WTO gets second chance at Bali

By Peter Murphy

Farmer, trade union, women and other civil society organisations who were focused on trade justice at the Bali World Trade Organisation Ministerial were disappointed in the ‘package’ that was adopted, while the WTO itself was elated.

At the extended close on December 7, 2013, Director-General Roberto Azevado declared it was the most significant decision since 1995. He even said, “For the first time in our history: the WTO has truly delivered!” But the outcome was a squib.

The Bali Package dealt with a tiny agenda compared to all previous Ministerials, so its significance is far more political than economic. It kept the WTO alive as a global trade and investment negotiating forum, when the extreme neoliberal demands of US and European corporations had almost killed it.

Unfortunately, the Package includes a commitment to return to the full agenda of the misnamed ‘Doha Development Round’ by the end of 2014. Note that the Doha Round was launched in December 2001, in the wake of the September 11 terrorist attacks in the USA, and the previous Uruguay Round was concluded way back in 1994!
What is in the ‘Bali Package’?

First, there are reservations.

A group of ALBA countries — Cuba, Bolivia, Nicaragua, Venezuela — recorded serious reservations at imbalances in the Package which favour richer countries.
The key issues addressed in the Bali Package are Food Security, Trade Facilitation and Least Developed Countries.

The first was a vigorous pushback by poor agricultural countries against the harshest aspect of the Agreement on Agriculture of 1994. The second was a high-handed demand by the richest countries on poor ones to adopt their customs procedures. The third is a long overdue helping hand to the poorest countries.

Agreement on the Agriculture part of the Bali Package required sorting out two issues. Much of the focus was on US objections to food security programs in developing countries where governments bought food at subsidised rates from farmers for stockpiles, and in some cases distributed from these stockpiles at subsidised rates to their poorest citizens, not for export. India’s program was the lightning rod.

Under WTO rules these subsidies could only amount to 10 per cent of the value of production at 1986 prices, and many countries were breaking this tight limit. The Group of 33 developing countries wanted to amend the Agreement on Agriculture so that they would not be challenged legally if these programs broke the limit. The US was only willing to allow such a shield for two to four years. And of course, the US and Europe were determined that their own massive agricultural export subsidies would not be cut. These direct payments to farmers make their exports cheaper and have undercut local food production in many developing countries.

The outcome allows for the shield from complaints to exist until a permanent solution is agreed, with a work program set up aiming to produce a permanent solution in four years. This represented a modest win for food security and social justice over narrow market concerns from the USA.

The second issue in the Agreement on Agriculture involves the ‘Cotton Four’ – Burkina Faso, Benin, Chad and Mali – who have been asking for duty free and quota-free access for their cotton into rich country markets since 2001. The subsidised US cotton industry held out against this, and the Bali Package only allowed for more negotiation and linked this request to an overall negotiation on Agriculture. Another setback for social justice.

The objectives of the Trade Facilitation document are to speed up customs procedures; make trade easier, faster and cheaper; provide clarity, efficiency and transparency; reduce bureaucracy and corruption, and use technological advances.

Part of the deal involves vague and unspecified assistance for developing and least developed countries to update their infrastructure, train customs officials, or for any other cost associated with implementing the agreement.

This is a mandatory agreement, and so many countries are now obliged to prioritise customs procedures over basic public services like health, education and housing. This is a burdensome imposition by advanced countries who have taken decades to develop their current customs procedures.

The “LDC Package” is meant to provide duty-free, quota-free access for least developed countries to export to richer countries’ markets. This is voluntary, not mandatory. While many countries, including Australia, have already implemented this, the Bali Package only exhorts other countries to extend this access to more products. Another bit of lip service to social justice.