It is inspiring to see convergence and agreement from the recently concluded World Trade Organisation (WTO) talks in Bali despite countries going through many years of frustration and fatigue discussing the Doha round which has seen little fruits being born.
Consensus on the Bali package, however, sends a strong signal of restoring dignity in the multilateral trading system and sets the right path towards concluding the Doha round.
The Bali package was an abridged form of the Doha round which mainly hinged on some of the contemporary trade related issues affecting the multilateral trading system. The package has covered four progresses in the Doha Round talks. These include trade facilitation; agriculture cotton production, as well as development and other issues of Least Developed Countries (LDCs).
It is interesting to see that the trade facilitation text was tabled and from what I gather, this remains to be one of the greatest achievements in the hierarchy of the issues under the Bali package.
It was just timely that trade facilitation, which was initially not part of the initial Doha package, has found its self in the main multilateral dominion. It is indeed great to note that all players i.e least developing, developing and development, have realised that there are incremental trade gains if the trade facilitation systems (ie economic infrastructure, border coordination issues and addressing of other administration barriers such as red tap etc) were improved.
Critical to this agreement, is the assent to LDCs demands which called for technical assistance to be provided in addressing the trade facilitation related challenges. It is also important that as the trade facilitation reforms are being pursued, more efforts should aim to address specific concerns that are not directly addressed by internal regulations which affect small and medium enterprises (SMEs) as in the end, it is the consumer who pays for those transaction costs.
Unlike big companies who benefit from large economies of scale, the smaller ones are very sensitive to unit transaction cost, cannot diversify risk and are price takers. Big firms have better knowledge of the trading system and procedures and are better informed. Therefore, trade facilitation under the WTO framework should aim to bring this missing information and to support SMEs in order to rebalance trade.
Further, it is clear from the Bali outcome that trade benefits are poised to accrue to LDCs but let me caution that a lot need to be done for this to be realised. Having an agreement is one thing, its implementation is another. The latter requires strong commitment by all parties and should not only focus on national interest but also on the common good.
For example, LDCs will also benefit from increased access to markets for goods and services in developed countries resulting from the duty free, quota free market access and other agreements in the package. However, it is a known fact that most of the countries in this category face numerous challenges in accessing the existing markets owing to a number of productive and supply side capacity constraints (behind the border and across). Addressing these constraints should start from national government before looking to the outside world.
Other agreements in the package include agreed multilateral guidelines for the rules of origin requirement that members apply to their non-reciprocal preference schemes for LDCs. This entails that, for the first time, government will have a set of multilaterally agreed guidelines which should help make it easier for LDC exports to qualify for preferential market access both to developed and developing markets. Again, softening the rules origins of origin will mean nothing it LDCs done take leadership in improving their industrial base and supply chains nationally, regionally and globally.