Blog Post

Life after Bali

Negotiating round the clock, World Trade Organisation (WTO) members successfully concluded an agreement on a mini-package at Bali MC9, on a package of issues designed to streamline trade, allow developing countries more options for providing food security, and boosting least developed countries’ trade and development. 

By: Date: January 8, 2014 Topic: Global Economics & Governance

Negotiating round the clock, World Trade Organisation (WTO) members successfully concluded an agreement on a mini-package at Bali MC9, on a package of issues designed to streamline trade, allow developing countries more options for providing food security, and boosting least developed countries’ trade and development. This was the first multilateral trade agreement of the WTO that came into being in 1995[1], but even this small package (consisting of 10 texts on a selection of issues from the broader Doha Round negotiations) proved very hard to reach, requiring tough compromises from all the key stakeholders.

Net gains from the Bali deal

The most significant gains for global commerce in the Bali deal will emanate from the trade facilitation part of the package, targeted for adoption by the General Council by 31 July 2014 and on ratification by two-thirds of the membership. This is a legally binding text aimed at simplifying customs procedures by reducing costs and improving their speed and efficiency. Part of the deal involves assistance for developing and least developed countries to update their infrastructure, train customs officials, or for any other cost associated with implementing the agreement, although financial commitments to support those have not been specified.

With respect to gains, potential benefits will materialise only after the WTO membership ratifies the agreement, widely expected to take at least a couple of years. The lower costs and reduced border delays can potentially help enhance global trade flows, a much needed boost at a time when weak global growth has resulted in a stagnation of global trade growth[2]. However, the greater gains from trade facilitation will materialise when all developing countries implement the commitments in Section I of the agreement, which is conditional on the technical and financial assistance which will be provided by developed countries to improve developing countries’ implementation capability.

This is likely to take longer than the two years of the ratification period, implying that the gains from Bali will take a while to accrue. It is well-known that border delays arise from enforcement agencies, especially at sub-federal levels of governance in all countries, which calls for massive training at lower levels of customs bureaucracy to comply with cooperation norms and in cutting red tape. An analysis of the estimated gains from the trade facilitation agreement also show that existence of too many unjustified assumptions and non-accounting of developing country implementation costs have resulted in an overestimation[3] of the potential gains of USD 1 trillion to world economy and 18 million developing country jobs that an International Chamber of Commerce study[4] proclaimed. 

The rest of the Bali package focuses on various issues related to development, cotton and a number of other provisions for least developed countries. The agriculture negotiations sorted out only two issues. Much of the focus was on an interim shield for public stockholding programmes for food security in developing countries, so that they would not be legally challenged even if a country’s agreed limits for trade-distorting domestic support were breached, and on tariff-quota-administration for persistently under-filled import quotas. The package also includes a non-binding 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.

Impressive as it seems prima facie, however, a quick analysis of the legal texts adopted at the MC9[5] show that while binding commitments have been made in the areas of trade facilitation and food security, in several other areas the ministerial declaration only consists of statements of intent and conditional implementation promises; i.e. depth of commitment in individual segments is rather low. While India is in the dog-house for demanding a binding agreement from the membership on a permanent solution to the food security waiver, an understandable position since earlier non-binding commitments from the Kennedy Round onwards have repeatedly resulted in non-delivery in the Agriculture negotiations, a fact that has gone largely unreported is that the developed countries also conveniently failed to meet their 2005 commitment to end export subsidies by 2013; the text on export competition only promises to work actively on the problem as a priority issue in the post-Bali work programme.

The net immediate gains from the Bali agreement therefore boils down to the symbolism of resurgent multilateralism and the WTO, at a time when most countries are increasingly investing their political and negotiating capital in regional trade agreements. Clearly, Bali has proved that multilateral negotiations can deliver success at low levels of ambition, which however makes it unlikely that the world will turn away from regionalism in the near future, despite many doubting the ability of the mega-regionals to deliver quickly on ambitious liberalisation packages[6].

