WTO future in doubt

Trade Minister Tim Groser says the collapse of  the World Trade Organisation (WTO)’s Bali deal  poses fundamental questions about the body’s future role in international trade.

A trade facilitation agreement to cut red tape at borders had been reached in principal in Bali last December at a meeting of trade ministers from the WTO’s 160 member countries.

Although important to efforts to streamline global customs procedures its larger significance had been in the impetus it would have given to finishing the Doha round of trade negotiations, which aims to slash tariffs and agricultural subsidies but which has been languishing since 2008.

That is all in tatters now after the deadline to sign off the Bali deal passed this morning without agreement from all members.

Groser said any efforts that WTO members had been ready to make to move on to a larger deal tackling tariffs and subsidies might now have been dashed by the failure of the trade facilitation deal.

“God knows where this leaves that – if there is no Bali deal then by definition there is no post-Bali work programme.”

The WTO’s director-general Roberto Azevedo said the latest failure threw the organisation’s future into doubt.

“This not just another delay which can simply be ignored or accommodated into a new timetable – this will have consequences.”

Azevedo said the WTO was important not just for its role in negotiating new agreements but also in preventing countries from backsliding into protectionism.

The countries which will be hurt most by this are those which can afford it least.

He said smaller countries had the most to fear if the WTO was to lose its importance in the world trading system.

“The major economies will have other options open to them. But the smaller, more vulnerable economies may not – they’re the ones that may no longer have a seat at the table.”

Groser said the WTO’s mandate as policeman in international trade disputes could come into question if it was no longer seen as a credible institution.

“What will happen if a legal finding about some major country comes through that is politically difficult for that country to implement?

“What will they do? That is the sleeper issue here.” . . .

Liberalisation of trade on a global scale has been moving at a glacial pace but it has been moving forward.

The collapse of the Bali deal and the implications for further liberalisation and the policing of international trade disputes is of great concern.

New Zealand already has free-trade deals with important trading partners including Australia and China and it will continue with bi-lateral and multi-lateral deals.

But any threat to the WTO is a threat to global free trade and a win for protectionism, politics and bureaucrats at the cost of producers and consumers.

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