Farm subsidy reform – covered by WTO talks on “agricultural domestic support” – remains top of the agenda for most of the trade body’s members ahead of the Organization’s Twelfth Ministerial Conference.
Chair Abraham-Peralta reported back on her consultations with delegations in the seven ongoing negotiating areas: domestic support to agriculture; market access; export competition; trade in cotton; food export restrictions; public food stockholding; and the question of a new “special safeguard mechanism”.
In the short term, the chair will appoint facilitators on specific negotiating topics to help her with her work.
Negotiating meetings open to the full membership are now planned for 10 November and 7 December.
Negotiations on agriculture at the World Trade Organization (WTO) have restarted under the guidance of a new chair, Costa Rica’s Ambassador Gloria Abraham-Peralta, amid growing fears that the COVID-19 crisis and economic slowdown will hamper progress on the food security aspects of the 2030 Agenda for Sustainable Development.
In 2015, world leaders committed to “correct and prevent trade restrictions and distortions in world agricultural markets” as part of SDG 2, the Sustainable Development Goal covering hunger, nutrition, food security, and sustainable agriculture. However, conflict, climate change, and persistent poverty and inequality have stymied progress since then, with rising numbers of hungry people among other troubling trends.
Since the COVID-19 outbreak, new farm subsidy packages and food export restrictions have sparked concern among other WTO members, who fear their own producers and consumers may be harmed. Many trade officials regret that countries applying these measures have not shared information about them transparently, Abraham-Peralta said in remarks to a negotiating session she convened on 25 September.
The chair told delegates that farm subsidy reform – covered by WTO talks on “agricultural domestic support” – remains top of the agenda for most of the trade body’s members ahead of the Organization’s Twelfth Ministerial Conference (MC12). After the pandemic prompted Kazakhstan to postpone plans to hold the high-level event this summer, it is now tentatively slated for June 2021 instead.
“Domestic Support remains the priority for many delegations, even more so in the context of the COVID-19 crisis and the SDG goals,” Abraham-Peralta said in her report to delegates.
Farm Trade Outcome “A Must”
The chair also said it was essential that WTO members strike a deal on agriculture when ministers next meet.
“It is clear for all that an agricultural outcome at MC12 is a must to preserve the credibility of the organization in the years ahead,” her report to the meeting said.
In recent years, members have struggled to make progress in negotiations on the controversial area, despite striking a deal to end agricultural export subsidies at the WTO’s Nairobi ministerial conference in 2015 – an explicit component of SDG target 2b – and two years earlier agreeing a declaration on public food stockholding programmes and WTO farm subsidy rules when they met in Bali, Indonesia.
Trade ministers failed to reach any consensus agreement on agriculture when they met in Buenos Aires, Argentina, in 2017 – leaving the trade body with no clear roadmap on how talks should proceed.
The WTO’s Agreement on Agriculture mandates the continuation of negotiations in its Article 20 – but markets for food and farm goods have nonetheless changed immensely in the quarter century that has elapsed since the treaty entered into force.
Seven Negotiating Areas
Abraham-Peralta reported back on her consultations with delegations in the seven ongoing negotiating areas.
Three of these relate to areas on which rules exist already under the Agreement on Agriculture. These are: domestic support to agriculture, where agricultural exporting countries and most developing countries seek new commitments; market access, covering tariffs on farm goods and other similar border restrictions, where again exporters seek concessions from importing countries; and export competition, covering agricultural export subsidies and other measures seen as similar.
Four other topics are more recent. These include the question of trade in cotton, of particular concern to West African countries; food export restrictions, where importing countries in particular have raised concerns; public food stockholding, where certain developing countries favour greater flexibility under WTO farm subsidy rules; and the question of a new “special safeguard mechanism,” which developing countries would be able to use to raise tariffs temporarily in the event of a sudden import surge or price depression.
The chair told the meeting that she “did not detect any major shift” in countries’ negotiating positions, which she said had been captured well in the final report issued by her predecessor, Guyanan ambassador J.R. “Deep” Ford.
A Changing Trade Landscape
Rapid change in food and agricultural markets have upended efforts to rewrite the global rulebook on farm trade. In particular, the rise of China, India, and other “emerging” developing countries have led to rapid growth in South-South trade – and changed how key players see the talks. Many countries have also fast-tracked efforts to strike bilateral and regional trade deals – depriving WTO talks of the political impetus they need to move ahead.
