It’s been a long time coming, but the World Trade Organization finally concluded its first multilateral trade agreement, settled in Bali, Indonesia on December 6. The negotiated arrangement is the only of its kind to emerge from the epic failure of the Doha rounds of international trade talks, though it remains unclear how this will ultimately impact the reality of global trade.
The agreement is already being touted as historically significant, involving 159 signatory nations, accounting for more than $1 trillion in global trade. The principal achievement of the treaty is affecting consensus on trade facilitation, essentially a basket of strategies designed to diminish trade costs by reducing unwieldy regulatory expenses and needlessly convoluted protocols. Some industry experts estimate that trade facilitation, properly fashioned and implemented, could cut the overall costs of global trade by as much as 10 percent, increasing global output by $400 billion.
The road to settling this issue proved to be rocky terrain, with less developed nations particularly anxious they would be incapable of overhauling their infrastructures to accommodate the agreement’s demand for capacity upgrades.
Still, agriculture turned out to be the fulcrum of controversy, almost killing the deal just concluded. As is often the case with modern trade agreements, the most contentious area of dispute was farm subsidies. India was the lead gadfly holding up negotiations, demanding that poorer nations be protected from richer nations saddling them penalties for funneling financial assistance to farmers, stockpiling crops and dispensing grants under the guise of zero interest loans. India has spent months advocating the need to insulate emerging economies from abuse on this score, eventually securing a four-year “peace clause” that would endow developing nations with added protections from such challenges. That issue remains unresolved, more procrastinated than settled, but India has agreed to temporarily table it for the sake of hammering out other areas of agreement.
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This free trade agreement is the progeny of the infamously ineffective Doha rounds, a WTO sponsored series of international negotiations that began in 2001, died from inertia in 2008, was half-heartedly revived in 2009 and then finally abandoned yet again in 2012. And like the current treaty, it also had the general objective of lowering trade barriers for a wide swath of the globe and was also stymied by disagreement regarding agricultural reform.
Out of the collapse of the Doha rounds came a global refocusing of energies into smaller, more regionally directed trade agreements. The Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP) are both essentially attempts to salvage the abiding motivation of the original Doha talks, now scaled down into manageable points of sovereign consensus.
In contrast to the original Doha talks, the TPP involves only twelve nations including the U.S., Vietnam, Singapore, Australis, Peru, Brunei, New Zealand, Chile, Malaysia, Mexico, Canada and Japan. Also contrary to the Doha, the TPP has made impressively brisk progress, and is widely expected to conclude soon.
The Doha agenda, despite its current moment of success, is still left largely a matter of continuous debate. Trade in goods and services, food security, foreign investment and environmental standards comprise just a modest sampling of the issues that could potentially derail the negotiations moving forward. And the always controversial subject of agricultural subsidies has merely been postponed rather than decisively resolved. As many have observed, India has repeatedly threatened to upend the talks on this point alone, and seems both capable and willing to do so.
Moreover, many believe the only reason the talks have progressed this far is because Roberto Azevedo, the new Director-General of the WTO as of last September, devoted himself to brokering a detente between India, on the one hand, and the U.S. and the E.U. on the other. His diplomatic savvy has won him an extraordinary measure of credibility that might permit him to push even greater agreement in the future. Nevertheless, stewarding concrete, long lasting consensus on such a hotly disputed subject will be a tall order.