Wednesday, August 15, 2012

A mini-package for trade possible?

I had recently blogged about the 'Trade Facilitation Agreement" that could provide a way to conclude the long drawn Doha impasse. WOuld it provide the much needed impetus to the political negotiations and provide the much needed boost and credibility to the multilateral negotiation framework?

Sungjoon Cho seems to think so. In his piece titled "A new trade pact for the 21st century" he reiterates the need to quickly finish this "mini-package" of a trade deal to save the Doha impasse. Though this agreement will not address all the vexed, intractable issues that is keeping the Doha round undecided, it would provide for the much needed reprieve it is badly in need of. Atleast, something would be agreed upon.Trade Facilitation itself has a huge potential to ease restrictions and make trade easier and less cumbersome.
"The trade-facilitation agreement is a timely response to this evolved pattern of trade characterized by global supply chains. Customs procedure paperwork amounts to 10 percent of the value of any trade transaction. According to the Organisation for Economic Co-operation and Development, the pact would cut those costs by half, which is expected to shower global businesses with an amazing $900 billion gain.

Finally, the trade-facilitation deal would be an ideal fit with the Doha Round's underappreciated "development" mandate. As WTO Deputy Director-General Valentine Rugwabiza recently highlighted, "reduced transit and transaction costs would be especially beneficial to small and medium-size enterprises operating in landlocked countries," such as those in Africa."
WiIl the WTO members tread this path of picking the low-hanging fruit or is the impasse so deep that no benefit is foreseeable in negotiations? In the context of my earlier post, I had raised these issues:

1. On a more pessimistic note, does trade facilitation impact developing countries and the developed world equally? It is seen that less developed countries and some developing countries have archaic trade procedures that impact both their exporters and importers. Trade Facilitation will help simplify non-transparent rules and procedures. Is this a way of increasing access of developing countries markets to the developed world? The developed world already has better trade procedures which may not be impacted by the Trade Facilitation Agreement.

2. One area where the Trade Facilitation Agreement will certainly help is capacity building and infrastructure support to improve trading and reducing transaction costs. If it helps a poor exporter from a developing country to access developed markets, the Trade Facilitation Agreement is a welcome relief. However, the impact should not be one sided - improving access to developing countries markets while the developed markets remain a distant reality.

Ofcourse, this Agreement may not be the most ideal solution to take multilateral trade forward. But it seems to be the only way? Can this be the "mini-light" at the end of a long dark tunnel? As Sungjoon Cho states, "Still, it could at least close the longest trade round ever negotiated, restore the WTO's trustworthiness, promote development and ready the WTO for the future."

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