However, some long-standing farm trade concerns can only be resolved through broad-based collective action, with the question of farm subsidy reform chief among them. The WTO’s Deputy Directory-General Alan Wolff recently underscored this point: “To date, there has not been a single regional or bilateral trade agreement that has tackled the issue of agricultural subsidies.”
The Cairns Group of agricultural exporting countries have long been proponents of reform in this area – with the group including Argentina, Australia, Brazil, Canada, Indonesia, New Zealand, Pakistan, and Viet Nam, plus a dozen other members. The EU – whose subsidies were for decades a prime target of exporters– has taken successive steps to reform the support it provides, “decoupling” it from prices and production and seeking to shift payments towards rewarding producers for delivering environmental benefits. In contrast, the US continues to provide substantial levels of support linked directly to farm output, with recent subsidy packages aimed at compensating producers for the impact of the Trump Administration’s trade war with China, and more recently COVID-19-related disruption. Meanwhile, China and India have emerged as significant providers of agricultural support, prompting concerns from trading partners in both the developed and developing world who fear their own producers could be unfairly disadvantaged. The four WTO members together account for some three-quarters of all support classed as trade-distorting under the trade body’s current rules.
High tariffs on farm goods – especially “sensitive” products such as beef, dairy products or rice – remain another sore point in the talks. With Japan, Switzerland, and the EU among WTO members maintaining high levels of protection, exporting countries such as Australia, Argentina, and Uruguay would like to see trade barriers reduced and simplified in the talks.
Following the 2015 Nairobi deal to end agricultural export subsidies, WTO members such as the US are reluctant to pursue further talks in this area. However, some Cairns Group countries would like to see more done in areas where they consider more progress is needed – in particular on topics like export credits, food aid, and agricultural exporting state trade enterprises.
Meanwhile, India has spearheaded a push by the G-33 developing country coalition to ease WTO rules that require food purchased at government-set prices to count towards the trade body’s maximum permitted farm subsidy limits, when these purchases are part of public stockholding programmes for food security purposes. Proponents want a “permanent solution” to the issue, following a 2014 decision on the topic by the WTO’s General Council. Exporting countries, and some other developing countries, nonetheless fear that subsidised food purchases could undermine producer livelihoods and food security abroad if stocks end up being exported abroad. G-33 members include China, India, Indonesia, and the Philippines, as well as over three dozen other countries in Africa, Latin America and the Caribbean.
The G-33 is also behind efforts to agree a new “special safeguard mechanism” to help developing countries shield producers from sudden import surges and price depressions. While exporting countries have agreed in principle to the talks in this area, they have nonetheless linked progress on the topic to efforts to improve market access for farm goods. The ensuing deadlock has meant WTO members’ negotiating positions remain far apart on this question.
One area where food importing countries such as Japan and Switzerland would like to see action is the issue of food export restrictions – a topic which has hit the headlines in recent months due to COVID-19. Numerous WTO members, fearing shortages, initially imposed bans or other limits on exports – although, with ample food stocks and robust farm output, many of these measures have since been lifted. Poor consumers in low-income food-importing countries are particularly vulnerable if export restrictions in major exporting countries cause world food prices to rise. WTO members are currently discussing options to improve transparency, and potentially also to exempt UN humanitarian food aid purchases from these measures.
Finally, cotton-producing countries in West Africa have long called for reform of farm subsidies that harm their producers by pushing down prices on world markets. While US cotton support schemes have been a particular focus of the talks in this area, Washington has argued that subsidies provided by China must also be part of any eventual deal.
Small Steps Forward?
Abraham-Peralta’s report to the meeting notes that some delegations see three successive time horizons for the talks: short term work; deliverables for MC12; and a post-MC12 work programme.
In the short term, the chair will appoint facilitators on specific negotiating topics to help her with her work. She also indicated she would convene small-group discussions in addition to meetings open to all members, while remaining committed to inclusiveness and transparency.
Negotiating meetings open to the full membership are now planned for 10 November and 7 December. Members would be able to re-evaluate the process she is leading by the year-end or in early 2021.
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This policy brief was written by Jonathan Hepburn, Senior Policy Advisor, IISD.