WTO Bali Package: An Analytical Review: Civil Services Mentor Magazine - February 2014


The Bali Package is a trade agreement resulting from the Ninth Ministerial Conference of the World Trade Organization in Bali, Indonesia on 3–7 December 2013. It is aimed at lowering global trade barriers and is the first agreement reached through the WTO that is approved by all its members. The package forms part of the Doha Development Round, which started in 2001.

In just 84 days after assuming office Roberto Carvalho de Azevêdo, the new director general of the World Trade Organisation (WTO) managed to produce a successful outcome to a ministerial meeting, something that had eluded his predecessor for eight years. The WTO’s ninth ministerial meeting during 3-7 December 2013 in Bali, Indonesia, was a “personal triumph” for Azevêdo, who took office only three months before the ministerial. Given the pronounced descent of the organization towards irrelevance since 2005 under the leadership of the previous director general Pascal Lamy, the “Azevêdo effect” has dispelled the cycle of negative perceptions that the WTO cannot deliver. The Bali outcome has brought WTO back into the negotiating orbit. It has suddenly raised the prospect of a revival of the comatose 12-year-old Doha Round of Trade Negotiations or the Doha Development Agenda (DDA) as it is otherwise called.

An Unequal Package

The industrialised countries along with a group of advanced developing countries, including China, left no stone unturned in harvesting, at Bali, a WTO agreement on trade facilitation (TF), an agreement that is meant to simplify customs procedures and ease the ûow of goods across borders. Although TF forms part of the Doha body, the manner in which it was plucked out from the DDA single undertaking constitutes an important
victory for the United States (US) and the European Union (EU).

Without having to deliver on agriculture, which was to be the engine of the Doha trade negotiations, or the “developmental” beneûts promised to the least developed countries (LDCs), the trade elephants succeeded in pushing through a grand but grossly unequal Bali package. Without making any “payment” in the other two pillars – agriculture and development – of the Bali package, the industrialised countries have walked away with a prize that can allow them to close their eyes to the need to rescue the larger 12-yearold DDA.The proclaimed goal of the ûrst “multilateral TF agreement” since the creation of the WTO in 1995 is “to simplify customs procedures by reducing costs and improving their speed and efficiency”.

In reality, the new agreement streamlines market access in developing countries and LDCs, and further expands the WTO’s remit into domestic policy governance. Azevêdo, when he was the trade envoy representing Brazil at the WTO, had argued that TF was nothing but market access for industrialised countries. It is another matter that as the WTO chief he campaigned on a war footing for a binding agreement. The constant mantra that Azevêdo and think tanks in Washington have chanted endlessly is that the TF agreement will generate an additional $1 trillion to the global economy.

The future direction of the multilateral trade negotiations will only become clear in the next year. The “post-Bali work” programme – on which there was little discussion either in the run-up to the meeting or at the ministerial – contains ûve paragraphs in the Bali Ministerial Declaration. On the DDA, the declaration says, We instruct the Trade Negotiations Committee to prepare within the next 12 months a clearly deûned work programme on the remaining Doha Development Agenda. This will build on the decisions taken at this Mini sterial Conference, particularly on agriculture, development and LDC issues, as wellas other issues under the Doha mandate that are central to concluding the Round. Issues in the Bali Package where legally binding outcomes could not be achieved will be prioritised. Work on issues in the package that have not been fully addressed at this Conference will resume in the relevant Committees or Negotiating groups of the WTO.

The Bali declaration candidly admitted that there are no legally binding outcomes in the agriculture and development pillars of the package. There are four issues – general services, public stockholding for food security purposes, understanding of tariff rate quota administration and export competition – in the agriculture pillar. And then, there is the issue of trade-distorting subsidies for cotton (provided mainly by the US) that has been hurting some of the poorest countries in Africa and has not been addressed since the Hong Kong Ministerial Meeting of 2005 which called for an “ambitious, expeditious, and specific” outcome to help the cotton farmers in Benin, Chad, Mali and Burkina Faso. In the development and LDC areas, four issues have been pending since 2005. They include preferential rules of origin for the poorest countries, operationalisation of waiver concerning preferential treatment to services and services suppliers in LDCs, dutyfree and quota-free market access for these countries, and a monitoring mechanism on special and differential treatment flexibilities. None of
these issues were comprehensively addressed in Bali and nothing was treated on par with TF.

