Saturday

24th Aug 2019

Analysis

World trade deal expected to boost EU nations

  • The cost of doing trade is expected to drop by 10-15 percent (Photo: dawvon)

Hailed as "historic" by British Prime Minister David Cameron, the surprise world trade deal agreed over the weekend in Bali aims to lower the cost of exports by simplifying customs procedures and reducing import duties.

It also seeks to give developing countries greater market access to western economies and allows them some breathing space on food subsidies.

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The deal brought tears to the eyes of the World Trade Organisation's new head, Roberto Azevedo, who managed to broker an agreement among 159 countries, despite a last-minute blockade by India and Cuba.

“For the first time in its history, the WTO has delivered. We are back in business,” Azevedo said in a press conference on Saturday (7 December).

EU trade commissioner Karel de Gucht said: "Today we have saved the WTO.”

Created in 1995, the World Trade Organisation has so far failed to deliver a global free trade deal. The Bali agreement is a first step in that direction.

For EU countries with a strong export base, like Germany, it is set to bring bigger revenues. The head of the German Trade and Commerce Chamber, Volker Treier, expects a boost to the German economy of €60 billion a year.

Britain also says its exports will grow and more jobs will be created as a result of the deal.

“If just 100,000 small businesses either start exporting or spread to new markets over the next five years, this would generate an extra £30 billion for the UK economy and create 100,000 new jobs," Cameron said.

But development NGOs have criticised the deal - projected to boost global trade by by €730 billion - as skewed in favour of big corporations and rich nations.

“Its gains have been grossly over-estimated, while the costs of implementation for poorer countries were completely ignored,” Oxfam, a British aid and development group, said in a statement.

The World Development Movement (WDM) also warned it was "an agreement for transnational corporations, not the world's poor."

India however managed to obtain a concession allowing it to continue subsidising food for the poor. WDM chief Nick Dearden said this was a "positive" development, but maintained that overall the deal serves the "pro-corporate agenda for the US and EU."

Another campaign group - War on Want - also decried the "hypocrisy" of the WTO deal.

"The USA and EU continue to channel billions in subsidies to their richest farmers, yet seek to destroy other countries’ right to protect their poorest citizens from starvation," the group said on its website.

In the Bali declaration, the 159 countries express their "regret" that the WTO has failed to meet its 2005 pledge to reduce export subsidies for EU countries.

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