A Successful Conclusion to the WTO Bali Ministerial

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Explore:  LDCs Trade Policy WTO

The WTO's Ninth Ministerial Conference was held in Bali, Indonesia on December 3-7, 2013. Acceptance of the "Bali Package" was by no means an assured outcome as Geneva-based negotiators were unable to finalize negotiations before the Bali conference. Yet, WTO Members pursued tough political decisions overnight on Friday December 6th and produced the first multilateral trade agreement under the WTO in two decades.

The Bali Package is a three-part "early harvest" of the Doha Development Agenda ("DDA"): trade facilitation, agriculture, and development issues. Trade facilitation, which aims to cut red tape on international transit of goods, is the keystone of the Bali Package. Estimates from the Peterson Institute for International Economics indicate that this deal may lead to export gains over $1 trillion, over 20 million jobs, and a $960 billion bump in Gross Domestic Product. While developing countries will benefit most, Cuba, supported by Bolivia, Nicaragua, and Venezuela, threatened to derail consensus as it held out for language limiting trade embargoes on goods in transit. Reduced customs costs and increased movement of goods also will help manufacturers in the United States. As United States Trade Representative Michael Froman stated, "Under this new agreement, a small business, including those in the United States, seeking to break into global markets and increase its export opportunities will be able to do so because it has faster, simpler, and less costly access to 159 economies."

On agriculture, the main issue concerned public stockholding for food security purposes. An extremely contentious issue, certain countries such as India argued that such programs should not be subject to subsidies disciplines under the Agreement on Agriculture, while other countries including Pakistan worried that government-subsidized purchases of food stocks could distort trade or lead to dumping of cheap staple foods. The solution was a four-year "peace clause" shielding these programs from WTO dispute settlement until a permanent solution can be found.

The development deliverables were the least contentious issues as these four texts were finalized in Geneva. These four elements are duty-free, quota-free market access for least developed countries ("LDCs"), simplified preferential rules of origin for LDCs, preferential market access for services from LDCs, and a Monitoring Mechanism to ensure that the WTO works for developing countries.

Other decisions include the accession of Yemen (160th WTO Member), an extended moratorium on "non-violation" complaints for intellectual property issues, and a decision to extend the moratorium on electronic commerce duties. These latter two decisions impact U.S. manufacturers -- the non-violation complaint moratorium reduces the options available to protect intellectual property rights in WTO dispute settlement, while the e-commerce moratorium means that new electronic technologies (e.g., 3D manufacturing) avoid tariffs in international trade.

The Bali Ministerial shows the continued relevance of multilateralism where trade liberalization increasingly is pursued via bilateral and regional trade negotiations. More is left to do, however, as a work program must now be established to finish the twelve-year-old DDA.

Jordan Shepherd

Topics:  LDCs, Trade Policy, WTO

Published In: General Business Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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