Caribbean news. Trade Ministers met last month in Bali and seem to have brought new life into the World Trade Organisation (WTO). So what does that mean for the floundering Doha Development Agenda (DDA) and how should the Caribbean respond?
Opening a diplomatic seminar in Lisbon last week Roberto Azevêdo, the WTO’s Director-General said “Bali changed the ballgame — we have put the ‘World’ back into the World Trade Organization.”
The DDA was launched in 2002 as the ninth of the rounds of global trade talks that since 1947 have been working to make trade freer. This time though with a difference; development would be a central pillar.
These negotiations were therefore seen as a great opportunity to re-balance world trade and ensure fairer participation of developing countries.
In Bali though Ministers shied away from reform of the trading system itself; instead they brokered a deal on Trade Facilitation to make it easier for goods to pass through ports and Customs. The formal agreement is to be adopted next July.
This fell short of the ambitions of many developing countries; but what of the other conclusions?
Agriculture has always been the most disputed subject on the WTO’s agenda. This is not surprising since it is the WTO that makes the rules governing trade in food and agricultural products and the support given to farmers.
These rules help decide whose agriculture will be viable and whose will not. With its fragile farming sector struggling to compete internationally, the Caribbean has a keen interest in fairer rules that take account of its circumstances.
What Ministers considered though was the administration of the tariff rate quota (TRQ) and Food Security.
The TRQ is a sometimes controversial arrangement for restricting imports. It permits a higher duty to be charged on imports of a particular product, once they exceed a specified level. Europe uses this device to protect Caribbean and ACP bananas.
The discussion on Food Security was about India’s proposal that Governments be allowed to hold higher levels of food stocks; something that would also help its farmers.
Small Economies, Aid for Trade and LDCs
The Caribbean has long campaigned for special support for small economies; but there was no breakthrough here either. Ministers dispensed with Small Economies in three paragraphs; doing little more than endorsing ongoing work.
Another important topic for the region is Aid for Trade. It was given similar treatment, and just two paragraphs.
There was encouraging support for LDCs; of which Haiti is the only one in the Caribbean. In general though, the proposals are not binding.
Significance of Bali
So what does the Bali conference signify for the prospects of the DDA?
Azevêdo said at the end of the conference that “The decisions we have taken here are an important stepping stone towards the completion of the Doha round.”
However, making progress just on Trade Facilitation does not seem like much. After all, developing countries had high ambitions for the DDA. They expected reforms to the global trading system that would provide new development opportunities and generate jobs and income. And this has not happened.
Of course, making trade easier by increasing its efficiency and reducing its cost is good for all countries. But for many small developing countries, the gain will come principally from lower prices on imports as Customs departments become more efficient. (See The WTO’s Gift to the Caribbean for Christmas)
The big gainers from Trade Facilitation will be those countries that will export more because they can get their goods onto the shelves of foreign markets easier and cheaper. These invariably will be the star performers who are already internationally competitive and have the capacity to expand output.
The Bali accord therefore does not really change the balance in the trading system to give a better deal to those developing countries that are currently on the margins of world trade.
The significance of Bali goes beyond the package that it adopted. So could it have signalled that the WTO’s Doha negotiations will get going again? But if this happens, can the Caribbean ensure that its commercial and economic interests will actually benefit?
The next article will consider the way forward for the WTO’s Doha negotiations and how the region might position itself.