on steps that might be taken to increase flows of technology to developing countries. The mandate was given at the 2001 Doha declaration.
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 31stJuly 2014. In conclusion, the Bali Package is a successful development for global trade. Had it failed, it would have dire consequences for the multilateral trading system. Had it failed, Pakistan would have been in difficult position as it is not part of any major regional trading bloc.