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Better than nothing

Rolf Wenkel / aiDecember 7, 2013

Critics describe the Bali WTO agreement as a defeat in the global fight against hunger. But it was about much more than just Indian wheat or rice. And in the end it is still a success, says DW's Rolf Wenkel.

Indonesien WTO Konferenz in Bali Demonstration Demonstrant
Image: Reuters

For almost 13 years, representatives from some 160 countries had to struggle to reach this agreement. Over the course of that time observers over and over again declared the talks to be dead. But now the deal is done, and it's like a small miracle. The Doha round, which was initiated 12 years ago, has finally achieved a multilateral agreement to lower trade barriers.

DW's Rolf Wenkel says the Bali agreement is a success after all
DW's Rolf Wenkel says the Bali agreement is a success after allImage: DW

The goal of the process first and foremost is to help integrate developing countries more into global trade. But for a long time during those past years, there was no progress whatsoever. Industrialized and developing countries were stuck without the will to come to an agreement. Yet over time, the lines between the so-called third-world and first-worlds have become somewhat blurred.

India is a good example to illustrate that. For almost an entire week, the country was described as the one player blocking progress in Bali. That's because India buys up rice and grain reserves to fight hunger in the country. This is a form of subsidy and therefore against WTO regulations. It's not just the industrialized nations that were complaining about this, though - countries like Thailand and Bangladesh worry that the subsidized rice or grain might find its way onto their markets.

A foul compromise?

The eventual agreement is a compromise allowing India - where some 40 percent of children suffer from malnutrition - to build up a national food reserve, albeit with a number of limitations. The deal also makes it clear that this is an exception - other countries will not be allowed to follow India's example. However, NGOs are complaining that this was a foul compromise and a setback in the international struggle against hunger and malnutrition. For them it seems to be clear that free trade and food security simply don't go together.

But it's not that simple. One would also have to pose the question whether the fight against hunger would be any better off without the Bali agreement. Probably not. Economists have suggested that an agreement along the Doha lines would generate some 1,000 billion dollars in additional income - especially in the developing world. And rising income levels are the best means in the struggle against hunger.

Realistic growth prospects

It's clear that many observers see this figure as mere propaganda by the West - in order to first achieve a lowering of trade barriers only to then flood the developing world with its products. Those critics need to understand that the growth in income is in fact realistic thanks to the Doha process.

And that's because Bali was not only about Indian wheat or rice. Trade ministers from 159 countries have in the end signed a package of ten separate agreements, ranging from agriculture to financial services, from patents and customs to simplifying bureaucracy. This will in many respects boost growth - also and particularly in the developing world.

No discrimination

And it's important not to forget that the Doha process is a multilateral agreement where the advantages are for all the member states. This is what made the negotiations so difficult but on the other hand has prevented any form of discrimination. Meanwhile, bilateral and regional trade agreements that have sprung up over time usually discriminate against those who are not part of the deal. And when a bilateral deal is between a developing and an industrialized country, who's to say that the agreement will be just and fair?

Many observers might see the compromise with India as a bad deal. But on the other hand the compromise is what made the Bali agreement possible and this will bring plenty of advantages in many other fields - not just for a small number of countries like in regional agreements but for 159 countries around the globe. And that's not just better than nothing but a historic success in the fight against protectionism.