WTO to Bali high (or low)

is my Trade Tripper column in this weekend issue of BusinessWorld:

The big news of this week should be the developments and conclusion of the 9th Ministerial Conference of the World Trade Organization at Bali, Indonesia. This article was written just before the ministerial’s start. Quite likely, readers by now will have known its outcome, with the difference being the recovery of the WTO or a decade’s more continuation of its moribund state.

The stakes, of course, are well defined. While the name "Doha" is interestingly no longer mentioned as much, it must be remembered that the reason why Bali is important is precisely because of Doha. And Doha was called the "Developmental Round" for a reason. And one of the best things about Doha (if one would prefer to see the bright side of things) is that it revealed a fundamental flaw of the multilateral trade system that needs to be corrected.

Because what Doha illuminated is the fact that the developed countries precisely are against the Doha Round’s "developmental" aspect. One commentator speaking under anonymity, as reported in Reuters, said it most directly: "A development agenda should never have been introduced into the WTO in 2001. The WTO is about mercantilist interest, and there is no space for philanthropy."

Doha’s unintended importance therefore is its publicly revealing developed country calculations: launch a round with some nice motherhood statements, let the developing countries flounder in their under-resourced and unorganized way through the talks, conclude like Uruguay, and developed rich countries are happy again. Unfortunately, the developing countries were apparently not given copies of the script. Learning from the Uruguay Round and gaining further experiences from Cancun and Hong Kong, poorer countries learned to stand their ground and maintained focus.

Hence, the present tact of the developed countries to break up developing country positions instead through regional or bilateral trade agreements. And here the US has been particularly more successful than the EU in this regard.

Which makes the US’ (or, more specifically, the Obama administration’s) lack of leadership throughout the Doha Round truly unfortunate. As put vividly by Columbia University’s Jagdish Bhagwati (writing for Handelsblatt): "the US killed Doha. Or at least put into Intensive Care ... it was killed by President Obama who had ironically been awarded the Nobel Peace Prize by Norway in the expectation that he would promote multilateralism and turn his back on US unilateralism!" Unfortunately, "the US, not content with killing Doha, is even promoting the regional PTA called the Trans-Pacific Partnership, compounding its folly twice over."

Thus the utter irony with which the US is now scaremongering the developing countries into getting in line with the "Bali Package". US Trade Representative Michael Froman, speaking at the WTO Public Forum 2013, bringing out again Doha’s "development goals", declares that the "loss of the WTO as a negotiating forum of course, would have the greatest impact on the smallest countries and the poorest economies. Big countries will always have options. Fair or unfair, that’s a reality. We all want the WTO to be a vibrant negotiating forum -- but small countries and poor countries would feel the loss the most."

Interestingly, Mr. Froman professes the importance of the WTO but lectures developing countries that "no one should blame the proliferation of bilateral and plurilateral trade negotiations for the state of the WTO today. Bilateral and plurilateral negotiations in or out of the WTO are not the context of our negotiating failure here -- if anything, they are a consequence instead. The main attraction of plurilateral agreements, for many, is that they offer a way forward. Like-minded countries -- the coalition of the working -- can come together to open markets, set high standards and introduce new disciplines for global trade."

This therefore explains the vigor with which the US pursues the TPP and TTIP deals, both -- incidentally -- excluding the Philippines.

But what’s disconcerting is why even the WTO would place upon developing countries like the Philippines the matter of Bali’s (and thus Doha’s) success. WTO Spokesman Keith Rockwell, noting the Philippines’ numerous free trade agreements, declared that "it would benefit the Philippines more if it actively pursues multilateral trading at the WTO considering its top three trading partners are huge players in the WTO, namely the US, Japan and China." This forgets, of course, that the Philippines is part of APEC, JPEPA and ASEAN-China.

Anyway, bottomline, if the developed countries don’t learn to practice what they preach, then just expect Bali to be declared a "success" simply because of small agreements like trade facilitation or customs procedures. Which, it must be remembered, is incredibly ironic as trade facilitation is one of the four "Singapore Issues" that tanked the Cancun Ministerial. Also, how a multilateral trade facilitation agreement will substantially benefit the Philippines is a puzzle, aside from it serving as an added international obligation.

In fine, there’s the likely probability that the WTO remains sidelined. And with that, the interests of developing countries.