By Shawn Donnan
When the 159 members of the World Trade Organisation managed to forge an agreement for the first time in the body’s 18-year life in Bali last month declarations that “the WTO is back” quickly rang out.
But when they reconvene far from the island heat in cold Alpine Davos for a “mini-ministerial” at the World Economic Forum on Saturday, a group of key trade ministers will be confronting a crucial question: Is it really? Or was Bali just a tropical fling?
There is already some scepticism in trade circles. “Bali was very small. We can’t say it publicly . . . But the WTO is irrelevant,” one senior official from the developing world whispered recently.
Yet there are also plenty of people who believe that the WTO can build on the deal it struck in Bali to attack red tape and delays at borders via a “trade facilitation” pact. After years of stasis, WTO members, they contend, should now be ready to tackle what remains of the 12-year-old Doha round of trade talks and address the difficult issues at its core.
For more than a decade the Doha round, which was launched in the immediate aftermath of the 9/11 attacks and shrouded in promises of development for poor economies, has been stuck on a simple balance problem. Boiled down, the rich world wants greater access to developing markets for its industrial exports while the poor world wants the rich world to stop subsidising rich-world farmers and give greater access to its markets to poor-world growers.
That is why Roberto Azevêdo, the plain-spoken Brazilian director-general who emerged as the hero of Bali, says that the subjects of agriculture and industrial goods have to be at the heart of WTO negotiations after Bali “I don’t think that you can replicate Bali, where we avoided the critical issues . . . and just go for harvestable areas which are not in the central core of the Doha round,” Mr Azevêdo told the Financial Times in an interview this week.
At the same time, he said, the “most critical” element in any conversation about the future of the Doha round has to be “do-ability”. He is also conscious of the need to maintain the momentum after Bali, where ministers gave the WTO a year to come up with a plan for the future.
“We cannot take another 10 years to figure out how to advance with the Doha negotiations,” Mr Azevêdo said. “The world is moving and the world is moving fast and we have to pick up the pace here in the WTO.”
That movement raises the main debate among WTO members over whether the future lies in going for one “big bang” agreement or a steady procession of smaller deals.
The momentum is already shifting in favour of the latter.
The US, EU, Japan and several other countries will announce on Friday that they are preparing to launch negotiations over liberalising the trade in environmental goods, something that was once part of the Doha round. Though they are due to be held under the umbrella of the WTO it is yet another sign of the frustration the US and others have with the wider multilateral arena.
Those talks will join an already busy global trade agenda beyond the WTO, which some analysts see as another challenge for the body.
Barack Obama, US president, is now trying to convince Congress to grant him “fast-track” authority to negotiate trade deals so that he can wrap up a 12-country Pacific Rim pact and a deal with the EU as well. The US is also ploughing ahead with the EU and other economies in negotiations outside the WTO on reforming the rules governing the $4tn-a-year international trade in services.
Trade officials in the EU are busily trying to sell the US deal to a sceptical public, make progress on trade talks with Japan and strike an investment treaty with China, where officials also have a busy agenda.
Meanwhile, India, which always has a loud voice in the WTO, is consumed by-election politics this year.
All of that, according to Simon Evenett, a trade expert at St Gallen University in Switzerland, means that “bandwidth – not ideas – are the roadblock”.
But that may end up being a good thing, Mr Evenett argues. He is among those who contend that the future of the WTO lies in “incrementalism”, a steady procession of small but important progressions rather than one all-encompassing deal. “Banquets are out, sushi sized portions are in,” he says.
The risk, he and others argue, is that one way or another, without some progress soon the WTO will again be engrossed in the same sort of existential conversation it was mired in pre-Bali. “If no work programme emerges from Davos to Easter,” he said, “then Bali will be a dead cat bounce, as they say on Wall Street.”