Politicians from around the world are gathering in Bali for the ninth World Trade Organisation (WTO) ministerial meeting. The atmosphere is likely to be a far cry from that of the big meetings in the late 1990s, which were dominated by street protests and debates over the role of globalisation.
These days, with major regional trade deals being negotiated outside of the WTO, the campaigners barely bother to show up. The talk among members is instead of “rescuing” the organisation from oblivion.
One trade expert recently described the Bali meeting to me as “elephants fighting over peanuts” – a graphic illustration of how little is really on the negotiating table. But it would be a shame if the WTO were truly to collapse into irrelevance, not least because these talks once promised so much.
The current round of negotiations was launched in Doha in 2001. Then, trade was seen as a tool for addressing development. Important issues on the agenda included moves to make it easier for the least developed countries to sell their goods abroad, and the elimination of cotton subsidies that have benefited industrial producers in the US at the expense of small-scale farmers across West Africa.
However, despite 12 years of negotiations, very little progress has been made. Ministers have now all but given up on securing an overall agreement on the Doha “Development” Round of talks, instead focusing on a few key elements it is hoped will breathe life back into the negotiations. Yet even this is proving hard, and ministers arrive in Bali a week after talks among their officials in Geneva collapsed.
Most of the energy in the run up to Bali has focused on “trade facilitation” – simplifying regulations at the border to make make importing and exporting easier. But reforms in areas such as customs can be costly and developing countries are rightly wary of signing up to binding and enforceable commitments that they can’t implement in practice. This has led to tensions with more advanced economies, who have sought new trade commitments from all countries.
In agriculture, the focus has been a proposal by India to change the rules on subsidies. Current trade rules mean India and other developing countries could be challenged at the WTO if they implement food security programmes. India is holding out. In the words of its trade minister, India “won’t compromise its farmers’ interest or succumb to mercantilist ambitions of rich nations”.
Progress on development has been modest at best. For instance, 23 specific ideas for “special and differential treatment” that would help the poorest countries integrate into the global trading system were first proposed by the WTO a decade ago. Now, all that is left is a “monitoring mechanism” to ensure special treatment and it is far from clear that this will have any teeth. Many of the specific demands made by least developed countries have been brushed aside – including the elimination of cotton subsidies.
Already the blame game has started, with India being held responsible in some circles for the failure to reach agreement in the run up to Bali. Yet, as Rob Howse points out, food security for 800m people in India is something the trading system should support. What kind of system allows millions to go hungry? In trade circles, liberalisation is all too often seen as an end of itself. In any case, the woes of the WTO lie much deeper than the domestic politics of one member state.
Many blame “inefficient” negotiating rules, arguing that arcane processes have frustrated progress and driven members towards regional trade agreements. Critics point out that reaching agreement among 150+ countries with diverse interests is nigh on impossible when the rules mean (in theory at least) progress is only made when every country has to be on board with all aspects of the negotiations. Reformers now want to speed up WTO decision-making by moving it towards a system of majority voting and negotiation on an issue-by-issue basis.
But the focus on WTO negotiating rules diverts attention from the real cause of impasse: geopolitical shifts. The problem is not the number of countries at the table as much as the fact that there are major divergences between the powerful few. Ultimately the growth of regional agreements like the trans-Pacific and trans-Atlantic trade deals are a response by the old powers to the growing political clout of large developing countries, most notably China.
The best case scenario agreement to emerge from Bali would fall a long way short of the promises made in Doha 12 years ago. In the wake of the meeting, we can expect much discussion of reforms to prevent the WTO from falling into oblivion.
Yes, reform is needed, but many current proposals prioritise efficiency over inclusion and, ultimately, development. They risk empowering the powerful few at the expense of the many, marginalising small developing countries and making it even harder for them to get pressing development issues onto the agenda (let alone acted upon by larger states).
The reform debate needs to give equal weight to both efficiency and inclusion. Only this way can we create an organisation that makes trade work for development.