After 5 days of intense negotiation, the World Trade Organisation Bali Ministerial Conference has ended in success. The so-called ‘Bali Package’, which consists of a selection of measures to reduce global trade barriers, was finally adopted and represents the first multilateral trade deal which the WTO has been able to broker for 12 years.
The WTO commented that it hoped that, ‘…[the agreement] would reinvigorate the WTO and its trading system, and provide the momentum to conclude the Doha Round, which was launched in 2001 and has seen little progress since 2008.’
But what will this mean for global supply chains? The WTO says that the objectives of the Package are: to speed up customs procedures; make trade easier, faster and cheaper; provide clarity, efficiency and transparency; reduce bureaucracy and corruption, and use technological advances. It also has provisions on goods in transit, an issue particularly of interest to landlocked countries seeking to trade through ports in neighbouring countries.
The benefits to the world economy are calculated to be between $400bn and $1 trillion by reducing costs of trade by between 10% and 15%, increasing trade flows and revenue collection, creating a stable business environment and attracting foreign investment.
There had been concerns that a failure by the WTO in Bali would seriously damage its credibility and its attempts to promote the benefits which globalisation can generate.
In fact it seemed that many countries had lost patience with the process, which had foundered over the issue of protection of agricultural sectors by both developing and developed markets. This had led, indirectly, to the establishment of regional trade deals such as the Transatlantic Trade and Investment Partnership (TTIP) between the US and EU. If these negotiations are successful, this on its own could add £100bn annually to the European economy, £80bn to the US and £85bn to the rest of the world. It is also believed that it would create millions of jobs.
There is no doubt that success at Bali will come as a major relief to the WTO which had risked becoming marginalised. It could also represent a major re-energisation of globalisation which has increasingly been questioned both in terms of economics (e.g. with the development of near-sourcing) and societal benefits.