WTO agreement: The Bali Ribbon

Richard Baldwin, 12 December 2013

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Bali’s success got multilateralism out of the emergency room and into the intensive care unit – but we don’t know whether the operation was a success. The Bali package is only distantly related to the heart of the 2001 agenda (WTO 2013). Indeed, the ‘Bali Package’ should really be called the ‘Bali Ribbon’ since very large parts of it were already being implemented unilaterally by members (Meltzer 2013).

Moreover, what little of the original Doha Agenda that could be done was done in Bali. This means that the WTO looks set to drift for the next few years. Unless the WTO finds some new initiative, WTO centricity in world trade governance will continue to erode – perhaps even slipping past some sort of ‘tipping point’ (Baldwin 2008).

Moving the WTO into the 21st century

Plainly the best way forward would be to expand WTO coverage to include 21st century trade issues – the sort of issues discussed in trade talks like the Trans-Pacific Partnership. But getting there involves a large detour. The logic of the detour rests on 3 facts:

  • Fact #1: The WTO cannot move on the 21st century issues until it accomplishes the Doha goals of ‘rebalancing’ the trading system in the eyes of developing nations.

The top Doha Round goal – rebalancing the trade system by liberalising agriculture and labour-intensive manufactured goods (Nassar and Perez 2011) – is the key gain for a large number of developing-nation WTO members. They justifiably view the Doha Declaration as a promise that they are unwilling to let slide. That is why the WTO cannot address 21st century trade issues separately.

  • Fact #2: The rebalancing issues cannot be completed on their own (as Bali and half a dozen other failures have shown).

But

  • Fact #3: Until the ‘mega-regionals’ conclude or die, no serious negotiations on 21st century issues can be held in the WTO.

The rise of mega-regional negotiations

Most of the WTO’s largest members – including the old ‘quad’, the US, EU, Japan, and Canada – are engaged in mega-regional negotiations, namely the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership. These talks involve deep changes which would fundamentally alter their members’ stance in any WTO negotiations:

  • They could not possibility negotiate in both the mega-regional and WTO settings – the logic of exchanging trade concessions precludes it.
  • They will not move the Trans-Pacific Partnership into the WTO since it would give vetoes to nations that have no stake in global value chains.

Thus restoring WTO centricity in trade negotiations is years away at best. Even if the mega-regionals finished in 2014, it would take several years at least to negotiate an update of the Doha framework, i.e. an expansion of the topics that would create a broader range of ‘wins’ for key members.

What should the WTO do?

The WTO’s choice is really rather simple. Given that the Doha Agenda is manifestly not ‘self-balancing’, the agenda has to be expanded to be concluded. The problem is that the WTO is now at the back of the queue when it comes to natural expansion items – those being negotiated in deep regional trade agreements. Key WTO members cannot negotiate them in the WTO until the mega-regional deals are done or dead.

On the mega-regionals’ current trajectory, that means at least two idle years for the WTO. More likely, nothing will move until after the current Director-General’s term is up in 2017.

The obvious way forward is to use the WTO’s power of convening and its uniquely legitimate structure to prepare the ground on 21st century issues. This is really the only substantive thing the WTO can accomplish in the medium run.

My proposal is to start a discussion about mega-regionals – akin to the Asia-Pacific Economic Cooperation forum – inside the WTO in 2014. The World Bank and UNCTAD are undertaking some studies along these lines, but both have institutional perspectives. They would be better placed in the WTO – a member-driven organisation that is truly global.

WTO-led discussions and analysis (not negotiations) should address:

  • How will the disciplines of mega-regionals like the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership affect excluded nations?
  • Which of these mega-regional disciplines should be brought into the WTO, and how?
  • Which would require special and differential treatment?
  • Which would require technical assistance to the least developed nations?

Using its convening power, the WTO could help nations develop fully informed views on these questions. This would help identify the key issues that arise from moving the WTO into the governance of 21st century trade disciplines (see, for example, Jara 2013).

References

Baldwin, R (2008), “The WTO tipping point”, VoxEU.org, 1 July. 
Blustein, P (2009), Misadventures of the most favoured nations: Clashing egos, inflated ambitions, and the great shambles of the world trade system, Public Affairs, Washington DC.
Jara, A (2013), "A multilateral agreement on investment: A brief reflection", in R Baldwin, M Kawau and G Wignaraja (eds), The Future of the World Trading System: Asian Perspectives, A VoxEU eBook.
Meltzer, J (2013), “The 2013 WTO Bali Ministerial: Prospects and New Horizons”, Brookings blog, November 25.
Nassar, A and C Perez (2011), “Why WTO members should not give up the Doha Round: The case of agricultural trade”, in R Baldwin and S Evenett (eds.), Why World Leaders Must Resist the False Promise of a Doha Delay, A VoxEU eBook.
WTO (2013). “Days 3, 4 and 5: Round-the-clock consultations produce ‘Bali Package’”.

Topics: Global governance, International trade
Tags: Bali, Doha, mega-regional negotiations, multilateralism, regional trade agreements, trade, Trans-Pacific Partnership, Transatlantic Trade and Investment Partnership, WTO

Professor of International Economics, Graduate Institute, Geneva; Director of CEPR; VoxEU.org Editor-in-Chief