When trade Ministers from more than 159 countries descend on Bali, Indonesia, in early December they will hold in their hands the future of the World Trade Organization and of the global trading system.
But, at a time of slow growth and economic hardship for many, what does that mean in practice? In plain terms a successful deal in Bali would achieve two things. First, it would bring immediate economic gains, boosting global trade flows by hundreds of billions of dollars. Second, it would set the stage for a bigger deal on trade liberalization in the future. Both outcomes would mean more high quality jobs for the U.S. and its trading partners so it is vital that we deliver - and negotiators in Geneva are working around the clock to make sure that we do.
The deal that is currently on the table covers three important issues: cutting red tape and streamlining customs procedures, some development-related issues and some elements of agriculture. While these issues constitute only a portion of the much broader Doha round of global trade talks, they pack a significant economic punch. Estimates from the World Bank, the Organization for Economic Cooperation and Development and the Petersen Institute for International Economics place the potential economic gains from a WTO accord in Bali between $500 billion and $1 trillion, benefitting businesses around the world, including in the U.S. According to the Office of the U.S. Trade Representative, every billion dollars of exports last year supported 4,900 American jobs – so the boost to trade from a deal in Bali could make a significant impact.
At a time of slow global growth, jittery markets and great uncertainty, an injection of trade-generated stimulus would be embraced around the world. Nothing on the table now would require any of the 159 WTO members to sacrifice their key national interests. The remaining gaps are mostly of a political nature. Therefore, if we are to bridge these differences, we will need strong leadership from the world's leaders. As I told ministers at the APEC summit earlier this month and leaders at the G-20 in St. Petersburg, if we reach the 11th hour and remain stuck, they should expect a call from me asking for their help.
We know that the WTO can deliver. At our last Ministerial Conference two years ago, 42 governments reached agreement to open an additional $100 billion in public procurement opportunities to international tender. This year it is possible that members will also agree on an expansion of the Information Technology Agreement that would scrap tariffs on more than 100 products that are not covered by the current agreement. Since that agreement was struck in 1996, trade in information technology products has tripled to $1.5 trillion. The need to keep pace is clear and, again, the benefits of an agreement would be significant.
Of course, I know that governments have other negotiating options outside the WTO. Across the Americas, Asia and Europe, governments are seeking to strike regional or bilateral deals. The WTO has been notified of nearly 600 such negotiations which have either been concluded or are currently under way. At the APEC meeting, I listened with interest to many ministers who outlined their efforts to finalize trade agreements in the region. They told me that while regional or bilateral agreements may be beneficial, they are very much the second-best option behind a global deal.
In my view these kinds of agreements can be an excellent testing ground for wider multilateral arrangements. Trade liberalization can be contagious and the opening of markets regionally can spark progress multilaterally as well. We are all pushing in the same direction.
But we need to be careful: Regional trade pacts can also be divisive. Many of these negotiations involve mutual recognition of technical standards or regulations which can facilitate trade between the parties. Yet, for those on the outside, cooperation of this sort among a small group of countries can increase trade costs or, even worse, be exclusionary. In an era of global value chains, worldwide sourcing and the never-ending search for new markets, we must be careful to avoid the proliferation of regional standards. A multilateral approach holds wider benefits for more actors.
The Bali deal would be an example of the multilateral approach delivering significant and immediate gains, but I know that many would like to see a bigger deal. Clearly more benefits could be unlocked through a broader Doha agreement, and all nations would stand to profit immensely from market-opening deals in agriculture, industrial goods and services.
But the fact is that we are not there yet. We have first to set the stage for the bigger deal we want to see – and Bali will achieve just that. In fact, preparations for Bali have already achieved a breakthrough. After many years of stalled negotiations and very limited progress, the WTO is negotiating again. Over the last two months, the intensification of the negotiations has been remarkable. Governments are showing flexibility, trust has grown and gaps have narrowed. However, there is still a long way to go and time is running out. We need to redouble our efforts.
Whatever happens in Bali, the WTO will continue its important work settling disputes, monitoring trade policy and administrating the many existing WTO agreements. But the prize that a deal in Bali represents is huge – and it is within reach. Aside from the immediate economic gains on offer, it would allow us to strengthen the multilateral trading system and chart a course for future negotiations, supporting jobs and growth now and in the future. Quite simply, it is an opportunity that we can ill afford to miss.
Roberto Azevêdo is Director-General of the World Trade Organization