WTO should aim for small successes in Bali

LONGSTANDING talks for a global trade deal are underway again, this time in Bali, to attempt to seal a multilateral agreement that has eluded negotiators for a dozen years now. The negotiations - which began in Doha, Qatar in 2001 - have seen the 159 member countries of the World Trade Organization (WTO) bicker over achieving a trade liberalisation pact. Two years ago, countries watered down the initial ambitious pact to cut tariffs on goods and services in an effort to nail down an agreement. This is the right approach. But it has not yielded a pact which brings all 159 members onboard a single liberalisation regime.

The ninth WTO Ministerial Conference in Bali presents perhaps the best opportunity yet to seal some kind of deal. It is important - for the global economy and indeed for the WTO itself. The failure of past attempts to strike a global trade deal has seen a proliferation of regional and bilateral trade pacts in the last decade. Negotiated between groups of countries with congruent interests, such deals have been easier to hammer out, and their success has questioned the need for a multilateral deal. But such a deal is still vitally needed.

The irony of the "spaghetti bowl" of regional and bilateral trade agreements is that their proliferation erodes the exclusive benefits that countries accrue from their trade partners. For instance, Country A is extended certain trade benefits by Country B when it signs a trade deal with the latter, but this benefit is eroded if Country B inks similar agreements with Countries C, D and E - which is what has been happening. After a point, it makes increasing sense for everyone to seek a multilateral deal; it's not only simpler for businesses, but also results in wider trade creation and economic benefits.