Chapter four of One Billion Hungry describes the Uruguay and, later, Doha rounds of international trade negotiations. At the time of publishing little headway had been made in reducing tariffs, trade barriers and protectionist measures in the agricultural sector (tariffs for agricultural products are an average 62% compared to 4% for industrial goods) and since the Doha round began in 2001, there has been a stubborn stalemate between developed and developing countries. Reducing the number of proposals to agree in 2011, including measures on intellectual property and trade in services, (and spurring the moniker “Doha Lite”), the World Trade Organisation were seeking agreement between the 159 member countries at a recent meeting in Bali, the success of which looked likely to determine the continuance of Doha altogether, and the value of the WTO itself as this would be the first ever deal agreed under the WTO since its inception 1995.
On the 3rd to the 7th December ministers of trade met in Bali and despite several disagreements and standoffs, which threatened to derail the process, an agreement was met. So what was agreed exactly?
Central to the agreement is “trade facilitation”, which commits members to implement binding rules that reduce the amount of customs paperwork needed and set maximum time limits for goods crossing borders, a proposal that is estimated to add over $1 trillion to the global economy. For regions where goods crossing borders are subject to lengthy delays and difficulties, resulting in high transaction costs, an agreement such as this could lower the cost of imports. Reducing these transaction costs associated with trade by just 1% could boost the global economy by $40 billion, according to a report by the Organisation for Economic Co-operation and Development. And the bulk of this increase in economic wealth is expected to benefit developing countries such as Uzbekistan, Tajikistan, Kazakhstan and the Central African Republic, which, according to the World Bank’s Doing Business Index, have the worst scores for the ease with which goods can be traded across their borders.
A further agreement was around increases in farm subsidies, which are currently limited under the WTO Agreement on Agriculture. India insisted it should be allowed to subsidise grain as part of its effort to tackle food insecurity, paying farmers higher than market prices for grains for its government domestic stores. As an interim measure, WTO members agreed not to bring disputes against countries breaching the farm subsidies limits as part of food security measures while a longer term solution is found but there remains concern that this gives India the power to distort global trade and undercut producers in other countries. Despite the negative impacts of subsidies, an alternative is yet to be found, and without this compromise India would have backed out of the agreement altogether, although they did agree not to ”distort trade or adversely affect the food security of other [WTO] members”. Development agencies are concerned that the agreement only last four years and only relates to currently held public food stock holding programmes.
Two agreements made in 2005 around reducing cotton subsidies and allowing duty-free, quota-free market access for exports of developing countries, were also upheld in the Bali agreement although they do not require a binding commitment on the part of developed countries.
Some believe that the Bali agreement does not go far enough and making trade easier in developing countries is made harder by the plethora of Free Trade Agreements being negotiated between richer nations, the EU-US trade deal and the Trans-Pacific Partnership. As a recent article in the Financial Times stated, this is a “competition between multilateralism and mega-regionalism”, and one that despite the success of Bali, remains ongoing. Reaching binding commitments that remove trade distortions harmful to the development of less developed countries remains an upward battle. In a BBC article, John Hilary of War on Want, a UK-based group, said: “The negotiations have failed to secure permanent protection for countries to safeguard the food rights of their peoples, exposing hundreds of millions to the prospect of hunger and starvation simply in order to satisfy the dogma of free trade.”
But we shouldn’t forget that an agreement being reached in Bali is a huge achievement and the Doha round now looks likely to be revived, with the WTO’s trade negotiating committee mandated to prepare a work schedule for discussions around issues yet to be agreed such as further reducing wealthy countries’ farm subsidies and providing easier access for developing country engagement in foreign markets.