The World Trade Organization (WTO) reached a major trade reform agreement on Saturday, the first in its history.
The deal required unanimous approval from the 159 countries involved and took until the final hour to complete.
This round of talks, known as the Doha Round, began back in 2001 and has seen little success. Member countries had already given up finding a compromise that would reduce tariffs and quotas and instead were looking to strike any deal. Since the WTO needs a consensus to pass anything, one country can blow up the talks.
Cuba almost did that in this round when it attempted to insert language that would undermine the U.S.'s long-standing embargo against the state. Eventually, Cuba relented on that demand.
Despite the historic nature of the agreement, the actual policy implications of it are small. Here's a run-down of them:
- Goods can pass quicker through customs. This could add hundreds of billions of dollars to the global economy - the Peterson Institute for International Economics estimates that it could add nearly a trillion dollars - especially in developing nations. Developing and least developed countries will receive assistance to help upgrade their infrastructure and train customs officials. This is known as "trade facilitation" and helps reduce the bureaucratic red tape that slows down world commerce.
- India can continue its food subsidies. This was the biggest roadblock to a deal. India wanted to keep its food subsidies so that it can feed its people, but these subsidies are illegal under WTO rules. Other countries, including the United States, worried that the subsidies would affect global food prices and wanted New Delhi to end them before any agreement was reached. In the end, the two sides compromised, allowing India and other developing countries to continue their subsidies as long they don't distort international prices, but they must also come up with an alternative solution. There is no deadline for that though.
- Member countries reaffirm their commitment to the least developed ones. Member countries give least developed nations duty-free, quota-free access to their markets and to help foster greater economic growth in those nations. Most developed countries have adopted this standard and this deal encourages developing ones to do so as well. Member countries also agree to help least developed ones integrate into world commerce
- The deal didn't fall apart. The WTO has never come to an agreement before in its almost 20 year history. The fact that all 159 countries finally made a deal, no matter its limited scope, is an accomplishment in and of itself. The WTO's hopes that this deal will lead to a larger, more comprehensive one in the future.
Each member government still must approve the deal so nothing is official, but all trade representatives have given their approval.