Concern within the chemical industry that the repeated failure of global trade talks would lead to a proliferation of bilateral trade agreements and slower market growth were allayed somewhat in December.
A major step forward for the World Trade Organisation (WTO), the so-called ‘Bali Package’, was described as the first major agreement among member nations since the WTO was formed in 1995. A great deal of media attention was given to the barriers on agriculture and export subsidies that were broached but the agreement also included a package of measures designed to cut red tape and speed up port clearances.
“The trade facilitation decision is a multilateral deal to simplify customs procedures by reducing costs and improving their speed and efficiency,” the WTO said. “It will be a legally binding agreement and is one of the biggest reforms of the WTO since its establishment in 1995.”
Trade should be made easier through clearer and more effective customs procedures. There is a training assistance package that implies that developed countries will help less developed nations update their customs infrastructure and train officials. The objectives of the agreement 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 WTO said.
The WTO has estimated that the economic benefits of an agreement would be between $400bn and $1,000bn with the costs of trade reduced by between 10% and 15%. The text of the agreement is not final although the WTO said that the substance will not change. A legally-correct agreement should be adopted by the WTO’s General Council by 31 July 2014.
The petrochemical industry reacted to the breakthrough with muted optimism but ongoing concern over the rising tide of protectionism. Arguments for more not less tariff protection in chemicals continue to be made. And the emergence of large trading blocks, and the proliferation of bilateral trade deals in the absence of any global agreement, is seen by some as making global agreement harder to achieve.
“The Bali agreement is only a minimal solution. But this solution shows that industrial, emerging and developing countries can overcome deadlock and engage in compromise. We hope that this is just the first step” said director general of Germany’s chemical industry association, the VCI, Utz Tillmann.