Eighteen years ago, the formation of the World Trade Organization was a hopeful sign that the global effort to increase trade, and the benefits that arise from it, were to be boldly carried forward. Instead, the WTO became a symbol of just the opposite. Persistent squabbles stymied efforts at a global free-trade agreement, and as the years wore on, the WTO’s failings became a measure of something very different — growing resistance to free trade and doubts that bringing down barriers to commerce was a universal good.
On Saturday, however, that long drought finally ended, and free trade won its biggest victory in many years. The WTO’s 159 members agreed to a package of protrade and development initiatives for the first time in the organization’s history.
The centerpiece is a pact to make exchanges easier, faster and cheaper by smoothing customs procedures and reducing red tape around the world. The agreement also offers better access for less developed nations to the markets of rich countries. Though not the fully comprehensive deal originally envisioned by the WTO (the “Doha Round”), the International Chamber of Commerce figures that even this limited pact could lift world exports by $1 trillion and create 18 million much needed jobs in the developing world.
Beyond the numbers, the deal tells us a lot about what’s happening in the global economy today. For much of the past decade, the entire notion that the nations of the world, with their varied interests, could come together on a common set of trade principles seemed increasingly unlikely, and the WTO more and more irrelevant. Governments frustrated with the lack of progress turned instead to easier-to-achieve bilateral free-trade agreements or regional pacts. Saturday’s victory shows that a truly international approach to trade issues is actually possible. A renewed spirit of cooperation infected the WTO conference in Bali that made the deal possible. After months of heated debate, a last-minute (albeit interim) compromise between the U.S. and India over its controversial national food-security program allowed the greater pact to move ahead.
The WTO success also raises hopes that such cooperative spirit will spill over into other trade deals now being negotiated. The White House is pushing two big pacts, one with the E.U., the other with a collection of Pacific Rim nations called the Trans-Pacific Partnership. The two agreements, if reached, would be the most ambitious achieved by the U.S. since the North American Free Trade Agreement 20 years ago. Republicans and Democrats are trying to overcome their recent acrimony to stiffen President Barack Obama’s negotiating power by granting “fast-track” approval of these deals through Congress.
Most of all, what the WTO deal shows is that the global attitude on free trade might be shifting back toward the positive. As the developing world sucked up low-skilled manufacturing jobs from the industrialized West, the belief that free trade was good for all came under serious question, and the whole issue became a political hot potato. Emerging economies, meanwhile, believed they weren’t gaining the advantages they required for their own development from free-trade deals. Now it appears the whole idea of free trade is making a concerted comeback. The prospect of added exports and jobs — and additional trade deals — should offer a world economy, still sagging after the 2008 financial crisis, a rare source of new hope.