Bali deal saves WTO innings

The first agreement in the World Trade Organisation's history has been 18 years in the making. Unfortunately, it's aimed more at keeping global trade talks alive than securing any meaningful reforms.

The World Trade Organisation’s agreement in Bali over the weekend was a triumph in the way that English wicketkeeper Matt Prior not going out yesterday was a triumph: the WTO managed to keep its innings alive.

This was the first agreement in the WTO’s 18-year history, would you believe. It’s a start, a long time after the start.

Essentially the 159 WTO members agreed to a series of measures to speed up the processing of goods through customs, and to publish their customs requirements.

The deal nearly came to grief over a dispute between the United States and India over India’s practice of over-paying farmers; in the end the US was persuaded to give in and allow India to keep its “food security measures” for another four years.

Removal of that blockage allowed the rest of the trade facilitation measures to be agreed, which they grandly declared would add $1 trillion to global trade.

Yes, well, it’s a good thing no one checks up on such press release predictions, but the significance of the Bali meeting is that they managed to agree on anything at all. As a result, the new director-general of the WTO, Roberto Azevedo of Brazil, has managed to rescue the WTO from total irrelevance.

As the WTO has become more and more bogged in argument between rich and poor nations over the past decade, bilateral free trade agreements have flourished, culminating in a grand pact called the Trans-Pacific Partnership.

With the benefit of hindsight, China may have been both the WTO’s greatest achievement and its killer – the monster that smothered the WTO.

China’s accession to the WTO in 2001 was agreed because the US and Europe thought it would give them access to its market of a billion potential consumers.

It worked entirely the other way around of course: China’s trade surpluses became so enormous that it unbalanced the global financial system, and it's still that way. Over the weekend China reported that its exports grew 12.7 per cent in November and its trade surplus is running at more than $US30 billion ($32.94 billion) a month, or $US240 billion a year.

The Doha Development Round of WTO negotiations was kicked off at the same time as China’s accession to replace the Uruguay Round of the General Agreement on Tariffs and Trade. At the ministerial conference in Doha, Qatar in November 2001, the ministers set a very ambitious agenda which proved in the end to be far too ambitious.

The basic idea was that developed countries would provide access to their markets for the agricultural produce of developing countries, while the poorer countries would reduce tariffs on manufactured goods from the rich countries.

It never happened. European and American farmers proved too powerful and the developing nations wanted actually to develop – to build manufacturing sectors in the same way Europe and America had – through tariffs.

It seems likely that China sucked all the oxygen out of Doha by totally dominating global trade – flooding the world with cheap manufactured goods and crowding out all other developing nations.

By the time Roberto Azevedo took over from Pascal Lamy as director-general in September, all that was left of Doha were a few scraps of customs red tape.

But, to his credit, Azevedo realised that if he could get agreement on 'Doha Lite' in Bali, the business of multilateral trade negotiating could be kept alive and then perhaps something more could be built on that deal.

Perhaps. And maybe England can save the Adelaide test.