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Better late than never for WTO
Publication Date : 13-12-2013
The "Bali Package" - which would lower some trade barriers and reduce the time goods take to clear customs - is a modest but significant achievement for the World Trade Organisation (WTO). It is modest compared to the overarching goals of global free trade embodied by the organisation since the Doha Round of talks in 2001. But the package is important for both concrete and symbolic reasons.
In hard terms, it will add about US$1 trillion a year to the global economy and create 21 million jobs, 18 million of them in developing countries.
Symbolically, it is evidence that, as WTO director-general Roberto Azevedo exclaimed, the organisation has delivered for the first time in its history. His declaration acknowledges how difficult it has been to move the WTO forward since its inception in 1995. It is cause for celebration that members managed to throw off the inertia that had become synonymous with its existence.
This portends well for globalisation because the WTO is the only global international organisation that deals with the rules of trade between nations. Its goal is to help producers of goods and services, exporters and importers conduct their business.
Given the centrality of trade to the economic life of nations, it would have seemed obvious that countries would have a stake in making it one of the most successful institutions in the world.
But the paralysis created by short-term national interests - very often the vested interests of particular economic lobbies such as farmers that could hold national policy-making to ransom - was turning the WTO into an irrelevance.
The Bali Package is a welcome reminder that countries can be persuaded to look beyond narrow gains at an international economic order that will benefit everyone. This includes the developing world, which needs concessions necessary for it to enter that competitive order.
Hobbled by differences, the WTO was being superseded by regional trade agreements which were necessary and more manageable but which posed the danger of carving the world into separate and potentially combative trading blocs. Post-Bali, therefore, it is essential for the WTO to use the momentum it has gained to inject urgency into the deadlocked Doha Round.
These are propitious times for optimism. The economic rise of Asia is creating mega-markets that are breathing new life into globalisation. Rising incomes and better education are building a middle-class core whose economic interests will not only sustain new products and services but will also stabilise international politics.
Protectionist and mercantilist theories stand thoroughly discredited. But turning these conceptual truths into workable policies is a job that falls squarely on the WTO.