Leaders at the Asia-Pacific Economic Cooperation summit pledged their commitment to getting long-stalled global trade talks off the ground, but slow progress in buckling up a much smaller Pacific Rim agreement highlights the hurdles to reaching a broader pact.
Trade negotiators are striving to reach agreement by December on less-contentious elements of the World Trade Organization’s long-stalled Doha round – named after the city where it was launched more than a decade ago – as a means of injecting life back into the long-moribund negotiations.
Wrapping up their annual meeting Tuesday in Bali, Indonesia, APEC’s 21 members renewed their commitment to the global trade round. More attention was focused on a set of negotiations on the sidelines, however, between 12 of their number trying to finalize their own Trans-Pacific Partnership, one of the many bilateral and multilateral free-trade agreements that have proliferated since Doha stalled.
“We recognize that Doha is at an impasse,” the APEC leaders said in a joint statement. “We are now at the 11th hour to put the negotiating function of the WTO back on track. Thus, the next step we take will be critical to the multilateral trading system and the role of the WTO.”
Indonesia, which isn’t part of the Trans-Pacific Partnership, has put considerable effort into hosting a summit in December aimed at getting Doha going again. The hope is that trying to reach agreement on a less-contentious package of issues – including measures on customs procedures and development issues – might get the first global agreement in nearly a generation.
Analysts say there are clear benefits to be had from the implementation of a globe-spanning trade agreement – a particularly attractive prospect at a time when demand in some of the world’s largest economies is weak and China’s expansion is slowing.
On Tuesday, the International Monetary Fund made a sixth consecutive downgrade in its forecast for world growth, cutting it by 0.3 percentage point to 2.9% for 2013 and 0.2 percentage point to 3.6% for 2014.
Since Brazil’s Roberto Azevedo took over as director general of the WTO last month, hopes have risen that the Doha talks – largely stymied by disagreement over agriculture – might yet be rekindled.
The WTO chief flew straight from the APEC meetings to New Delhi to tackle one of the key stumbling blocks – a dispute over food security between India and the U.S. involving government food buying and distribution for the poor.
“Although Bali is a priority, it is not the end of the road,” Mr. Azevedo said at a seminar in New Delhi. ”We are talking about taking the first step. At Bali, what we want is a long-term strategy to govern global trade for the benefit of all nations.”
On the sidelines of the APEC talks, Indonesian Trade Minister Gita Wirjawan told The Wall Street Journal that discussions had advanced in recent months, and that officials had come up with a “small but ambitious” food security package that he was “hopeful” would please India.
“Conversations I have had with the Americans and the Chinese and also the new director general exude a lot more optimism than they did two to three months ago,” Mr. Wirjawan said.
A senior US official speaking during a media briefing on Tuesday, said US trade negotiators are “very much focused” on making progress on the Doha agenda.
Trade facilitation is another issue targeted for December. Analysts say that customs procedures alone form around 10% of trade transaction costs. A 1% reduction in the cost of world trade would increase income by more than US$40 billion, with developing countries benefiting the most, according to a multi-agency report last month.
But despite the positive noises, the challenges to getting the process moving again shouldn’t be underestimated.
The planned Trans-Pacific Partnership may have a more ambitious scope than traditional trade pacts – taking in issues such as intellectual property and state-owned enterprises – but it is also being slowed by the challenge of reaching agreement in fundamental free-trade areas such as tariff reduction.
The major emerging economies “we not willing to make commitments commensurate with their role in the international economy — so they weren’t willing to open up their economies in areas like services or manufactured products access in a way that reflected, in many respects, their global competitiveness,” said the senior US official. ” That has created a “deadlock” in coming up with an overall package.
An official directly involved in the TPP talks predicted a “very intense” process in the weeks to come to achieve an ambitious target of a year-end deal. Japan’s economy minister Akira Amari said that an additional ministerial-level meeting was planned.
On Doha too, “we’ve got a lot of work to do between now and December,” U.S. Trade Representative Michael Froman Told the Wall Street Journal in Bali.
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