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Last updated: December 7, 2013 2:24 am
Ministers from around the world were set on Saturday to seal the first global trade deal in almost two decades in a move hailed as a milestone for the global economy.
The deal provisionally agreed in Bali by the vast majority of ministers from the 159 members of the World Trade Organisation after four days of gruelling negotiations was immediately hailed by business groups as a major boost to the $18tn annual trade in goods worldwide. Its biggest component is designed to ease red tape and set binding standards for customs and the movement of goods through national frontiers. It would add up to $1tn to the world economy, according to some estimates.
Approval of the deal, initially due Friday, was delayed until Saturday after Cuba and three other Latin American countries blocked a consensus in an effort to have the WTO call for the lifting of the 53 year old US trade embargo on the Caribbean island. But early morning negotiations resolved the issue and the deal was set to be approved by ministers on Saturday.
The Bali deal would mark the first time any components of the long-stalled Doha Round have been completed. As such it would represent a rare win and a badly-needed credibility boost for the multilateral trading system and the WTO. Since its creation in 1995 the Geneva-based body has failed to produce any new agreements, leaving the rules governing global trade badly outdated.
“This is a landmark,” Anand Sharma, the Indian commerce minister, told the Financial Times in an interview, after India and the US on Friday resolved a stand-off that had been the biggest potential barrier to a deal.
“Today we have taken a major step to correct the historical distortions,” he said, by proving that a WTO with much greater representation from new economic powers like China and India and poor economies than its predecessor, the GATT, could yield results.
“It looks as if tonight we have saved the WTO,” said Karel DeGucht, the European Union’s trade commissioner. “That would be a historic event.”
The agreement includes only a small portion of the broader Doha agenda. Besides the “trade facilitation” deal to tackle red tape at borders it contained little else that amounts to concrete market-opening measures.
Ministers agreed that the Doha Round should eventually result in the end of controversial export subsidies to farmers. They also pledged to work to do more to provide duty-free and quota-free access for goods from the world’s poorest countries and expressed regret that more had not been done to open up cotton markets in the US and elsewhere in the rich world to growers in poor countries in Africa and beyond, a longstanding bone of contention.
The talks almost collapsed as the result of a battle between India and the US and EU over how WTO rules should be applied to government programmes to buy staples from subsistence farmers and provide food to the poor.
Roberto Azevêdo, the Brazilian who took over as director-general of the WTO in September, successfully brokered a deal to resolve that issue. But in the early morning hours on Saturday, efforts to finally close the deal were being blocked procedurally by Cuba’s representative to the WTO, who was seeking to include a provision to end the US trade embargo of the Caribbean nation.
The impending agreement was welcomed by business groups.
“There’s a great deal of hope among businesses in Bali that a package is at hand, and more than a few prayers being offered that negotiators seize on it,” said Jake Colvin of the Washington-based National Foreign Trade Council, a lobby group for business. “Companies are multilateralists at heart, and we’re rooting for the WTO to deliver.”
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