Bali Package a bulwark against neo-protectionism

The WTO's Doha Round of trade negotiations lingered for about 13 years, longer than even the Uruguay Round of GATT talks. The latter in turn had brought into being the WTO itself in 1995.
The latest ministerial conference, under the Doha Round, took place in Bali in December 2013 which reached the first-ever agreement, titled the Bali Package.
The WTO's first ministerial conference, held in Singapore in 1996, devised the so-called Singapore Issues-ones that included government procurement-related matters, issues on trade and investment, and those on trade and competition and trade in services.
Since the Day One, the developing countries were in general opposed to the Singapore Issues; they saw almost no prospect for them there. They expressed concerns that the developing countries would even be further marginalised if those issues were pushed through. So a divide among the two groups of countries surfaced within only one year of the emergence of the WTO. Aggrieved parties started to vent complaints wherever they found opportunities, e.g., at Potsdam (1997), and Geneva (1998). They demanded, among others, erasing of the Singapore Issues, withdrawal of farm subsidy practiced by the developed countries, especially the US and the EU,  and duty and quota free entry of developing countries' exports into the US and the EU.
The 1999 ministerial conference at Seattle saw so huge public demonstrations that the city government had to impose emergency to restore civil order. The developing countries stuck to their point but the industrialised nations widely differed with them. At one point, the developing countries began to be sidelined and one delegate was even physically barred from attending a meeting. The conference failed to produce any resolution.
The 4th ministerial conference took place in Doha, capital of Qatar, in November 2001. The resolution passed by the conference has become known as the Doha Development Agenda (DDA).  It is so called because it places development at the centre of the to-do list, understandably, being prompted by ground reality.
The 2003 Cancun conference showed signs of some progress about the DDA. An agreement looked very close to be signed. It may be noted that aside from the latest one, Cancun's (although a failure) was the most positive one among the WTO conferences so far. The US offered to reduce farm subsidies to some extent and proposed that the 'Singapore issues could progress by negotiating on trade facilitation, considering further action on government procurement, and possibly dropping investment and competition.'
 But, among other matters, India's uncompromising staunch on security of its small farmers led to the breakdown of the talks.
In August the same year, the developing countries under the leadership of Brazil, India and China formed the group of 20 or G20 (distinct from G-20 major economies).
 Things began to become more and more complicated for the WTO since then. The subsequent conferences showed signs of parties drifting away from one another instead of coming closer.
To the irk of the rest of the world in general and the European Union, in particular, and in violation of the WTO norms, the US began to subsidise its agriculture heavily. Commenting on it, Peter Mandelson, former European Trade Commissioner, said that India and China should not be blamed for the failure of the Doha round. Rather, the five-year US programme of agricultural subsidies was 'one of the most reactionary farm bills in the history of the US.'  The US, on the other hand, was blaming the EU for subsidising agriculture.
The subsequent conferences and related negotiations- of which seven took place between 2005 and 2011-produced zeros. In the meanwhile, a recession - the worst one since the Great Depression of the 1930s - badly struck almost the entire world. But the WTO members, while 'catching at a straw', did play only blame games as to the share of responsibility of talks failure.
Some developed countries openly pleaded for deleting the development issue from the WTO's job list, arguing that 'trade is not charity'. The developing countries fought back saying that investment, competition etc., which are components of the Singapore Issues, are but align to trade proper. So, these should be dropped from WTO's agenda of action.
Pascal Lamy, the former head of the WTO, was lamenting that the world could have evaded the 12 per cent drop in  the volume of trade that it suffered in 2009 had the Doha Round seen a successful conclusion.
 The WTO members found themselves with a reduced level of freedom as regards devising policy. Accordingly, unlike in cases of earlier recessions, there was not widespread increase in protectionism via traditional tariffs.  Only a few countries, such as, Malawi, Russia, Argentina, Turkey and China took resort to traditional tariffs on products that did have significant impacts on trade flows.
However, this global recession will be remembered in international economic history for bringing into being some so far unknown and in effect, stealthy, forms of protection. They include direct governmental assistance to troubled firms, such as 'Buy America' in the US and France's bailout of two automakers. "These measures do not explicitly violate the law-based definition of protectionism, but mainly because of the absence of regulations that govern them". This type of behind-the-border protectionism often smacks of mercantilism.   
The G-20 countries were the major perpetrators of protectionist actions, comprising almost 80 per cent of all protectionist state measures by the end of 2011. Temporary trade barriers (TTBs), such as safeguards, countervailing and antidumping duties saw only a slight increase of usage by developed countries, in the neighbourhood of 4.0 per cent. In contrast, emerging market economies were the heavy users of TTBs, whose usage rose by almost 40 per cent between 2008 and 2009.
This type of protection has been branded as a legitimate action of government to defend a national economy that has been injured by economic conditions. Thus arose the joke -- protectionism is the 'dog that did not bark' during this recession.   
Alongside open tariffs, stealthy tariffs, and TTBs, the world also saw an unprecedented spiral of Preferential Trading Agreements (PTAs) during the period.
The US formed PTAs with South Korea, Panama and Columbia. It was negotiating to form Trans-Pacific Partnership. The US also was negotiating a PTA with the EU. The Asian countries and the EU were busy in negotiating PTAs.   PTAs are shown to be anti-multilateral in nature because they increase protection against non-members.
As a famous economist wrote, " The US-led public-relations blitzkrieg of euphemism has begun, with US Assistant Trade Representative Wendy Cutler describing the latest PTA, the Trans-Pacific Partnership, as a 'high standard' agreement.  … What is disturbing is the way in which some trade economists in Geneva and in Washington have capitulated to such propaganda, and regard capitulation by the WTO as a way to 'salvage' and reshape the organisation. The WTO, like a village during the Vietnam War, must be destroyed in order to be saved."    
In sum, one could brand the above events as a version of 'new protectionism', which, in turn, is strong enough to destroy the WTO.
It is at such crucial a juncture that the Bali Package of December 2013 came into being.
The Bali Package thus appears to be the rescuer. It will ensure, among others, trade facilitation by reducing red tape and streamlining customs. It will also support food security in developing countries, allowing for public stockholding. Above all, it has apparently saved the WTO from virtual extinction.
Not unlike before, negotiations repeatedly came close to collapsing. The two main actors, India and the USA, after intensive negotiation reached a compromise where a permanent solution to the Indian subsidies will be decided in separate future negotiations within four years.
  Although some critics described the outcome as incomplete and inadequate, none will probably, given the above account, deny its worth. Those critics should be reminded that the alternative to Bali, as hinted above, was 'neo- protectionism' i.e., protectionism in new veil. And who knows where the world would have been pushed to by such a calamitous eventuality.  
 Not unlike the lesson that the world community, while founding the GATT in the 1940s, took from the hazardous global events of the 1930s, experts assembled in Bali, too, it may well be presumed, did act on the basis of lessons they learnt from the recent 'neo protectionism'.     
The writer is Professor at Dhaka School of Economics ncnagcu@yahoo.com