As WTO delegates prepare to meet at a key trade summit in Qatar, the food industry can only speculate on the effects a general trade round will have on food trade liberalisation. Keith Nuthall investigates what ongoing trade talks will mean for world agriculture, its major developed players and the developing countries that rely on food exports to survive.
The timing of concessions that can be achieved at the World Trade Organisation’s agricultural round, sweeping away the high tariffs, import quotas, production subsidies and export credits that make the working lives of every food exporter more of a struggle, are likely to be set in the next three months.
By the end of November, it should be clear whether the WTO’s key summit in dusty Doha, in the gulf desert state of Qatar, has succeeded in its stated aim of launching a general trade round; it would consider every commercial topic from intellectual property to textiles and manufactured goods to health standards.
This would depend on whether WTO director general Mike Moore succeeds over the next six weeks in persuading developing and developed countries to be flexible enough to meet each others’ contrasting concerns. If so, he will have a good shot at launching the general round that delegates tried and failed to start in the ill-fated Seattle summit in 1999. Whatever happens, there will be important consequences for the ongoing agricultural round, which was established in the wake of Seattle, in spring 2000.
It has been surprisingly successful, with WTO member countries finishing its first stage – where broad proposals are issued and debated generally – on time, in June of this year. Diplomats are now debating the fine print of these suggestions, trying to sharpen up the grey areas so that solid offers of trade concessions can be made in bilateral discussions next year.
So far so good, but if a general round is launched, this solid progress could be upset, with the 18 months-old agricultural talks being rolled into the general negotiations. Although on one hand making deals in the food sector could be made easier, because concessions in less sensitive sectors could be used as bargaining chips; on the other, because so many other topics would have to be covered, progress would probably be slowed, delaying maybe by years the time when agreed concessions on the trade in food would become a reality.
Meanwhile, the size of the problem that would be caused by extensive delays is being made apparent by the obvious progress that is being made in the agricultural talks.
Long seen as the world’s worst offender in terms of subsidising its food industry, the European Union has recently announced that it is pressing for the agricultural talks to lead to a reduction in export credits for food products, that are currently unregulated by world trade rules.
EU chief negotiator David Roberts has offered to trim Europe’s export subsidies under a new WTO Agreement on Agriculture, if other countries – notably the USA – consider reducing loans such as export credits. He said: “We must ensure a balanced result on export competition, which will need to address all forms of support to exports.”
Roberts is trying to establish a global deal on how these credits should operate, to prevent them from being used as a blank cheque for governments looking for a way to subsidise producers without getting in trouble at the WTO.
As a result, he wants national limits on credits to be capped and then reduced, he wants particular products to be subject to individual caps and he wants maximum repayment terms to be established, to prevent credits from becoming de facto subsidies.
Whether the EU achieves widespread support for these ideas remains to be seen, but it is clear that Brussels has been trying hard to gain worldwide support for its positions, especially on the key question of non-trade concerns.
These are elements of food production policy – such as rural development, conservation, animal welfare, organic production and environmental sustainability – that Brussels would like to support with public money, but would need to achieve support for globally, lest it face being hauled into a disputes panel for handing out illegal subsidies.
As a result, the European Commission recently organised a Second International Conference on Non-Trade Concerns in Agriculture, in Mauritius, attended by senior officials from 42 WTO members and observer countries, such as the EU countries, Japan, Mauritius, Norway, South Korea, Switzerland and many developing countries, (including least-developed, land-locked and small island countries).
They were a diverse bunch, but all had a keen interest in securing the future of their existing food production traditions in a liberalised world trading system.
The collected officials agreed that not only were state subsidies required to achieve these goals, but that successful agricultural production was also needed; for instance with conservation, food producers are in the best position to care for the countryside, but they will only be there if there is a viable farm.
Recalling the long-running and now, thankfully, resolved Caribbean banana dispute, the conference agreed that at least for ‘vulnerable’ developing countries, preferential market access to richer trading partners “is a key means to obtaining these resources.” In other words, the officials agreed to rewrite WTO rules, so that the old EU banana regime would be legal under a new agreement.
Whether this aim is achieved or not, it is clear that developing countries will be centre stage at any general round, or conclusion of a separate agricultural negotiation. Quite simply, the WTO’s decision-making process of unanimity requires that poorer countries be on board. And given that almost all of them are dependent on food production and that export success is tied to cash crops, they have a crucial interest in battering down food trade restrictions.
Speaking at a recent conference on the role of agriculture in development, World Bank Vice President Ian Johnson called for food issues to be fully integrated in any full scale global trade round. With 70% of the world’s poor employed in the sector, how trade reform and globalisation affect agriculture and the rural poor has a critical impact on poverty reduction, Johnson said, adding: “Developing countries are particularly badly hit by the distortions in global agriculture trade.”
As if to underline the fact, the latest broad proposal to the agricultural round has come from the poor West African state of Burkino Faso. It called for a new WTO agricultural agreement to include duty-free admission of fruit, vegetables and meat from least developed countries and the abolition of export subsidies from richer countries for fruit, vegetables and rice.
By Keith Nuthall, just-food.com correspondent
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