The World Trade Organization agreed to the first major accord in the group’s 18-year history, a pact designed to smooth commerce at borders and safeguard food security programs in developing nations.
The deal unveiled today in Bali, Indonesia, was the first multilateral agreement negotiated by the WTO’s 159 member nations. It emerged from talks that had continued through the night after the U.S. and India compromised on food subsidies and a Latin American bloc led by Cuba dropped its earlier opposition to a draft agreement.
Aircraft sit on the tarmac at the FedEx Corp. Express hub at Memphis International Airport in Memphis, Tennessee. Photographer: Daniel Acker/Bloomberg
Success in reaching an agreement that supporters say could add $1 trillion to the world economy may help extend talks on the Doha trade negotiations, which have have dragged on for 12 years. A deal at Bali had looked unlikely earlier this week.
India wanted a pact that would satisfy its demands to exempt food security plans from being counted under subsidy spending caps, while the U.S. was concerned that surplus from India’s food program may get dumped onto world markets.
The agreement lets India and other developing nations continue to subsidize their crops to bolster food security without having to worry about legal challenges, so long as the practice doesn’t distort trade, according to a draft text.
Indonesian Trade Minister told ministers at a conference today that the accord will provide more certainty to business.
“These countries will benefit from increased access to markets,” said Wirjawan, adding it will make it easier for the least developed countries to export goods.
The anti-poverty campaign group War on Want said the Bali talks still hadn’t resulted in universal rights to food.
The U.S. and other members of the Geneva-based WTO would retain the right to file a complaint if subsidized goods are sold in global markets and depress prices or harm competitors.
“The WTO has entered a new era,” Froman said in a statement. “WTO members have demonstrated that we can come together as one to set new rules that create economic opportunity and prosperity for our nations and peoples.”
U.S. business groups, including the Business Roundtable and the U.S. Chamber of Commerce, hailed the pact. The Washington-based roundtable’s members include the chief executive officers of U.S. companies such as Boeing Co. and Microsoft Corp.
This “will provide a solid foundation to re-energize the WTO” and provide momentum to conclude other deals, Caterpillar Inc. CEO Douglas Oberhelman, chairman of the roundtable’s international engagement committee, said in a statement.
Susan Ariel Aaronson, professor of international affairs who specializes in trade policy at George Washington University in Washington, said the compromise was a trade-off that keeps in place protectionist agricultural policies for the sake of the larger trading system.
“You always have to buy trade liberalization with some protectionism” at the international level, she said in a phone interview. If that allows the WTO to achieve some success in opening trade, it’s a good thing, she said.