India and the Bali Package: Part I — What is Bali Package?
This post is the first in a series of posts that will analyze the role of India in the Bali Ministerial Meeting and its outcome, Bali Package. There are conflicting view points about the actions of India throughout the negotiation process. This series of posts will try to present a comprehensive and objective analysis of the issue.
There are a lot of relieved souls at Centre William Rappard, headquarters of World Trade Organization in Geneva, Switzerland. The relief emanates from the successful (if one could say) conclusion of the Bali Ministerial Meeting. This was the 9th ministerial meet in the Doha Development Round which started in 2001. It has been resuscitated by four WTO Director-Generals over a decade. In the latest Bali round Director-General, Roberto Azevedo spared no ammunition in getting an agreement signed. In his own words, “For the first time in our history: the WTO has truly delivered”. The achievement of the meeting is a trade agreement which has been termed as, Bali Package. While there is a spectrum of perspectives around the implications of Bali package, our concerns can be compartmentalized into few broad questions. The larger questions to be answered are:
- What is the actual economic, social and political significance of the Bali Package?
- How is it different from the larger Doha Development Agenda and why?
- How did the countries organize themselves into blocks and on what issues?
- What was India’s concern with the larger Doha agenda and what was its role in shaping the Bali package?
- What is the international perception of India’s role and what should be the way ahead for India?
But what is the ‘Bali Package’?
It is a selection of four issues from the 21 subjects listed in the broader Doha Round negotiations, namely:
- export subsidies and other policies known collectively as “export competition”
- a proposal to deal with the way a specific type of import quota (“tariff quotas”) is to be handled when the quota is persistently under-filled
- developing countries’ food stockholding for food security
- a proposed list of general services of particular interest to developing countries that would be added to the “Green Box” — the category of domestic support that is considered not to distort trade (or to distort minimally) and therefore allowed without any limits.
Trade facilitation
The trade facilitation decision is a multilateral deal to simplify customs procedures by reducing costs and improving their speed and efficiency. The objectives are: to speed up customs procedures; make trade easier, faster and cheaper; provide clarity, efficiency and transparency; reduce bureaucracy and corruption, and use technological advances.
The benefits to the world economy are calculated to be between $ 400 billion and $1 trillion by reducing costs of trade by between 10% and 15%, increasing trade flows and revenue collection, creating a stable business environment and attracting foreign investment.
Agriculture and cotton
The two primary issues in this section were: shielding public stockholding programs for food security in developing countries, so that they would not be challenged legally even if a country’s agreed limits for trade-distorting domestic support were breached.
The other issue was about “tariff quota administration”, how a specific type of import quota (a “tariff quota” where volumes inside the quota have a lower duty) is to be handled when the quota is persistently under-filled.
Another is a strong political statement to ensure export subsidies and other measures with similar effect are low. A third deals with improving market access for cotton products from least developed countries, and with development assistance for production in those countries.
Development issues
Four documents remained unchanged from their Geneva versions.
- Duty-free, quota-free access for least developed countries to export to richer countries’ markets. Many countries have already implemented this, and the decision says countries that have not done so for at least 97% of products “shall seek to” improve the number of products covered.
- Simplified preferential rules of origin for least developed countries, making it easier for these countries to identify products as their own goods, and qualify for preferential treatment in importing countries.
- A “services waiver”, allowing least developed countries preferential access to richer countries’ services markets.
- A “monitoring mechanism” consisting of meetings and other methods for monitoring special treatment given to developing countries.
The preceding sections briefly describe the essential components of the Bali Package. The key questions to be asked, as mentioned earlier, give a more eventful description of why this package created great hue and cry in the national and international politics. The aim of the subsequent posts is to answer each of the 5 questions mentioned earlier. I hope that at the end of the series, the attentive reader would be able to build a case (for or against) the Bali Package based on more than ideological prejudices or heard something through the grapevine.
