After 20 Years of Nothing, the WTO Finally Reaches a Deal…Sort of

The World Trade Organization lives to fight another day. Amid concern that last week’s trade talks would end in failure and render the WTO obsolete after two decades of ineffectual negotiations, member countries finally reached a global trade reform deal Saturday — for the first time in the WTO’s history, and 12 years into the ...

SONNY TUMBELAKA/AFP/Getty Images
SONNY TUMBELAKA/AFP/Getty Images
SONNY TUMBELAKA/AFP/Getty Images

The World Trade Organization lives to fight another day. Amid concern that last week's trade talks would end in failure and render the WTO obsolete after two decades of ineffectual negotiations, member countries finally reached a global trade reform deal Saturday -- for the first time in the WTO's history, and 12 years into the Doha Round of negotiations. In Bali, where the deal was reached, there was a lot of back-patting: European Trade Commissioner Karel De Gucht exclaimed that "we have saved the WTO," the WTO's Director-General Roberto Azevedo concluded that "for the first time in our history: the WTO has truly delivered," while the president of Indonesia attributed the meeting's success to "the mystique of Bali." But what the group actually accomplished is up for debate.

The aim of the the Doha Round is to lower trade barriers between member countries and, ultimately, to improve the trading prospects of developing nations. But disagreements between rich and poor members have dragged negotiations on for years, and the most contentious issues -- such as efforts to restrict food subsidies in developing countries -- remain unresolved. In order to salvage an agreement, and buy itself more time, the WTO narrowed its agenda and eventually passed an agreement to streamline customs processes and make it easier and cheaper for countries to trade with one another. The deal is expected to increase global trade income by $1 trillion and add 20 million jobs, most of which would be in developing countries.

But critics were quick to highlight the deal's shortcomings. Jeronim Capaldo, a senior researcher at Tufts's Global Development and Environment Institute, argued in a policy paper this month that estimates of the deal's potential benefits are overstated and "depend on too many unjustifiable assumptions." While a trade facilitation agreement may create more jobs in exporting industries, he contends, it would also likely lead to higher unemployment in non-export industries. He also argues that income and savings projections do not take into account the high costs of implementing trade facilitation, which would naturally offset gains for poorer countries. The latter point is one that India brought up prior to last week's trade talks, when its Confederation of Indian Industry called for the WTO to fund implementation costs for developing countries.

The World Trade Organization lives to fight another day. Amid concern that last week’s trade talks would end in failure and render the WTO obsolete after two decades of ineffectual negotiations, member countries finally reached a global trade reform deal Saturday — for the first time in the WTO’s history, and 12 years into the Doha Round of negotiations. In Bali, where the deal was reached, there was a lot of back-patting: European Trade Commissioner Karel De Gucht exclaimed that "we have saved the WTO," the WTO’s Director-General Roberto Azevedo concluded that "for the first time in our history: the WTO has truly delivered," while the president of Indonesia attributed the meeting’s success to "the mystique of Bali." But what the group actually accomplished is up for debate.

The aim of the the Doha Round is to lower trade barriers between member countries and, ultimately, to improve the trading prospects of developing nations. But disagreements between rich and poor members have dragged negotiations on for years, and the most contentious issues — such as efforts to restrict food subsidies in developing countries — remain unresolved. In order to salvage an agreement, and buy itself more time, the WTO narrowed its agenda and eventually passed an agreement to streamline customs processes and make it easier and cheaper for countries to trade with one another. The deal is expected to increase global trade income by $1 trillion and add 20 million jobs, most of which would be in developing countries.

But critics were quick to highlight the deal’s shortcomings. Jeronim Capaldo, a senior researcher at Tufts’s Global Development and Environment Institute, argued in a policy paper this month that estimates of the deal’s potential benefits are overstated and "depend on too many unjustifiable assumptions." While a trade facilitation agreement may create more jobs in exporting industries, he contends, it would also likely lead to higher unemployment in non-export industries. He also argues that income and savings projections do not take into account the high costs of implementing trade facilitation, which would naturally offset gains for poorer countries. The latter point is one that India brought up prior to last week’s trade talks, when its Confederation of Indian Industry called for the WTO to fund implementation costs for developing countries.

Meanwhile, anti-poverty NGOs have criticized the deal for doing little to support global development, which is one of the stated purposes of the Doha round. "The Bali package is hardly going to make a difference for poor countries," Romain Benicchio, senior policy adviser with Oxfam, said in a statement. Oxfam boycotted the WTO meeting this year, saying that "the package on the table is rather meaningless from a development point of view." One point of contention during the talks was India’s refusal to curb a new food security program, which will allocate $18 billion a year to support farmers and feed the hungry but would violate trading rules limiting agricultural subsidies. In the end, delegates decided to allow India and other developing countries to temporarily continue their food subsidy programs as long as those programs don’t interfere with international trade.

The World Development Movement, another international anti-poverty organization "condemned" the deal, saying it is an agreement for the world’s corporations, not the world’s poor. "On the positive side, developing countries have forced concessions onto the pro-corporate agenda of the US and European Union," said Nick Dearden, WDM’s director. "However, those concessions are only the minimum necessary to get through what remains a deal for corporations, not for the world’s poor."

Perhaps the the WTO’s biggest achievement, after all of this, is that it hasn’t yet faded into obsolescence. 

Catherine A. Traywick is a fellow at Foreign Policy.

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