Finally, in November 2013 at Bali , Indonesia, the World Trade Organization (WTO) struck its first global accord since coming into existence in 1995. Many times over the past 12 years the efforts to reach an agreement, in the “Doha Round” of world-wide negotiations, had seemed doomed. However, thankfully this time a deal , albeit a modest one, was reached after some hectic and nerve wracking deliberations. Why modest, because the agreement merely covers “trade facilitation” (simplifying customs procedures) and not the broad liberalization that was the aim of the ‘original’ initiative at Doha. Still, the breakthrough covers some useful stuff: by one estimate, cutting customs red tape and the cost of shipping goods around the world by more than 10% to potentially raising annual global output by nearly $400 billion – more importantly, much of this gain will be flowing to the developing economies instead of the developed ones. Whereas in general the news is a very welcome one for Pakistan, at the same time it also presents a lot of challenges that the country will need to deal with vis-à-vis its international trade management amidst the new evolving trends in the global trading arena.
The main lesson - from this small success from an otherwise ambitious agenda – that comes across from Bali is to not repeat the sorry history of the Doha Round. The problem had been WTO’s earlier all-or-nothing approach of seeking a jumbo accord at all costs. An accord that needed to be all encompassing (catering to everyone’s wish list) and should be approved by all 159 members. While the previous approach was good in theory, it was a recipe for deadlock in practice. This small success based on ‘minimum agreeable agenda’ has in fact opened up even newer avenues. One such new and promising route is that of ‘plurilateral agreements’ – deals whereby group of countries get together to agree on liberalizing rules on one sort of good or service, with others free to join as and when it suits them. The idea behind this is that such deals are simpler to negotiate than multilateral agreements and set the right incentives for laggards; get on board or get left behind. And, as others sign up, they can turn into global ones. Further, it works on the assumption that not all subjects need to be negotiated among all WTO members, as the Bali deal was. Some can be passed to those countries that are eager to press forward (“plurilateral “ talks as opposed to multilateral ones), as long as other WTO members are free to sign up to any resulting agreement. Negotiations on services and on information technology already fall into this category. The emerging economies (like China and Brazil) especially feel that the plurilateral approach is indeed the right way to move liberalization forward in future.
However, on the other hand the plurilateral approach in a way takes the responsibility of ensuring fair trading opportunities away from the shoulders of the WTO and instead places the onus on the governments of member countries to successfully develop and create their own respective global trading opportunities. The action in the trade-liberalization world these days is not inside the WTO but with regional agreements. The recent agreement in principle between the European Union (EU) and Canada is a pioneering example. Other such big pacts under negotiation are the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership between America and the EU.
What this essentially means is that Pakistan also from now on cannot just be satisfied on simply being part of a larger system in hope that the overall trading regime will automatically protect its interests. Instead, it will from now on have to formulate its own vision on bilateral, regional and global trade linkages in order to safeguard its national interests and optimize its trading potential. For example, as the latest signs of rebalancing of the global economy, six major Western and Far Eastern economies that include USA, Canada, European Union, UK, Japan and South Korea have decided on their own to launch talks on Free Trade Agreements (FTA), They have also signed currency swap agreements between their six major central banks - this without involving the WTO or the emerging economic powers of the world namely, China and the BRICS nations. This also suggests that a new framework of global governance is unfolding where smaller developing economies like ours will (in the days to come) need to clearly identify on our own the regional and global economies with which they have strong synergies. And, once identified, they can strive to get linked with them. Further, trade from 2014 onwards will require diplomatic priority. No one could have summed this better than the Chinese foreign Minister, Wang Yi, who upon hearing the Bali news commented, “China in context of global trade will from now on focus on five areas: enhanced ties with large economic powers, closer relations with neighboring countries, friendship with developing countries, deepen economic and sovereignty diplomacy and most importantly, regardless of earlier disputes to now strive to inter-lock our economy with any willing partner who complements China’s growth.”
On post Bali’s Doha Agenda, the other challenges that will also now require proactive tackling by Pakistan pertain to ‘Agriculture’ and ‘Investment’. With India succeeding in what it wanted to have approved at the WTO forum with regards to waiver on providing agriculture subsidies, Pakistan will be well advised to carefully strategize its agriculture policy in light of what India can now legally do to help its farmers and agriculture produce without the risk of violating any international law. And on investment, which is likely to be the next focus item of WTO , the members will be endeavoring to rein in domestic subsidies and protect cross-border investment. Also, trade in environmental goods and services (which cover everything from air filters to green consulting) is another area likely to be on the WTO radar in the coming days.  Finally, with Bali success the WTO seems to have a new momentum where small successes may grow into bigger ones. And amidst all this activity, managing national interests in a complex web of bilateral, regional and now cross-continent agreements is not going to be easy. Only a professional team and competent leadership that truly understand the evolving structure of post 2014 global trade and the very shift in the nature of the ‘governance of global trade’ will be able to ensure the right connectivity for Pakistan and safeguard its interests going forward!

The writer is an entrepreneur and economic analyst.

Email:kamal.monnoo@gmail.com