A New Chance For Free Trade?

The basic idea was simple: open all borders and let free trade flow. After 44 countries met in 1944
during the Bretton Woods Conference in the United States and agreed to establish the World Bank and
the International Monetary Fund and tie their exchange rates to the U.S. dollar, it took 70 years
to achieve the current results. That agreement was followed in 1947 by the General Agreement on
Tariffs and Trade (GATT), a multilateral agreement that should regulate international trade. The
official purpose was the “substantial reduction of tariffs and other trade barriers and the
elimination of preferences, on a reciprocal and mutually advantageous basis.” In eight steps,
duties and other trade barriers should be abolished. However, without too much success, GATT was
followed by the WTO treaty and framework, named after the World Trade Organization (WTO) that was
established in 1995.

Over the years, many problems were solved; however, there is still protectionism among some
member states all over the globe. Here and there, special agreements have come into effect. After
tough negotiations, the current Ministerial Conference of the WTO in Indonesia ended with an
agreement. WTO Director-General Robert Azevêdo described the result as a milestone.

In fact, the adoption of the Bali package is an extremely important step for the organization.
With the agreement, hope has been generated that the multilateral trade system could regain its
importance and would no longer be jeopardized by a growing number of regional and bilateral free
trade agreements. The package consists of several partial agreements and provides, among other
issues, trade facilitations for developing countries as well as measures to promote trade. It is
predicted that the agreement should generate additional income of up to an estimated trillion
dollars to the global economy. It is said that the cost of goods in customs clearance would be
reduced by 10 to 15 percent.

The agreement is interesting not only for the economy as such, but particularly for the
global textile industry. The simplification of customs procedures should push cross-border trade in
the producing countries and lead to a decline in corruption in customs services, thus stimulating
global trade. Everything should be as accessible and transparent as possible. Especially in the
modern textile industry, products cross borders many times. If these crossings become more
efficient, the global flow of goods should be easier. These facilitations are extremely important
for Asian manufacturers, which are already responsible for the major part of global textile
production — and for their Western customers as well.

October/November/December 2013