The trade agreement reached in Bali last weekend has provided much-needed oxygen to a moribund World Trade Organisation. The WTO, founded in 1995, was fast fading into irrelevance what with countries forging bilateral trade pacts and powerful regional trade agreements, especially in the developed world. In the event, the first-ever trade agreement between the 159 member-countries of the WTO is a shot in the arm for multilateralism even as it keeps the agenda of the Doha Round alive. “We have put the world back into the WTO,” declared Roberto Azevedo, Director-General, and he could not have put it more eloquently. The agreement is designed to simplify customs procedures and lower trade barriers between countries. The International Chamber of Commerce has estimated that the Bali deal will cut trade costs by 10-15 per cent even as it adds an estimated $1 trillion to global trade. How realistic these numbers are will only be proved in the years ahead, but there is little doubt that global trade will get a significant boost from the Bali agreement. In a sense, the emergence of regional trade blocs which was seen as a threat to the WTO eventually proved to be its saviour as those countries left out from them, mainly emerging economies such as India, Brazil, South Africa and Russia, realised the WTO was critical to their interests.
The unyielding stance of India on protecting its farm subsidies which are set to increase following the enactment of the Food Security Act did cause some disquiet amongst the member-countries and at one stage seemed set to hold up an eventual agreement. The interim mechanism devised as a via media will allow India to continue with its agricultural support price programme undisturbed until a final solution is negotiated. A phase of tough and tricky negotiations is ahead for the country as it seeks to get its farm subsidy programme into the WTO framework; support from other developing countries with similar programmes is crucial here. Indeed, from a larger perspective, the agreement at Bali is just the beginning. A lot of hard work lies ahead for the WTO, and Mr. Azevedo has acknowledged this. Trade negotiators need to carry forward the positive momentum built up at Bali as they seek to push through the Doha Round agenda. This will not be easy though, as negotiators will have to contend with regional groupings such as the Trans-Pacific Partnership, which involves the U.S., Japan and ten other Pacific Rim countries, and the powerful trans-Atlantic alliance between the U.S. and the European Union, negotiations for which are now on. Bali may have infused life into the WTO but its biggest battles lie ahead.