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2013-12-07 17:15:17
By Andrew Walker BBC Economics correspondent
Ministers from 159 countries have reached a deal intended to boost global trade
at a meeting in Bali, Indonesia.
The World Trade Organization's first comprehensive agreement involves an effort
to simplify the procedures for doing business across borders.
There will also be improved duty-free access for goods sold by the world's
poorest countries.
The deal, which could add about $1tn to world trade, gives developing nations
more scope to increase farm subsidies.
"For the first time in our history, the WTO has truly delivered," said WTO
chief Roberto Azevedo, as the organisation reached its first comprehensive
agreement since it was founded in 1995.
Continue reading the main story
Analysis
Bureaucratic barriers to commerce can be a big problem.
Africa, for example, has the longest customs delays in the world. The African
Development Bank says it can take 36 hours to get goods through the customs
post at the Victoria Falls crossing from Zambia into Zimbabwe.
And there are often more barriers to negotiate once goods are over the border.
The highway between Lagos and Abuja in Nigeria has 69 official checkpoints.
It takes time and costs money dealing with these delays. It can be disastrous
for a cargo of perishable goods. These are exactly the kind of barriers that
the WTO deal is intended to tackle.
Dealing with them would certainly make it cheaper for business to move goods
across borders. And if it's cheaper, they will do more of it.
"This time the entire membership came together. We have put the 'world' back in
World Trade Organization," he said.
Indonesian Trade Minister Gita Wirjawan said the deal would "benefit all WTO
members".
UK Prime Minister David Cameron said the "historic" agreement could be a
"lifeline" for the world's poorest people, as well as benefiting British
businesses to the tune of more than $1bn ( 600m).
However, the package was criticised by some development campaigners who said it
was not going far enough.
Rich and poor
It is worth spelling out something what is not covered by this - tariffs or
taxes on imported goods.
Dealing with them has been the bread butter of past trade rounds - but not for
this deal.
The core of this agreement is what is called trade facilitation. This is about
reducing the costs and delays involved in international trade. It is often
described as "cutting red tape".
Some analysts suggest the benefits could be large. An influential Washington
think tank has put the potential gains to the world economy at close to $1tn
and 20m million jobs.
Continue reading the main story
Start Quote
The negotiations have failed to secure permanent protection for countries to
safeguard the food rights of their peoples
John Hilary War on Want
It also estimates the cost of administrative barrier as double the cost of
tariffs.
The rich countries have agreed to help the poorer WTO members with implementing
this agreement.
Another important aspect of the Bali package is about enabling poor countries
to sell their goods more easily. This part is about tariffs, and also quota
limits on imports.
Rich countries and the more advanced developing countries have agreed to cut
tariffs on products from the poorest nations.
EU trade commissioner Karel De Gucht told the BBC that if the poorest nations
"have more trading capacity it will also result in more investment in logistics
and infrastructure".
But campaigners describe the plan as weak.
Nick Dearden of the World Development Movement said: "If the US and EU really
wanted to tackle global poverty, they would have made the
least-developed-countries package much stronger."
Credibility test
Getting this deal has involved introducing some extra flexibility into the
existing WTO rules on farm subsidies. India led the campaign, by insisting that
it should be allowed to subsidise grain under its new food security law.
There is a strong possibility that India's policy would break WTO rules that
limit farm subsidies.
A "peace clause" has been agreed, under which members agree not to initiate WTO
disputes against those breaching the subsidy limits as part of a food-security
programme. But it only lasts four years and there is criticism from
campaigners.
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."
Traditional Sulawesi dancing Traditional dancing was performed at the WTO
meeting in Bali
The Bali meeting was an important one for the WTO's credibility. The deal
includes a rather small part of the negotiating programme that was launched 12
years ago, known as the Doha Round.
Repeated delays have made the WTO seem irrelevant as a forum for negotiating
trade liberalisation agreements. It was a leading reason so many countries have
sought to make deals bilaterally or among small groups.
The agreement will help repair the WTO's damaged image. Nonetheless, the rest
of the Doha Round will be very difficult to conclude.
The deal seeks further reductions in farm subsidies, tariffs on industrial
goods, barriers to international trade in services and more.
All are very difficult to conclude and are entwined with domestic political
factors in many of the WTO's 159 member countries. So don't hold your breath
waiting for the final deal.