Uncertain Future for DDA

The Bali declaration, however, contains a caveat on all these unresolved issues which are presented as best endeavour outcomes so to enable the US to turn its back on the declaration. “The work programme will be developed in a way that is consistent with the guidance we provided at the Eighth Ministerial Conference, including the need to look at ways that may allow members to overcome the most critical and fundamental stumbling blocks”, the declaration says. This is where the nub lies: at a time when the two trade elephants – the US and the EU who created the WTO as part of the overarching Uruguay round agreement – are marching ahead with bilateral, regional, and plurilateral agreements, the so-called fresh lease of life from the Bali accord to prepare the “work programme” on the core issues in DDA, especially agriculture, remains uncertain.

Indeed, at an informal closeddoor meeting in Geneva a week after the Bali meeting, the US was already cautioning about member-countries rushing to deal with the difficult issues in the DDA. After the industrialised countries have tasted victory at the WTO thanks to the able leadership provided by a director general from Brazil, it will be a litmus test as to whether the US will support negotiations so that “issues in the Bali Package where legally binding outcomes could not be achieved will be prioritised”.

More importantly, those who established the WTO like a banyan tree based on a single undertaking of different agreements that include binding dispute settlement rules, intellectual property rules, services, agriculture, and various other traditional areas, now want to ditch the multilateral negotiating format because there is nothing more that the WTO as a multilateral body can now offer after the TF agreement. That the Bali declaration is an eyesore is vividly exposed. A binding TF agreement standing like Mukesh Ambani’s 27-floor residence in Mumbai is now surrounded by many unregularised slum dwellings such as an unbaked deal on public stockholding for food security purposes, and several other agreements in the agriculture and development pillars. How these dwellings of the Bali package will be regularised remains a challenge for the developing and the LDCs in the
coming months and years. Dividing Countries The Bali conference provided an early glimpse of what is likely to happen at t he WTO. The run-up to the ministerial meeting as well as the proceedings at the conference brought to the fore several inconsistent practices that were adopted to divide the developing and LDCs, and prevent them from adopting common positions on TF and public stockholding programmes for food security and other issues of interest to them. Azevêdo has deployed all his energies from day one to aggressively pursue a strategy that emphasised that a failure at Bali will reduce the organisation to an “empty building and empty chairs”.

Success at the ninth ministerial meeting in Bali, he said in the weeks before the meeting, would restore “conûdence” and “breathe” new life into the multilateral trading system. Otherwise, “the world will not wait for the WTO indeûnitely”. “It will move on... and it will move on with choices that will be not as inclusive or efficient as the deals negotiated within these (WTO) walls”, the director general argued. Several members privately likened Azevêdo’s strategy to “crying wolf” and painting doomsday scenarios for the WTO as unhealthy. At Geneva, ahead of the Bali meeting, the WTO director general opted for a combination of sustained open-ended informal meetings as well as closed door small group meetings. Though Azevêdo has said that “transparency and inclusiveness” are his priorities, he also took recourse to practices that are secretive and difficult to fathom. For example, how descriptive and non-binding outcomes on issues in the development dossier of the Bali package were ûnalised remains a mystery.

The four decisions in this area – duty-free and quota free market access, cotton, preferential rules of origin for the LDCs, and the services waiver – involved Nepal (the coordinator for the LDCs), the US, and the director general. In all the four LDC decisions, the US adopted intransigent positions and refused to agree to any binding commitments. Much of the membership was clueless about the actual negotiations. The language that has emerged in the development dossier is all based on a “should endeavour to” text and does not contain any binding decisions. Effectively, the four outcomes failed to provide any “concrete”, “tangible”, and “measureable” immediate market access to bread-and-butter issues of the LDCs. The development dossier was ûnalised in Geneva in which the poorest countries agreed to the outcomes with which they remained unhappy.

Ajay Kumar

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