Action plan for realising potential of Bali outcome

The ninth ministerial conference (MC9) of the World Trade Organization (WTO) which was held in Bali on 3-6 December has created a new benchmark for the faltering Doha Development Round (DDR). Since the launch of the DDR in 2001, the international economy has undergone significant changes.

This has happened due to volatile food and commodity prices, shocks emanating from global financial and economic crisis, proliferation of regional and bilateral free trade arrangements and weak commitment to the Aid for Trade programme, according to the editorial of the current ICCB News Bulletin (October-December 2013 issue) of International Chamber of Commerce-Bangladesh released here on Tuesday.

Cover-BulletinAs a result, least developed countries (LDCs) have suffered trade preference erosion and poor productive capacity development, while duty-freequota-free (DF-QF) market access for all products from all LDCs have remained a far cry. Thus, the Bali outcomes may come as a welcome relief for the low-income countries as they try to trade out of poverty. 

The Bali package adopted at the MC9 has three important components, viz (i) Agriculture and Cotton,(ii) Trade Facilitation, and (iii) Development. The third component, i.e. Development contains three sets of decisions having direct relevance for the LDCs. These are DF-QF, Rule of Origin (RoO) of exports, and operationalisation of the waiver accorded to export of services from the LDCs. The proposed monitoring mechanism regarding implementation of Special and Differential Treatment (S&DT) provisions is another decision of the Development component of the Bali package which may have important consequences for the LDCs.

Decisions on account of Agriculture and Cotton stipulate that the developing countries would not be challenged legally even though a country’s limits of the trade distorting domestic support were violated. However, the proposed solution is provisional, and the Members are committed to set up a work programme to find a permanent negotiation outcome within four years period. In addition, the MC9 outcome document reaffirmed commitments to the parallel elimination of all form of export subsidies and disciplines on all export measures. Moreover, discussion should encompass all forms of export subsidies for cotton, domestic support for cotton, and tariff and not-tariff measures applied to cotton exports from LDCs.

Notwithstanding all its limitations, the Bali outcomes opened up critically important possibilities for the LDCs in general and Bangladesh in particular. Implications of the decisions relating to Trade Facilitation should be examined in right earnest and teased out the potential for Bangladesh. To make preferential RoO LDC-friendly, the domestic value addition requirement criteria should be defined in a manner that takes into account the domestic supply-side and productive capacities of the LDCs, and are easy to comply with.

Agreement on Trade Facilitation incorporates 13 articles which covers a wide range of issues, such as testing procedure at border points, expeditious shipments, border agency cooperation, single window, pre-shipment inspection, common border procedures and uniform documentation requirements, etc. This might pose an opportunity to develop our trade infrastructure and improve our export competitiveness. Access to financial and technical resources from international sources has to be sought out in this regard.

However, operationalization of the LDC Service Waivers holds the maximum potential for Bangladesh as it may radically change the employment situation in the country and finally lead to movement of service providers (natural person) from Bangladesh to the preference giving countries. A high-level meeting dealing with requests from the LDCs regarding opening up certain Service Sector to the LDCs on a priority basis is to be convened soon. Bangladesh has to be ready for that with its request proposals by then. In this connection, one has to do in-depth studies so as to identify the supply-side capacity of the country, and prepare necessary plans and programmes for human resource development.

Streamlining of the RoO of manufactured exports deployed by the preference giving country had been a longstanding demand of the LDCs. The Bali decision in this regard will save Bangladesh from a lot complications associated with accessing preferences and improve cost competiveness of its exports. However, the decision on DF-QF as articulated in the Bali outcomes will not help Bangladesh to gain access to US markets for its clothing and textiles products.

Realization of the potentials of the Bali package will largely depend on the steps to be taken by the Bangladesh Government and the county’s private sector in the near future. It is to be seen how fast and how efficiently our government and private sector draw up an Action Plan to take advantage of Bali Package of the MC9 of the WTO. One should not forget that our competitors are already doing it, if not has already done it.