Last Saturday, 7 December, in Bali, Indonesia, the World Trade Organisation reached a major agreement on its first trade reform deal since its establishment in 1995.  After 12 years of unsuccessful talks, many began to question the WTO’s capacity to establish effective international trade agreements; thus, governments have recently begun relying on regional settlements, such as the Transatlantic Trade and Investment Partnership,   to remove trade barriers and increase cross-border economic activity.  Although last week’s negotiations persisted for a day longer than expected and nearly collapsed on more than one occasion, the 159 ministers eventually reached a compromise that will not only enhance the free flow of goods but will also revive confidence in the organization’s ability to bolster global economic growth and well-being.

The World Trade Organization was founded in 1995 during the final round of the General Agreement on Tariffs and Trade in order to serve the international community by harmonizing trade regulations between nations and preventing discriminatory treatment in the global market.  Furthermore, the WTO works to ensure smooth and free trade flows across the world while aiming to prevent the protectionist policies and trade wars that characterized the trade system prior to World War II.  During the recent recession, protectionist policies resurfaced, hindering global economic development; thus, it became crucial for the WTO to formulate trade deals that would promote an open, competitive, and reliable system that stimulates growth and augments the confidence of governments and corporations alike.

Last week’s agreement represents a major milestone towards the completion of the Doha Round, the WTO’s current series of trade talks that were initiated in November of 2001.  The focus of the Doha Round negotiations is to increase global trade through the elimination of major trade barriers and the revision of international trade regulations; moreover, the organization strives to encourage trade with developing countries by creating a more secure and attractive trade environment.  The Bali negotiations took great strides towards fulfilling these objectives by addressing issues such as agricultural subsidies, lower tariffs, and stockholding for food security within developing countries. 

During the four days of negotiations, strong stances made by India and Cuba threatened to derail the talks entirely.  Initially, India insisted on being indefinitely exempt from the WTO’s regulations regarding subsidies, claiming that the stockpiling and subsidizing of grain is necessary for the provision of food for the country’s millions of poor.  A compromise was struck between the 159 members, allowing India and other developing nations to subsidize their crops in order to maintain a secure food supply; however, the other members of the WTO will maintain the right to file a complaint if these products enter the international market and threaten its competitiveness.  Moreover, these arrangements buy the organization time to create a permanent solution regarding food security in developing nations within the next four years.  After addressing India’s concerns, a deal appeared to be close on the horizon; however, at the last hour, Cuba announced that it would not approve an arrangement that did not discuss the United States trade embargo on the island that has persisted for decades.  Thankfully, Cuba cooperated with the U.S., enabling the WTO to move forward in its first successful round of large-scale negotiations.

The removal of trade barriers and the lowering of tariffs will drastically hasten the process of importing and exporting goods, encouraging cross-border trade and making the current international system easier to navigate.   According to a study commissioned by the International Chamber of Commerce, these measures   could strengthen the global economy by 730 billion euros and create over 20 million jobs.  Furthermore, U.S. President Barack Obama claims that small businesses will be among the greatest beneficiaries of the Bali negotiations, for they currently suffer from the high costs of entering a complicated global trade system. 

Arguably the most important outcome of the Bali trade talks was the WTO’s ability to reassert its viability as the leading global organization dealing with the removal of cross-border trade barriers. The agreement, which still needs the approval of each member’s national government, will enhance transparency in the global market for goods and services, bolstering confidence in the world economy as it continues to climb out of the recent recession.  According to Roberto Azevedo, the director-general of the WTO, this momentous deal has revived hope in a global trading system and has “put the ‘world’ back in the World Trade Organization”.