Finally, in November 2013 at Bali, Indonesia, the World Trade Organization (WTO) struck its first global accord since coming into existence in 1995. Many times over the past 12 years the efforts to reach an agreement, in the “Doha Round” of worldwide negotiations, had seemed doomed. However, thankfully this time a deal, albeit a modest one, was reached after some hectic and nerve wracking deliberations.
Why modest? Because the agreement merely covers “trade facilitation” (simplifying customs procedures) and not the broad liberalization that was the aim of the “original” initiative at Doha. Still, the breakthrough covers some useful stuff: by one estimate, cutting customs red tape and the cost of shipping goods around the world by more than ten per cent to potentially raising annual global output by nearly $400 billion – more importantly, much of this gain will be flowing to the developing economies instead of the developed ones.
The main lesson – from this small success from an otherwise ambitious agenda – that comes across from Bali is to not repeat the sorry history of the Doha Round. The problem had been WTO’s earlier all-or-nothing approach of seeking a jumbo accord at all costs.
An accord that needed to be all-encompassing (catering to everyone’s wish list) and should be approved by all 159 members. While the previous approach was good in theory, it was a recipe for deadlock in practice. This small success based on “minimum agreeable agenda” has in fact opened up even newer avenues.
One such new and promising route is that of “plurilateral agreements” – deals whereby a group of countries get together to agree on liberalizing rules on one sort of good or service, with others free to join as and when it suits them. The idea behind this is that such deals are simpler to negotiate than multilateral agreements and set the right incentives for laggards; get on board or get left behind. And, as others sign up, they can turn into global ones.
Further, it works on the assumption that not all subjects need to be negotiated among all WTO members, as the Bali deal was.
Some can be passed to those countries that are eager to press forward (“plurilateral” talks as opposed to multilateral ones), as long as other WTO members are free to sign up to any resulting agreement. Negotiations on services and on information technology already fall into this category. The emerging economies (like China and Brazil) especially feel that the plurilateral approach is indeed the right way to move liberalization forward in future.
On the other hand, the plurilateral approach in a way takes the responsibility of ensuring fair trading opportunities away from the shoulders of the WTO and instead places the onus on the governments of member countries to successfully develop and create their own respective global trading opportunities.
The action in the trade liberalization world these days is not inside the WTO but with regional agreements. The recent agreement in principle between the European Union (EU) and Canada is a pioneering example.
With the Bali success, the WTO seems to have a new momentum through which small successes may grow into bigger ones. And amidst all this activity, managing national interests in a complex web of bilateral, regional and now cross-continent agreements is not going to be easy.
• Dr Kamal Monnoo is a Pakistani entrepreneur and economic analyst.