The WTO’s post-Bali Imperatives

What should be the focus of Doha negotiations after Bali? Notably, the WTO membership agreed at MC9 to prepare, within the next 12 months, a clearly defined work programme towards the completion of the Doha round. It is accepted that a closure of the Doha Round is necessary before moving onto a new round, and attaining this closure at the earliest should be the main item on the WTO’s post-Bali agenda, to exploit the present negotiating momentum and hard-won zeal for cooperation and compromise.

Some analysts recommend that given its outdated negotiating agenda, the Doha Round should be abandoned in favour of a new round that addresses current economic and trade concerns. The lack of progress in the Doha Round negotiations is often blamed on its focus on long-simmering issues like ending agricultural subsidies and outstanding tariff issues, and moving onto fresher subjects like investment subsidies and cross-border investment barriers, and trade in environmental goods and services is recommended. Yet ignoring the long unfulfilled commitments runs the risk of the developed country group losing credibility and furthering disenchantment of the developing world with the lop-sided global trade laws. For example, the permanent solution on the food subsidy negotiations that took centre-stage at Bali should review the Uruguay Round’s Agreement on Agriculture, which mooted 1986-88 prices as the base for calculating food and agricultural subsidies limits, and which is totally outdated in today’s context[7].

Of the several identified causes for the intractability of the Doha Round, western analysts largely underplay the fact that agriculture has remained the key stumbling block for conclusion of the Doha Round, and is one of the major bones of contention between the developed countries and the rest in the Doha Round Agriculture negotiations[8]. However, our analysis[9] posits that a satisfactory agreement in the agriculture market access and farm-subsidy negotiations in favour of the developing and least-developed countries could well turn out to be the most effective means to get the Doha Round completed, as it will best fulfil the DDA’s development mandate. If the developed world is to advance globally a modern trade agenda, it will need to show grit in dismantling the nineteenth century protections, and break down pernicious trade barriers in agriculture, textiles and apparel, and footwear. From this perspective, the easiest way to conclude the Round will be for the members to pick out another discrete set of development-focused deliverables from the expansive DDA agenda.

Also, quickly delivering on the current round requires that members do not complicate the ongoing negotiating process further by adding onto the existing Doha agenda in a misguided wish to provide gains for all under the single undertaking mandate. It may be recalled that one of the perceived reasons for the DDA negotiation stasis is an overloaded agenda. In particular, the post-Doha new trade agenda should carefully avoid bringing in non-trade issues, such as energy, currencies, sustainable development and the environment. Inclusion of these will only slow down the WTO negotiation processes.


[1]              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 (ITA).

[2]              The volume of world merchandise trade (i.e. goods trade adjusted to account for changes in prices, exchange rates and seasonal variation) was only up 1.2 percent in the first half of 2013 compared to the same period in 2012. Source: WTO PRESS/694, 19 September 2013.

[3]              Capaldo, Jeronim (2013), “The Uncertain Gains from Trade Facilitation”, GDAE Policy Brief No. 13-02, December, Tufts University.

[4]              See ICC statement at: http://www.iccwbo.org/News/Articles/2013/Business-gives-last-push-to-seal-Bali-deal-and-salvage-Doha-Round/, based on the Hufbauer, Gary C. and Jeffrey J. Schott (2013), “Payoff from the World Trade Agenda 2013,” Report to the ICC Research Foundation, Peterson Institute for International Economics.

[5]              https://mc9.wto.org/draft-bali-ministerial-declaration

[6]              Slippage is already apparent. Officials caution that the informal mid-2014 deadline to conclude TTIP negotiations is now likely to be pushed back to 2015. New leaks on the TPP talks reveal daunting obstacles on several issues undermining Washington’s 2013 deadline to complete the deal.

[7]              Wise, Timothy A. (2013), “Right to food wins ‘defensive battle’ in World Trade Organization deal”, Global Post, December 8.

[8]              Matthews, Alan (2013), “Doha Negotiations on Agriculture and Future of the WTO Multilateral Trade System”, IIIS Discussion Paper No. 436, Trinity College Dublin.

[9]              Karmakar, Suparna (2013), “Life After Bali: Renewing the World Trade Negotiating Agenda”, Bruegel Policy Contribution Issue 2013/17.


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