WTO agrees global trade deal worth $1tn

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.

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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.

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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.