Facilitating Bali

my Trade Tripper column for this weekend issue of BusinessWorld:

The big news, of course, for 2013 so far as trade is concerned was Bali. But after all the triumphalism has died down, it would be good really to see what the significance of that Bali package really is. The most apparent is that it buys time. In keeping with the “bicycle theory” of international trade, the Bali Package keeps the negotiations moving along in the hope something turns up in the future.

The contents, though, seem impressive. It essentially consists of 10 past agreements made at separate previous Ministerial Conferences and covers the areas of food security, cotton, and preferential treatment for poorer countries. It also contains provisions on the lowering of tariffs and agricultural subsidies, the inclusion of which nearly derailed the proceedings. Agriculture and provisions for the least developed countries were considered among the “early harvest” areas of a Bali Package.

It is, however, in the area of trade facilitation that Bali is hoping to make its mark. “Trade facilitation” is essentially the easing of customs rules in a country, so that the same will not serve as a hindrance to trade. By having a uniform set of standards for customs rules, so the theory goes, a country will need to improve its customs procedures or, otherwise, not use the same to discriminate against imports.

As the World Trade Organization (WTO) itself put it: “The new trade rules that the Agreement introduces are aimed at streamlining customs and port procedures. WTO Members have committed to implement new rules of trade that will bring streamlined and more transparent customs rules and procedures for traders.” An important aspect is greater customs transparency, making publicly available information relating to import/export procedures, duty rates and taxes, customs fees and charges, and penalties and appeal procedures.

It also seeks to establish inquiry points to address questions by governments and traders, provide an opportunity to review and comment before rules enter into force, provide advance rulings on issues raised by traders, streamline procedures to reduce times and costs, post-clearance audits, E-payments of fees, risk management to reduce physical inspection of entering cargo, expedited release of air shipments, and improved procedures for perishable goods.

The foregoing looks good but when you really think about it, what is the point? The Philippines could make all these improvements on its own, without the need of an international multilateral agreement that binds it up to other countries. Neither does it need the same really for improving trade with other countries as most of its major trading partners are richer countries anyway with quite developed and transparent customs procedures. The only problem perhaps (due to language issues) would be China (and conceivably, Japan). But both are parties to the Philippines in regional trade deals (ASEAN-China, JPEPA, and ASEAN-Japan), of which trade facilitation has already been included.

The World Customs Organization (WCO), for its part, seemed quite (ironically) restrained in its welcome of the Bali Package: “The Dublin Resolution, which was issued at the conclusion of the Policy Commission meeting in Dublin, Ireland on 11 December 2013, welcomes the WTO Agreement On Trade Facilitation (the “Trade Facilitation Agreement”), as embodied in the Bali Package’s Ministerial Decision, adopted at the WTO’s Ninth Ministerial Conference in Bali, Indonesia from 3 to 7 December 2013, under the framework of the Doha Development Agenda. The Dublin Resolution emphasizes the commitment of the WCO to the efficient implementation of the Trade Facilitation Agreement. The WCO Secretary General, Kunio Mikuriya, said that he was very pleased with the timely and affirmative action of Policy Commission, which reflects the determination to drive forward the global Customs trade facilitation agenda.”

Another thing that dampens any enthusiasm I have for Bali is that, even assuming its contents really are a big step forward, 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 this year and with US President Barack Obama still without a Trade Promotion Authority (and with 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.

On the latter, though, points have been raised which trade lawyers may find quite interesting. Cato’s Bill Watson says no TPP is needed. From the IELP Blog: “Basically, his point is that Congress can, if it wants to, vote up or down on a completed trade deal even without fast track, so mucking up the process with fast track now doesn’t really add anything.” An argument analyzed further by trade lawyer Ted Posner: “As long as the executive confers informally with the legislature first, and doesn’t push too far, it will maintain the ability to expand international law on its own through sole executive agreements, including as amendments to congressional-executive agreements.”

Your Trade Tripper will look more closely into the Bali Package in succeeding columns.