Aug 1st 2014, 15:35 by E.M. | LONDON
THE trade-facilitation agreement the 160 members of the World Trade
Organisation (WTO) concluded in Bali in December may have sounded drab, but it
was important for two reasons. First, it set in motion big cuts in red-tape at
the world s borders, which were projected to boost the world economy by $400
billion a year. Second, it put paid to the widespread view that the WTO had
become a useless talking shop, incapable of fulfilling its mission to
liberalise world trade. For the first time in our history the WTO has truly
delivered, its director-general, Roberto Azev do, exulted at the time.
No wonder, then, that when the deal unexpectedly collapsed this week, Mr Azev
do urged members to reflect long and hard on the ramifications of this setback
. The WTO s members had until midnight on July 31st to signal their approval
of the deal a step that had been considered a formality, since they had all
already signed up to it in December. But India, which almost prevented an
agreement then, decided to strangle it in its infancy instead. It complained
that the immunity it had been given in Bali from complaints about protectionism
in the name of food security was not broad enough. When other members refused
to re-open the deal, it withheld its approval, in effect killing it.
India s obduracy is particularly disappointing, in that its foot-dragging in
December was dismissed by many as electioneering by the outgoing Congress
government before India s elections earlier this year. The new government, it
was assumed, would be more accommodating, especially if it was led by the
relatively pro-business Bharatiya Janata Party (BJP). As it happens, the BJP
won a victory so sweeping that it does not need to rely on the support of
minority parties in India s parliament. But the new government has nonetheless
proved even more intransigent than the last.
In theory, the WTO can dust itself off and start negotiations to revive the
deal in September. But the perception that it is too big and divided a forum to
achieve anything is growing stronger. It is now 20 years since the body, then
called GATT, managed to agree on a big global deal to liberalise trade. In the
interim, many regional trade bodies and free-trade areas of varying degrees of
vigour have sprung up. The countries that are keenest to promote trade will
presumably focus their attention on these other groupings, rather than the
seemingly futile proceedings of the WTO.
There is nothing wrong with regional deals, but they not as beneficial as freer
trade worldwide. They also tend to exclude poorer countries, who would have
been the biggest beneficiaries of the trade-facilitation agreement. As Mr Azev
do said this week, My fear is that the smaller and more vulnerable an economy
is, the more it will suffer.