Free Trade Forever

NEWTON, MASSACHUSETTS – On December 7, representatives from the World Trade Organization’s 159 member countries reached agreement on the first multilateral trade deal in the WTO’s 19-year history. Although the Trade Facilitation Agreement – dubbed the “Bali package,” after the Indonesian island where the meeting took place – did not address the most pressing North-South trade issues, it remains an important economic and political milestone.

The Bali package commits WTO members to moving toward lowering non-tariff trade barriers – for example, by establishing more transparent customs regulations and reducing trade-related paperwork. These changes might seem like bureaucratic minutiae, but the agreement’s impact – adding $1 trillion to global output and creating 21 million jobs worldwide – will be substantial.

The agreement has been criticized for failing to meet the goals set out in the WTO’s 2001 Doha Development Agenda. But these objectives – including improvement of market access in agriculture, manufacturing, and services; clarification of international trade rules; and progress on addressing relevant environmental issues – were overly ambitious. Even the modest Bali package was touch and go, requiring an extra day of negotiations to reach agreement on contentious issues like Indian farm subsidies and the US embargo of Cuba.

Nonetheless, it is clear that trade liberalization is gaining momentum. Consider the impressive scale and scope of other multilateral trade agreements – such as the Trans-Pacific Partnership, the Transatlantic Trade and Investment Partnership, and the Trade-in-Services Agreement – that are currently being negotiated.