THE recently concluded ministerial meeting of the World Trade Organisation (WTO) in salubrious Bali, Indonesia, has agreed on a trade pact. This should not be momentous news because this is what the WTO is supposed to do.

It is, however, news of vital importance because of the state of the global economy and, more importantly, the state of the WTO.

The WTO was established in January 1995 as the formalisation of a multilateral trade agreement and as an institution. It succeeded the General Agreement on Trade and Tariffs, which existed from 1951 when the United States scuttled the proposed International Trade Organisation.

The WTO has three functions: first, making rules to regulate the multilateral trading system (MTS); second, adjudicating and resolving disputes arising from the interpretion and application of these rules; and third, assisting countries, especially developing countries, to implement the rules.

Completing a multilateral agreement is not an easy undertaking because of the need for consensus among a very large number of widely different types of economies: large and small, rich and poor, developed and developing. The rule of nothing is agreed until all is agreed is a prescription for decision-making paralysis.

The global economic crisis was not propitious. Indeed, it made the task of negotiations more complicated.

The previous trade round, the Uruguay Round, conducted in the context of global economic growth, lasted from 1986 to 1994. Add to that the international community setting an unrealistic ambitious objective called the Doha Development Agenda (DDA), so named as a palliative to developing countries which felt they were not benefiting from the MTS. That there is any agreement is a tribute to the indefatigable leadership of Mr Pascal Lamy, the director general who demitted office just months ago.

The pact provides trade facilitation measures in the form of simplifying and making more transparent Customs procedures. It also preserves food security programmes in developing countries. The current mini-agreement, it is claimed, will reduce the cost of trade by 10-15 per cent, and thereby hopes to promote global trade by US$1 trillion and create 20 million jobs over time.

With the ink not yet dry, the controversy over who will actually benefit remains to be seen. Business organisations have praised it and many NGOs have criticised it.

The minimalist deal has salvaged the WTO from irrelevance and restored its waning credibility as a meaningful international forum and not a talk shop dominated by a few developed countries that practice protectionism.

It also serves to revive the possibility and give impetus to realising the full DDA, which was launched in 2001. However, it makes the negotiations for the DDA more difficult because it is a basket of the low-hanging fruit.