Bali’s Lessons for Trade Negotiators
The future of multilateral trade has presented some vexing questions for policy watchers over the past few years. With the Doha Round of multilateral trade negotiations hopelessly stalled and the proliferation of regional and bilateral agreements in its stead, contemplation and debate about the fate of the World Trade Organization, its successful adjudicatory body, international trade governance, and globalization have been all the rage.
December continues to shine a particularly bright light on these issues, as U.S. and EU negotiators are in Washington this week discussing the proposed bilateral Transatlantic Trade and Investment Partnership. Last week, negotiators from the United States and 11 other nations met in Singapore in an effort to advance the regional Trans-Pacific Partnership deal. The week prior, representatives of 159 WTO members were in Bali, Indonesia for the Ninth Ministerial Conference (MC-9), where a multilateral agreement was reached on a set of issues for the first time in the WTO’s 19-year history.
The significance of the Bali deal depends on whom you ask. Those heavily vested in the current architecture of the multilateral system tend to hail Bali as proof that multilateral negotiations are back in business and that there is renewed promise for completing the long-stalled Doha Round. Frankly, taking 12 years to forge an agreement on trade facilitation (basically, reform of customs procedures, which constitutes a tiny fraction of the Doha Round’s objectives) plus some concessions to permit more subsidization of agriculture in the name of food security is not exactly convincing evidence that Doha Round negotiators have demonstrated their cost effectiveness or the utility of this approach.
The most enlightening (and liberating) conclusion from Bali is that the agreement killed the Doha Round. By peeling off the trade facilitation negotiations and reaching agreement, Bali circumvented what has been, arguably, one of the greatest obstacles to the Doha Round’s success: the commitment of negotiators to the "single undertaking," which pledges that "nothing is agreed until everything is agreed."
With Bali a direct hit on that unwieldy concept, WTO negotiators are free to take-up Doha Round issues in other, more manageable fora, thus liberating governments to pursue global trade barrier reduction in myriad new ways. Why not have a series of mini-rounds and pursue fewer issues at a time by matching negotiations on, say, agricultural and industrial liberalization? Or by matching talks on services with talks on rules, like antidumping? Yes, there need to be adequate tradeoffs in a world of reciprocity-based trade agreements, but the notion that everything needs to be on the table to accomplish those tradeoffs has been rendered quaint--if not inutile--by the changing composition and interests of the WTO membership. If particular governments are the problem, why not pursue more plurilateral deals? Why not establish a mechanism in the WTO through which demonstrably successful provisions from the universe of existing and brewing bilateral and regional agreements can be adopted as best practices by taking up these issues and voting on an annual basis? These approaches could facilitate liberalization and give the WTO new credibility.
But Bali doesn’t only offer guidance to WTO negotiators. Before U.S. and EU negotiators get too far along--where they are near certain to get stuck in the deep mud created by trying to resolve dozens of highly contentious and highly technical issues on "one tank of gas"--they should consider the alternative of taking the negotiations in smaller bites. Despite the original announced deadline of 2014, negotiators are quietly acknowledging that projection is overly ambitious. But so too are 2015, 2016, and 2017. There are simply too many issues on the table and too much suspicion that local autonomy over traditionally domestic matters is up for bargaining that the amount of time needed for public debate has been vastly underestimated. Meanwhile, it is unclear that government’s can stay committed to the TTIP agenda if it drags on for several years.
This short paper explains in greater detail the rationale for breaking the TTIP up into three, two-year negotiations that yield three successive agreements. The ideas conveyed are certainly bound to raise objections and even scorn. But by exposing the single undertaking as an obstacle to liberalization, the Bali Agreement has some lessons that TTIP negotiators would be wise to understand.
