WTO Director General Roberto Azevedo announced on November 25 that members had failed to reach consensus on trade facilitation issues, part for a small package of trade concessions planned for approval at WTOs Ninth Ministerial Meeting to be held on Dec. 3-6 in Bali, Indonesia. The package also included agricultural and least-developed country issues that were an outgrowth of the stalled Doha Round of WTO trade policy negotiations that began in 2001.

After three days of almost non-stop negotiations, and weeks and months of work leading up to the weekend session, 50-60 sections of the text on trade facilitation remained bracketed indicating that consensus had not been achieved. Some of these were technical issues that could have been handled with more time, while others were political that needed decision by government leaders. Inside U.S. Trade reported that some countries were driving hard bargains on trade facilitation because they had concerns on other issues and wanted to see a watered down package.

While many of the trade facilitation issues involved developing countries being pressured by developed ones to speed up trade flows, some were specifically involved developed countries. According to Inside U.S. Trade, the EU wanted to obligate WTO members to not impose constraints on goods moving via “fixed infrastructure”, like Russia turning off pipeline transport of oil and gas. Cuba tried to include transit language to force the U.S. to end its embargo. Argentina argued for stronger language on export subsidies. Turkey wanted to prevent EU members from limiting the number of Turkish trucks entering their countries.

The negotiations involved ambassadors from 159 countries. U.S. Ambassador Michael Punke noted in a statement after Azevedos announced that, In an organization that operates by consensus, a small handful of members can keep the majority from achieving success. The least common denominator can become the de facto highest common denominator.

Punkes comment raised one of the key issues for the WTO concerning how to conclude negotiations when a few member countries can override the view of the overwhelming majority of WTO members. That could be rectified by adopting a system of supermajority voting of members, such as three-fourths, or negotiations among willing participants who agreed in advance to be bound by the outcome.

The failed negotiations, which were targeted on developing countries, will result in them being even further behind in participating in multinational value chains that rely on speed and simplicity for products moving across borders. These countries have to modernize at some point. They would have been provided a process and time schedule for change and financial assistance from international agencies.

It is instructive that in the middle of the negotiations at the WTO on trade facilitation the U.S. and Morocco signed a bilateral trade facilitation agreement on modernizing customs practices covering internet publication, transit and transparency issues. The countries already have a free trade agreement. Morocco is the first country in the region to have a facilitation agreement with the U.S.

Director-General Azevedo spoke to the WTO General Council on November 26. He said the good newsis that they came very close to having fully agreed to texts; the Geneva process managed to get convergence in almost all areas. The bad news was that over the last few days country leaders stopped making the tough political decisions that prevented them from getting to texts with no brackets. The bracketed areas were too numerous and too technical to be negotiated by the ministers in Bali in early December.

After reviewing how far they had come in negotiations and how the issues were not developing countries versus developed ones, Azevedo said they could still get the job done. He said they have proved that normal negotiating practices will not close the remaining distance for an agreement. He then said, If we are to get this deal over the line it will need political engagement and political will. This put the burden clearly on national leaders to make decisions in their interests and the interest of more open trade in the world. He had earlier noted, Over the last few days I began to see signs of backtracking and inflexibility. Time would not remedy this situation.

The lack of political will on the part of WTO member countries is not a new idea. The repeated breakdowns of the Doha Round have been blamed on developed countries not giving up old ways and developing countries not being willing to open markets. Both groups have delayed change to the point of leaving the WTO behind as the EU has made trade agreements with Asian countries and the U.S. and others are pursuing the Trans-Pacific Partnership agreement.

Azevedo left open the door for further negotiations by saying he would brief the ministers in Bali on the state of play using the texts in their current state. The texts would not be presented for adoption. He implied that it would be up to the ministers representing their governments to take the next step.

The WTO was established in 1995 as a result of the Uruguay Round Agreement of the General Agreement on Tariff and Trade. That agreement laid the groundwork for more multilateral talks in agriculture and non-agricultural products. That led eventually to the Doha Round begun seven years later. The WTO has gone over 18 years without a new multilateral agreement. The WTO performs many other valuable functions, but one of its basic functions has remained unfulfilled.

Ambassador Punke made an interesting observation in his statement. A friend of his with no connection to trade policy said he noticed more lights on at the WTO building in recent weeks with intense negotiations on the Bali Package. The Ambassador, who has been in Geneva for three and a half years, saw the building come alive with hallway chatter and meeting room activities. Global stakeholders were contacting Geneva asking what was going on.

A world with growing global trade needs a WTO alive pursuing all of its basic functions. If it cannot do that in its current structure, political leaders will have to seek change.

Ross Korves is a Trade and Economic Policy Analyst with Truth About Trade & Technology (http://www.truthabouttrade.org). Follow us: @TruthAboutTrade on Twitter | Truth About Trade & Technology on Facebook.