By Peter Ungphakorn
POSTED DECEMBER 31, 2020 | UPDATED DECEMBER 31, 2020
In this 3-part series (plus one):
1. The pertinent questions | 2. What’s been happening inside and outside the WTO | 3. Policy responses: from confidence-building to a work programme | (Plus: References)
Based on, with updates, Chapter 20 (“Lessons from the pandemic for WTO work on agricultural trade and support”) in the CEPR e-book “Revitalising Multilateralism: Pragmatic Ideas for the New WTO Director-General” edited by Richard Baldwin and Simon Evenett
For once, this might be a good time to rethink how agriculture is handled in the WTO, with hope of some success after years of going nowhere. The need to respond to the COVID-19 crisis is an opportunity to examine where the trade rules help or hinder sound policies.
That also requires an understanding of what trade rules do and do not do — WTO rules are not prescriptions.
This is the first part of a series on lessons from the pandemic for agriculture in the WTO and the prospects for the coming year.
It kicks the series off by examining the context and the often-misunderstood framework of what the WTO does and does not do before moving on to the issues. There’s no point in calling for actions that are outside the WTO’s remit.
WTO disciplines on trade policies come from negotiated rule-making. For well over a decade, the WTO agriculture negotiations, which should be modernising the sector’s trade rules, have largely been stuck in a repetitive rut.
Agreements have been reached on eliminating agricultural export subsidies (2015) and public stockholding for food security in developing countries (2013–14), but much of the original agenda remains unresolved.
As members prepare for yet another ministerial conference with low ambition, perhaps in late 2021, insiders suggest that the most likely outcome in agriculture is to devise a work programme — sometimes productive, but often just a means of making indecision look like a decision, at best to keep the ball rolling.
Will COVID-19 convince governments of the need to cooperate for a change? Will the selection of a new WTO director-general and new chair of the agriculture negotiations encourage members to turn over a new leaf? Or will old habits continue to die hard and divisions worsen among the membership?
Maybe they will. Maybe they won’t. That is the subtext throughout this series. Developments as 2020 drew to a close did not look promising.
Agriculture is generally exempted from lockdowns but is still indirectly squeezed. It has been more resilient than other sectors. It has experienced a mixed impact, depending on the products, countries and regions.
Nevertheless, the pandemic has highlighted the fragility of the food supply chain as governments strive to ensure their populations are fed. Sometiimes their actions have disrupted food flows.
The UN has warned of a worsening global food emergency with nearly 50 million more people pushed into extreme poverty, much of the vulnerability arising from existing poverty and conflict (see also this from the FAO). The warnings might spur countries into action. They might.
COVID-19 could (and perhaps should) have two impacts. One is for WTO members to discuss their agricultural trade policy reactions to it, most obviously by tackling export restrictions on food. This is already happening.
The other is as a catalyst to encourage genuine progress in reforming agricultural trade rules more generally, so that in the future the sector is less susceptible to shocks caused by inappropriate policies. That is a much tougher ask.
One important point needs to be stressed. Those unfamiliar with the WTO’s negotiated rules often misunderstand their role.
They are not generally about prescribing good practices. Rather, they set the boundaries for policy space, to avoid one country damaging the interests of others. How governments use the space — and even use it to damage their own interests — is up to them.
So the pertinent questions are:
- What rules need changing and why?
- Where do they hinder suitable agricultural policy?
- Where are they too permissive in allowing countries to hurt each other through trade distortions?
- And where can discussion in the WTO help countries learn about what is needed?
Much of the focus in relation to the WTO has been on the “great folly” of export restrictions and supply chain disruption (see this e-book, page 7 and chapter 6). Also discussed inside the WTO, but only in a limited circle outside, is trade-distorting domestic support for agriculture, for example in a report from the negotiations’ chair, a WTO news story, and this external paper.
So what has been happening inside and outside the WTO? Continue to Part 2
More on the agriculture negotiations
Acknowledgement: Thanks to Robert Wolfe, Jonathan Hepburn and Simon Evenett for comments on drafts of the original e-book version
Updates: None so far
• Panorama of WTO General Council (2004) | WTO, Jay Louvion
• Map | FAO and WFP