December 9, 2013 12:31PM

Cuba: Global Free Trade Champion?

I would like to second Simon Lester’s ambivalent endorsement of the trade agreement reached by WTO members in Bali last week. Despite cheers from governments and embarrassingly unrealistic claims of economic value, the new WTO agreement on trade facilitation is hardly something for free traders to get super‐​excited about. 

There was some excitement, however, when a bit of last‐​minute diplomatic drama at the talks threatened to derail everything. Cuba, it turns out, had some genuine demands for actual trade liberalization and indecorously refused to be ignored. As reported by Inside U.S Trade [$]:

Cuba and three other Latin American countries – Bolivia, Venezuela and Nicaragua – had withheld consensus from the so‐​called Bali package consisting of a trade facilitation agreement as well as agriculture and development components.

Specifically, Cuba had refused to endorse the package until its demands were met for a provision in the trade facilitation deal that would prevent countries from applying discriminatory measures to goods in transit. This was aimed at counteracting a part of the U.S. trade embargo that prevents ships that engage in trade in Cuban ports from unloading cargo in the U.S. for 180 days thereafter.

After Cuba’s demands on trade facilitation came to the fore as the last outstanding issue on the evening of Dec. 6, WTO Director‐​General Roberto Azevedo held consultations throughout the night with the U.S. and Cuban delegations until 6 am. At that point, the two sides agreed to compromise language to address Cuba’s demands, according to an informed source.

The compromise language consists of one sentence in the Bali ministerial declaration that appears immediately after a sentence adopting the trade facilitation deal. It states: “In this regard, we affirm that the non‐​discrimination principle in Article V of the [General Agreement on Tariffs and Trade] 1994 remains valid.”

This “compromise” means that the U.S. takes on no new obligations, and the embargo remains as is. Cuba wasn’t looking for an end to the embargo with its demands, merely recognition that this one small component of the embargo violates the brand new, U.S.-approved WTO rules. 

It’s difficult to imagine, however, that the process could have worked out any differently. If there’s one thing that’s clear about the new WTO package at this point, it’s that the deal will not have any meaningful impact on U.S. trade policy.

Something is amiss when the global trading system’s achievements depend on the United States convincing Cuba and Venezuela to stop demanding freer trade.