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Exceptional breakthroughs at the WTO Bali conference

By Yang Panpan & Wang Yaqi: 0 Comment(s)Print E-mail China.org.cn, January 10, 2014

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WTO Director General Roberto Carvalho de Azevedo (center) celebrates with other representatives at the closing ceremony for the ninth Ministerial Conference in Bali, Indonesia on December 7, 2013. [bjreview.com.cn]

On Dec. 7, 2013, the Ninth Ministerial Conference of the World Trade Organization in Bali successfully closed. The Bali Trade Agreement (Bali Package) reached at the meeting exceeded expectations. This is the first time that the WTO has reached a comprehensive trade agreement.

Some people have tried to figure out the reason for this exceptional outcome. One view is that the harsh global trade environment at the moment calls for further corporation and new trade rules. The trade sector, previously the engine for growth, is now significantly holding back the global economic recovery. A global trade agreement is expected to bring with it an upward turn in global trade and economic growth.

Others believe that the agreement came about as a result of the proliferation in regional and preferential trade agreements after the deadlock of the Doha Round brought members of the WTO back to the organization in order to reach a consensus: they are worried about losing this global trade system and are making joint efforts to prevent the WTO from being completely marginalized.

However, these two factors might not have triggered the conclusion of Bali Trade Agreement. On the one hand, global trade has caused the global economy to drag since the 2008 global financial crisis. International organizations like the WTO and G20 have repeatedly made statements to strengthen the pivotal role of the global trade environment in global economy recovery. However, five years have passed, and the previous biennial WTO ministerial conference did not produce a trade agreement. In other words, promoting trade development is not the true reason for the Bali trade agreement.

On the other hand, the concept of a "marginalized WTO" was introduced even before the 2008 global financial crisis. It was introduced and widely accepted after the WTO officially announced the suspension of the Doha Round in 2006. Afterwards, the global trade system witnessed a boom in bilateral and regional trade agreements. In other words, the marginalization of WTO has been a developing trend, and was not a new trigger for the Bali trade agreement.

In our views, the emergence of new U.S.-dominated trade rules though they are still in an embryonic form, is the real trigger of Bali Trade Agreement. Since its high profile participation in Trans-Pacific Partnership Agreement in 2008, the United States has spared no effort in promoting its global new trade and investment rules. In the past, the United States established its initial global trade and investment framework along three geographical lines: the "eastern line" represented by the TPP; the "middle line" represented by the Plurilateral Services Agreement (PSA) and the "western line" represented by the Trans-Atlantic Trade and Investment Partnership (TTIP). New global U.S-dominated trade and investment rules are coming into place: the TPP negotiation is expected to conclude at the beginning of this year. Meanwhile, the TTIP and PSA are under active negotiation. At the initial stage of the United States' negotiation, it chose negotiation partners very discretely, to minimize risk. It has already made good progress in its negotiations. A new U.S-dominated global trade framework is on the horizon. The United States has also shifted its focus from the success of signatories, to expand its influence. The major motivation behind its strategic shift in trade negotiation is to establish U.S-dominated new global trade and investment rules as the future template.

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