Post-Bali Trade Agenda in Focus as Davos Meetings Begin

23 January 2014

The annual World Economic Forum in the Swiss ski resort of Davos kicked off on Tuesday, bringing together over 2500 business leaders and policymakers amid reports of a tentative global economic recovery. Coming fast on the heels of last month's WTO ministerial conference in Bali, Indonesia, the meet is also expected to give early signs of what a "post-Bali" agenda might look like, and could include the announcement of a plurilateral initiative to lower barriers to trade in green goods.

International financial institutions such as the World Bank and International Monetary Fund have said that the global economy is at a turning point, with high-income countries showing steadier signs of recovery, and developing countries similarly showing firm growth. However, both have warned, risks - such as deflation, or volatile capital flows - remain.

Notably, this year's Davos meet comes just a month after WTO ministers clinched a small package of Doha Round deliverables at their conference in Bali, marking the global trade body's first multilateral deal in nearly two decades. How WTO members might build on this success is set to be one of the main themes of Saturday's informal meeting of trade ministers, sources say. (See Bridges Daily Update #5, 7 December 2013)

The Saturday meeting will be hosted on the sidelines of Davos by Swiss Economy Minister Johann Schneider-Ammann, and has long been a staple of the international trade calendar. The event, which usually brings together nearly two dozen ministers, has traditionally been an opportunity for taking stock of the Doha Round negotiations, now in their thirteenth year.

Last month's Bali package included a deal on trade facilitation, along with select agriculture and development-focused provisions. Notably, the Bali ministerial declaration also included a pledge to develop a "work programme" during 2014 in order to deal with the various outstanding areas of the Doha talks.

"We now have a ministerial mandate to look anew at core Doha Round issues and to develop a viable new approach," WTO Director-General Roberto Azevêdo said in Lisbon earlier this month.

"Many didn't believe we could deliver in Bali, and with good reason. But we did - and we can do more. Bali is just the start," he continued.

The process to develop a "post-Bali" programme will likely be slow in the beginning, trade sources say, as WTO members begin to take stock of last month's developments. Long-time trade observers such as Simon Evenett, an economics professor at the University of St. Gallen, note that the challenge of 2014 will be how to capitalise on the Bali momentum, now that WTO members do not have a pending deadline spurring them forward.

"This year will show whether WTO members can make progress without an existential threat looming over it," he commented to Bridges. "I think what they have to establish in Davos is whether Bali was the end of the road, or just a way station. Senior trade officials need to gauge each other's interest in moving beyond Bali."

Environmental goods initiative to kick off?

Multiple sources say that an initiative aimed at liberalising trade in environmental goods could be announced by a small group of WTO members during Davos. The plurilateral initiative would aim to build upon the momentum generated by the 2012 Asia-Pacific Economic Cooperation (APEC) deal on the same subject, where the 21 member economies made a non-binding commitment to reduce applied tariffs on a list of 54 environmental goods to five percent or less by 2015. (See Bridges Weekly, 12 September 2012)

Though the APEC move had been welcomed by many at the time as having the potential to spur multilateral talks in this area - which have been stalling for years - some have noted that various goods in the APEC list already face low tariffs, and that other important environmental goods are missing, thus urging for the list of products to be broader.

Analysis from ICTSD, the publisher of Bridges, shows that fully implementing the APEC commitment would reduce the overall simple average by only 0.8 percent. Nevertheless, for some goods and some countries, the tariff reduction would be significant.

These new environmental goods talks, if launched in Davos, would aim to develop a most-favoured-nation (MFN) type of pact, similar to the WTO's Information Technology Agreement. In these types of arrangements, participants take on binding commitments whose benefits are extended to the rest of the WTO membership after reaching a "critical mass."

Months of preliminary discussions have already taken place in Geneva among a group of members known as the Friends of EGS (environmental goods and services). To date, WTO members that have reportedly participated in these discussions include Australia, Canada, the EU, Japan, Korea, Norway, Switzerland, and the US.

Unconfirmed as Bridges went to press was whether China would be involved in such an initiative, given its large market, its status as a major producer of environmental goods, and its participation in the APEC pact. Some sources said that while Beijing's participation is likely, it may not be part of the original announcement.

Others that may sign on include Costa Rica, Hong Kong, and Chinese Taipei, one source said. Some other names, such as Chile, Mexico, Singapore, and Turkey, have also been floated, though their participation has not been confirmed.

ICTSD reporting.

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