In Caribbean News. David Cameron, hailed as “historic” the agreement reached by the world’s trade Ministers two weeks ago in Bali. He said that it could be a “lifeline” for the world’s poorest people, and would benefit British businesses by over US $1billion.
The decade old talks to improve global trade and support development, the Doha Development Agenda (DDA), have been floundering for quite some time. So, in the run-up to the recent 9th World Trade Organisation (WTO) Ministerial conference in Bali, expectations were at an all time low. But Ministers continued for an extra day and might well have confounded the sceptics.
At the closing ceremony on the 7th December, the recently appointed WTO chief, the Brazilian Roberto Azevêdo, proudly proclaimed “For the first time in our history: the WTO has truly delivered”.
Now that the conference documents are on the internet, we can read them and judge for ourselves what Bali meant for the Caribbean and whether the excitement was justified or just ‘a brave face’.
What is Trade Facilitation?
The accord in Bali was for a formal international agreement to be adopted next July to make it easier for goods to pass through ports and Customs; what in the jargon is called Trade Facilitation.
But developing countries always wanted much more; they sought a better deal on trade. Antigua, Dominica, St Lucia, St Vincent, Venezuela and others boldly challenged Ministers in Bali “to start to address the asymmetries in world trade and ensure a fairer participation of the developing countries in the international trade”.
Earlier, in Addis Ababa at the end of October, the African Union had called for “a fair and balanced outcome of the DDA including in the context of the Bali package, which must prioritise development as its main deliverable.”
You could be forgiven then, if you feel that the Trade Facilitation deal is a let down; many developing countries do as well.
Of course the agreement is important. If implemented it will get Customs to use modern technology, provide clarity and transparency, get rid of arbitrariness, reduce bureaucracy and clamp down on dodgy dealings and corruption. These reforms will speed up Customs clearance, reduce aggravation for traders and the costs of importing and exporting. Unnecessary costs that end up being passed to the consumer.
The WTO estimates that the agreement will lower costs of trading by 10% to 15%, earning the global economy between US$ 400 billion and US$1 trillion
The question is; how will this bonanza be shared out?
WTO chief, Brazilian Roberto Azevêdo. Photo courtesy www.onlinecasinorecommendations.com
Who benefits?
Countries gain in two ways from Trade Facilitation.
Firstly the economy benefits from cutting the waste of inefficiency and saves from the resulting drop in prices of consumer goods and other imports.
Why you might ask should countries need an international agreement to take measures that are anyway in their own interests?
Maybe it’s the cost. But the gains from eliminating unnecessary burdens placed on importers would far exceed those costs.
Secondly exporters will benefit. They now complain of bottlenecks and inefficiencies in Customs and want the obstacles to their trade, which slow down clearance and raise their costs, removed. Major exporting nations like the USA, China, Brazil, Japan, Germany etc. know that Trade Facilitation would help their exporters sell more easily in foreign markets and enjoy greater profits.
Whilst all countries will have to take measures to facilitate trade, the less advanced developing nations, whose Customs departments are starting from a low base, will have to upgrade the most in order to meet the agreed standards. The impact of the changes on their imports could therefore be significant. The more advanced countries though, with their relatively efficient and modern Customs will not have to transform as much, so their imports should be less affected.
The countries that can capitalise most on the new opportunities in the markets of less advanced developing countries are those that are internationally competitive and have the capacity to expand.
The Caribbean’s share
Substantial increases in Caribbean exports seem therefore unlikely. Instead, the principal gain for most countries in the region will be lower prices on imports because Customs departments become more efficient.
Okay Santa, we are really grateful for the gift, but it does not seem that much of the $1 trillion will make its way into stockings in the Caribbean.
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In my next article I will look at other issues being dealt with by the WTO in Bali and the longer term prospects for the DDA
