TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
WTO deal forces customs reform, keeps farm subsidies intact
As trade officials from the World Trade Organizationâs (WTO) 160 member states celebrated Saturdayâs triumphant sealing of the first global trade deal since the trade body was created almost two decades ago, the question now is how the deal will benefit businesses and farmers
Change Size
A
s trade officials from the World Trade Organization's (WTO) 160 member states celebrated Saturday's triumphant sealing of the first global trade deal since the trade body was created almost two decades ago, the question now is how the deal will benefit businesses and farmers.
The deal, dubbed the Bali package, comprises three deliverables: trade facilitation, agricultural subsidies and the development of least-developed countries (LDCs).
Under the trade facilitation deal, proposed by developed nations, countries will be required to eliminate red tape at customs in order to speed up the passage of goods.
'This deal will have a positive impact on our maritime and transportation services,' said Trade Minister Gita Wirjawan.
Global logistics giants, such as FedEx Corp., United Parcel Service Inc., and Deutsche Post DHL, as well as shipping groups including the Maersk Group and the Mediterranean Shipping Company SA, will benefit most from the deal.
'With simplified customs procedures, it will ease the flow of goods and services. According to a study, the agreement will add around US$1 trillion to the world economy. Part of that will trickle down to Indonesia,' said Gita.
While the benefits of the trade facilitation deal for developed nations are good, the positive impact on several developing countries, including Indonesia, will also be considerable.
The deal will force the customs agency to reform and, hopefully, help eliminate the rampant charging of illegal fees.
Red tape in Indonesia's seaports and customs offices is among the world's worst, often causing unnecessary additional costs for businesses, according to various studies.
Under the deal, each member will have to apply common customs procedures and uniform documentation requirements for the release and clearance of goods. While the overall costs of reforming the country's customs infrastructure and mechanisms will be monumental, donor members have agreed to provide assistance and capacity building to developing countries and LDCs.
'It [the deal] is good for both developed and developing members alike,' US trade representative Michael Froman said.
The US' trade-facilitation proposal was met by stiff opposition from developing countries, particularly India, which sought more concessions on agricultural subsidies in exchange for accepting the deal.
Developed nations eventually agreed to the Bali package, which allows developing nations to continue subsidizing their crops for food security without having to worry about future legal challenges.
This will permit India and Indonesia to massively increase the subsidies for their food crops, aimed at their respective domestic markets.
'The deal will save us from breaching the limit of the WTO agricultural subsidy,' Gita added.
However, the US and other members could file a complaint if the subsidized food is sold in global markets, thus distorting prices.
Gita also said that the agricultural package may help Indonesia boost its competitive edge as under the export-competition provision, advanced nations were required to cut their trade-distorting subsidies.
'This will allow our farmers to be more competitive,' he said.
The Bali package also covers the interests of poor countries in Africa, Asia and Latin America through the so-called 'LDCs deal'.
Under the deal, developed and developing countries should provide duty-free and quota-free market access to at least 97 percent of products originating from LDCs.
The Bali package has also rescued the potential demise of the WTO, following a widespread loss of confidence among members in the trade body after 12 years of negotiation deadlock since the Doha Round of talks that aimed for comprehensive liberalization across a wide range of trade policies.
'We're back in business,' said WTO director-general Roberto Azevedo on Saturday. 'We have put the 'world' back in the WTO.'
Points in the Bali package
Agriculture:
1. Developing countries permitted to maintain public food stockpiling for food security.
2. Members agree to negotiate agreement on a permanent solution applicable to all developing members on the food stockpiling issue for adoption by the 11th Ministerial Meeting, while an interim solution remains in place.
3. Until a permanent solution is found, members shall refrain from challenging, through the WTO Dispute Settlement Mechanism, support provided for traditional staple food crops for food security purposes.
Trade facilitation:
1. No fees or charges will be imposed in respect of transit, except charges for transportation or those commensurate with administrative expenses entailed with transit or with the cost of services rendered.
2. Members shall endeavor to establish or maintain a single window, enabling traders to submit documentation and/or data requirements for importation, exportation or transit of goods through a single entry point to the participating authorities.
3. Each member shall apply common customs procedures and uniform documentation requirements for release and clearance of goods throughout its territory.
4. Donor members agree to facilitate the provision of assistance and support for capacity building to developing and least-developed country members on mutually agreed terms, either bilaterally or through the appropriate international organizations.
Source: WTO
