is my Trade Tripper column in this weekend issue of BusinessWorld:
International trade does sometimes come up with
surprises. Although the quality of the surprise is another matter. In
any event, the 9th Ministerial Conference in Bali, Indonesia of the World
Trade Organization (WTO) did try monumentally hard to live up to its
hype. Say what you will, those engaged in international trade do have a
flair for the dramatic.
With the shadow of past collapses looming, particularly the
ghost of Cancun, negotiators agreed at the last minute (is there any
other way?) to the "Bali Package." It essentially consists of 10 past
agreements made at separate previous Ministerial Conferences and covers
the areas of food security, trade facilitation, cotton, and preferential
treatment for poorer countries.
The Package also contains provisions on the lowering of tariffs and
agricultural subsidies, the inclusion of which nearly derailed the
proceedings. In the end, India decided to go along but not after
securing certain exemptions for its own agricultural subsidies.
Trade ministers certainly tried to put on optimistic faces regarding
Bali’s conclusion. Our own Trade Secretary Greg Domingo, in an interview
with local media, said that "overall, the Philippines will benefit from
the Bali package. Under the agriculture agreement, developing countries
like the Philippines will be able to maintain and expand its public
stockholding for food security free from WTO dispute."
But, really, the significance of the Bali Package could only be
considered suspect when you have commentators wryly concluding it was
"better than nothing." DW’s Rolf Wenkel certainly thinks so,
albeit with certain qualifications: "Many observers might see the
compromise with India as a bad deal. But on the other hand the
compromise is what made the Bali agreement possible and this will bring
plenty of advantages in many other fields -- not just for a small number
of countries like in regional agreements but for 159 countries around
the globe. And that’s not just better than nothing but a historic
success in the fight against protectionism."
On the other hand, Bloomberg reportage on the deal makes it appear as
merely something to "buy time": "‘A successful Bali buys the WTO time to
prove that multilateral trade talks can be productive on a regular
basis and in a timely manner,’ said Terence Stewart, a trade lawyer
based in Washington, in an e-mail yesterday. ‘The risk is that members
will not address the underlying issues that have crippled the
organization’s ability to respond to the changing business
In short, the Bali Package doesn’t end anything, doesn’t conclude
anything, but merely, in keeping with the "bicycle theory" of
international trade, keeps the negotiations moving along in the hope
something turns up in the future.
But even within that context, the significance of Bali is still dubious. Reuters
had occasion to get the comment of Simon Evenett, professor of
international trade at the University of St. Gallen in Switzerland, and
his assessment was that "beyond papering over a serious dispute on food
security, precious little was progress was made at Bali. Dealing with
the fracas on food security sucked the oxygen out of the rest of the
Two considerations also need to be made regarding the Bali Package. The
first has to do with the fact that the same needs to be approved by each
individual WTO member governments before it becomes effective. In that
regard, that India has an upcoming general election next year and with
US President Barack Obama still without Trade Promotion Authority (and
with an upcoming mid-term Congressional elections coming in 2014 that
the Republicans are poised to gain advantages in) may even lead to
possible delays in any eventual actual application of the Bali Package.
The other is the effect that the Bali Package has on the Trans-Pacific
Partnership Agreement (and vice-versa). The TPP is an expanded version
of the 2005 Trans-Pacific Strategic Economic Partnership Agreement and
currently includes as parties or potential parties Australia, Brunei,
Chile, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, the
United States, and Vietnam. Japan and China are also considering or
being considered for TPP membership.
Australia’s Trade Minister Andrew Robb, although lauding the Bali
Package as making it easier for trade in goods due to the trade
facilitation provisions of the agreement, nevertheless was quoted by the
Financial Review as saying that the WTO deal will "not influence" ongoing negotiations for the TPP.
And there lies whatever significance Bali may have. Because, as the Wall Street Journal
pointed out, immediately "after reaching a deal in Bali, several trade
officials traveled to Singapore to work on a regional trade pact
involving 12 Pacific Rim countries, known as the Trans-Pacific
The best way to ensure "developmental" success for developing countries
is through multilateralism. But, as your Trade Tripper presciently wrote
last week, if the developed countries won’t "practice what they preach,
then just expect Bali to be declared a ‘success’ simply because of
small agreements like trade facilitation," to the detriment of poorer
countries like the Philippines.