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ECONOMIC GROWTH

WTO agrees to enact first global trade reform deal

Ending months of deadlock, the Geneva-based World Trade Organization agreed on Thursday to implement the first global trade reform agreement in its 19-year-history.

WTO agrees to enact first global trade reform deal
WTO chief Roberto Azevedo: 'We are back on track!" Photo: WTO

The deal means the 160-member global trade body can begin putting into action a landmark deal reached in Bali late last year to overhaul global customs procedures.
   
Economists have estimated the measures could help create $1 trillion in economic activity and 21 million jobs worldwide.
   
"We are back on track!" an ebullient WTO Director-General Roberto Azevedo told reporters.
   
"We have renewed the commitment to the multilateral system," he added.
   
The member states adopted two texts presented Monday: the Trade Facilitation Agreement (TFA) protocol, aimed at streamlining global customs procedures, and one on the management of food stockpiles.
   
The two texts were agreed upon late last year in Bali, but work towards their implementation had been stalled since July, when India refused to endorse the pact unless its food stockpiles were exempted from possible punitive measures.
   
India and its supporters in the developing world have argued that food stockpiling is essential to ensure poor farmers and consumers survive in the cutthroat world of business.
   
But stockpiling and subsidies for the poor are considered trade-distorting under existing WTO rules.
   
India and the United States finally said earlier this month that they had resolved the row, and the WTO member states had been expected to seal the deal.
   
The member states agreed Thursday to try to find a permanent solution to the stockpile issue by December 2015.
   
Azevedo stressed though that the UN trade body needed to act fast to implement Thursday's agreement.

Precious time lost 

"We have lost precious time since July, and it goes without saying that we can't wait another two decades to deliver further multilateral outcomes," he told trade diplomats in Geneva.
   
Two thirds of WTO's members must ratify the TFA before it can take effect, he pointed out, urging countries to hasten the procedure.
   
Diplomats hailed the deal to put the TFA into action.
   
EU Trade Commissioner Cecilia Malmstroem said it had the potential to "help developing countries better integrate into the global economy, intensify regional integration and lift millions out of poverty."
   
US trade representative Michael Froman also celebrated the deal, which he described as "a critical step forward by breaking the impasse that has prevailed since July."
   
"I am pleased that the United States was able to work with India and other WTO members to find an approach that preserved the letter and spirit of the package of decisions reached at last year's Bali Ministerial Conference," he said.
   
TFA, he said, was the "perfect example of how breaking down barriers to trade can unlock new opportunities for developed and developing countries alike, and it's a particularly important win for small and businesses in all countries."
   
"With this win under the WTO's belt, we can once again focus our efforts on revitalizing the organization's core negotiating functions," Froman said.
   
Azevedo agreed that the diplomats "should be pleased that our work is back on track," but stressed that "this is where the real work begins."
   
The 160 countries which make up the WTO set trade rules among themselves in an attempt to ensure a level playing field and spur growth by opening markets and removing trade barriers, including subsidies, excessive taxes and regulations.
   
Bali was the first multilateral agreement concluded by the WTO since its inception in 1995.
   
It also signalled the first concrete progress on the Doha Round of trade liberalization talks, launched in 2001 and aimed at underpinning development in poorer nations.
   
The lack of progress had led to countries increasingly pursuing bilateral or multilateral trade deals, and the relevancy of the WTO was under a dark cloud until the Bali deal was negotiated.
   
Thursday's agreement once again opened the way for negotiations on the remainder of the Doha agenda, which was not agreed upon in Bali.
   
The member states had agreed on a new July, 2015 deadline to decide on a work programme for those talks, Azevedo said.
   
It will likely take a while to complete those negotiations. It took nearly a decade to conclude the trade facilitation portion, which began in 2004.
   
"We have delivered today on a promise we made in Bali," Azevedo told trade diplomats Thursday.
   
"Now let's make it count."

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ECONOMIC GROWTH

WTO slashes global growth forecast for 2015

Sluggish economies and global conflicts are taking their toll on world commerce, the Geneva-based World Trade Organization said on Tuesday as it slashed its trade growth outlook for 2015.

WTO slashes global growth forecast for 2015
WTO headquarters in Geneva. Photo: WTO

"For trade growth it is important that you have certain elements present in the global economy (including) stability, predictability, and those things are not there right now," WTO chief Roberto Azevedo told reporters in Geneva.
   
With economies around the world still struggling to fully recover from the 2008 financial crisis, and with conflicts flaring in places like Ukraine and the Middle East, global trade is expanding far more slowly than anticipated a year ago.
   
The Ebola outbreak in west Africa, unusually harsh winter weather in the United States and collapsing world oil prices are also taking their toll, as are strong exchange rate fluctuations, Azevedo said.
   
"All of these things have effects, sometimes destabilising effects," Azevedo said.
   
On Tuesday, WTO said preliminary estimates showed global trade had expanded just 2.8 percent last year and was expected to swell only 3.3 percent this year.
   
A year ago, the WTO was singing a different tune.
   
Last April, it had forecast that trade would expand 4.6 percent in 2014 and 5.8 percent this year.
   
But it downgraded those predictions in September, to 3.1 percent and four percent respectively, before slashing them further on Tuesday.
   
"Trade growth has been disappointing in recent years due largely to prolonged sluggish growth in GDP following the financial crisis," Azevedo said.
   
"Looking forward, we expect trade to continue its slow recovery, but with economic growth still fragile and continued geopolitical tensions, this trend could easily be undermined," he warned.
   
Last year was the third consecutive year in which trade grew less than three percent, WTO said in a statement.
   
In fact, trade growth averaged just 2.4 percent between 2012 and 2014 — the slowest rate on record for a three-year period when trade was expanding.
   
Trade growth is expected to pick up in 2016 with an expansion of four percent, it said, warning though that going forward, trade growth looks set to remain well below the annual average of 5.1 percent seen since 1990.

Slow recovery

"We are cautiously forecasting that trade will continue its slow recovery," Azevedo told reporters.
   
WTO acknowledged though that "risks to the trade forecasts are mostly on the downside."
   
Trade is a key measure of the health of the global economy, which it both stimulates and reflects.
   
But Azevedo warned Tuesday that a systemic shift might be under way and that trade expansion would no longer far outstrip overall economic growth as it has largely done for decades.
   
"The rough two-to-one relationship that prevailed for many years between world trade growth and world GDP growth appears to have broken down," WTO said.
   
The organization noted that "the 2.8 percent rise in world trade in 2014 barely exceeded the increase in world GDP for the year, and forecasts for trade growth in 2015 and 2016 only surpass expected output growth by a small margin."
   
Azevedo said that the 2015 forecast was based on an assumption that global GDP would expand by nearly three percent, while the 2016 forecast depended on economic growth reaching over three percent.
   
The International Monetary Fund announced later Tuesday that it expects to see global growth at a tepid 3.5 percent this year, and 3.8 percent next year.
   
WTO meanwhile said developing countries were expected to see exports rise 3.6 percent this year, while their imports were set to jump 3.7 percent.
   
In developed countries, exports and imports were set to rise just 3.2 percent, it said.
   
Asia was expected to have the strongest export rise at five percent, followed by North America at 4.5 percent.
   
The weakest export growth this year is predicted to come in South America with just 0.2 percent.

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