Washington Notebook: WTO trade facilitation effort can be revived, analysts say

   Trade advocates say there still is a window of opportunity to implement the agreement on trade facilitation reached by ministers at a World Trade Organization meeting in Bali, Indonesia, last December.
   India is receiving the largest amount of blame for the failure to reach a final agreement on an implementation framework by July 31. India and several other WTO members sought to postpone implementation until negotiations on other aspects of the Bali accords are complete. India wanted to renegotiate multilateral rules that would permanently exempt Indian food security subsidies from WTO review, according to two analysts at the Peterson Institute.
   The deal is said to provide an annual global benefit of between $400 billion to $1 trillion depending on how many countries sign up because it would shave 10 percent to 15 percent from the regulatory cost of importing and exporting, and could stimulate more trade and allow countries to collect more revenue at the border.
   The Bali Package of negotiating items is a trimmed-down version of what was achievable from the stalled Doha Round of comprehensive trade talks that have faltered for a decade over disagreements about agriculture and other issues. The biggest achievement was the agreement on universal trade facilitation rules designed to simplify cross-border transactions, increase transparency, and reduce delays and costs; this would be accomplished by speeding up customs procedures, eliminating red tape, cracking down on corruption, and employing information technology to minimize the exchange of paper freight documentation. It includes provisions on goods in transit, including through landlocked countries, and capacity-building for customs infrastructure, training, and other implementation costs for less-developed countries.
   Two-thirds of members are required to file their acceptance for the agreement to enter into force.
   A business coalition led by the International Chamber of Commerce used social media and direct letters to trade ministers to communicate the importance of the trade facilitation deal to global economic growth, especially in developing countries.
   The unsuccessful appeal saps confidence in the WTO as a forum for multilateral negotiations and undermines the organization’s credibility as a monitor of international trade policies, the Peterson Institute’s Jeffrey Schott and Gary Hufbauer say.
   The Bali trade facilitation agreement would have added $21 billion to India’s economy by 2020, according to research cited by the United States Council for International Business. The United States and international donor organizations were mobilizing to provide capacity-building assistance to ensure less developed nations had the resources to implement customs improvements.
   Business groups have expressed deep disappointment that the trade facilitation deal has been delayed.
   “To now have this significant agreement delayed due to the reservations of a small number of WTO members means the major gains in world trade, increased GDP and more jobs will not be realized,” Michael Mullen, executive director of the Express Association of America, said in a statement.
   The EAA represents DHL, FedEx, UPS and TNT. The four large integrated express carriers would have been among the biggest beneficiaries of smoother customs clearance procedures because of the vast amount of cargo and parcels they handle, and their business models based on speed.
   Schott and Hufbauer published an article proposing several ideas for salvaging the trade facilitation agreement. An earlier study they wrote estimated that the global benefit of simplifying trade would eventually be $1 trillion. They argue that if obstructionist countries do not change their minds, the next best alternative would be a plurilateral agreement that only binds those countries that sign on to it.
   The National Foreign Trade Council suggested a similar approach, noting that businesses will push smaller groups of countries to do what the full WTO could not.
   Schott and Hufbauer said trade ambassadors could still get the trade facilitation deal back on track when they return to Geneva for meetings in September.