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
Fears that the pandemic would lead to a flood of export restrictions and other disruptive policies have proved to be largely unfounded. The main impact has been from travel restrictions and other measures aimed directly at preventing the disease from spreading.
This is the second part of the series on lessons from the pandemic for agriculture in the WTO, and prospects for 2021. It looks at what’s been happening inside and outside the organisation, before continuing on to possible work ahead.
Trade measures taken in agriculture are few when compared with previous crises or the actions on medical products during the COVID-19 pandemic. Lockdowns and the general economic slump have more of an impact.
According to the WTO, measures on foodstuffs are less than half the number on medical gloves alone. Most of those affecting food have been short-lived. Generally, liberalising measures on food trade outnumber restricting measures.
Meanwhile groups of countries have declared political commitments to avoid disrupting supply chains. They include Latin American and Caribbean countries, G20 agriculture ministers, G20 Trade and Investment Ministers, CPTPP ministers and senior officials, and a large group of WTO members.
St Gallen University’s Global Trade Alert shows that food dominates the “liberalising” side as governments try to counter supply disruptions caused by the pandemic, while restrictions on exports of food are fewer and more short-lived than on medical products.
Global Trade Alert also looks beyond border measures (tariffs, export taxes and restrictions) and includes state loans, price stabilisation and other policies. But in 2020, the year of the pandemic, actions inside the border drop down the list.
(Skip the charts and continue reading)
The changing agenda can already be seen inside the WTO, in its two bodies dealing directly with agriculture — the negotiations and the regular committee meetings.
The two are nominally the same Agriculture Committee but meeting for different purposes, in regular and “Special” sessions. In practice the negotiations and the regular committee meetings are distinct. They have separate mandates, working practices, sets of documents, chairs and sometimes delegates
By the end of the year, the negotiations’ new chair, Ambassador Gloria Abraham Peralta, reported that in their recent discussions, members had two priorities.
One was exempting the World Food Programme from export restrictions. This initiative from Singapore gained support from almost two thirds of the membership but eventually failed to obtain the necessary consensus for a decision in the year’s final General Council meeting.
The other was domestic support, which “remains the key priority for virtually all members who all want an outcome on this issue at [the next ministerial conference],” she emphasised in her report to heads of delegations.
To help her with the talks, she had organised a group of 11 delegates chairing discussions on seven topics spanning the traditional three “pillars” of the talks: domestic support, market access, and export competition (ie, subsidies); and including public stockholding, a special safeguard mechanism, export restrictions and cotton.
What COVID-19 did was to give a much higher profile to export restrictions — previously 10 brief paragraphs tacked on to the end of a long draft text (paragraphs 171–180).
Earlier in the year, her departing predecessor, Ambassador John “Deep” Ford’s final report of June 24, 2020 was considerably more detailed and is still relevant. It was heavily influenced by policy responses to COVID-19, and how the negotiations might therefore proceed.
Ford advocated starting work on export restrictions with information sessions leading to a possible decision in 2021, which is still possible.
Overall the report also spans the three “pillars”, with the same range of topics, but also including special treatment for developing countries and transparency in the negotiations.
Of the three pillars, agricultural export subsidies are now more or less settled, with agreement in 2015 to outlaw them. Ongoing work on this pillar is largely about monitoring to avoid circumvention and possibly to refine the rules — therefore involving both of the WTO’s agricultural bodies. This would intensify if speculation is right about increased export incentives in response to COVID-19 (see chapter 13 of this).
Some concern has been expressed about whether developing countries have enough access to export finance. The problem may be structural, about the availability of finance, rather than about WTO rules such as the 18-month repayment limit for ensuring the credit is market-based and self-financing. The rules are also more lenient when the exports go to least-developed, net-food-importing developing and some other vulnerable countries.
Otherwise the main focus in the negotiations is on the two other pillars.
Meanwhile, the (regular) Agriculture Committee’s role is for governments to scrutinise each other’s specific actions. COVID-19 is now a standing item on its agenda.
In the committee, members raised 35 new “specific implementation matters” (SIMs) related to COVID-19 up to mid-October, a WTO report on global trading conditions says:
“Of these, 11 targeted measures that potentially restricted or prohibited exports of cereals, processed vegetables, fruits, and agricultural products in general (Cambodia’s prohibition of rice exports, Egypt’s export prohibitions on agricultural products, El Salvador’s export prohibitions on dried leguminous vegetables, EU-Romania’s export prohibition on agricultural products, Honduras’ export prohibitions on dried leguminous vegetables, Kazakhstan’s export prohibition measures on certain food products, Myanmar’s export quota on rice, Russian Federation’s export quota, Tajikistan’s export prohibitions on certain food products, Turkey’s prior export authorization/registration and Vietnam’s export restriction measures on rice).
“An additional 16 [specific implementation matters] were raised in relation to domestic support programmes targeting producers of dairy, wine, potatoes, beef and sugar (Canada’s dairy policies, EU-France and Italy’s support for the wine sector, EU aid to the potato sector, Japan’s beef support and Thailand’s sugar support) and to the agricultural sector in general (Canada’s agriculture support package, Canada’s Farm Credit Canada, China’s measures to ensure agricultural input supplies, EU national state aid programmes in response to COVID-19, EU private storage aid, EU support measures in response to COVID-19, India’s COVID-19 stimulus package, Turkey’s treasury-backed loans, United States’ Coronavirus Food Assistance Program, United States’ direct payments to farmers and United States’ Paycheck Protection Program).
“Five [specific implementation matters] sought clarification on policies that potentially subsidized exports of agricultural products (Australia’s International Freight Assistance Mechanism, EU-Czech’s guarantee scheme, Japan’s support package, Japan’s transportation support and New Zealand’s International Airfreight Capacity Scheme).
“Three [specific implementation matters] were raised in relation to policies affecting market access (China’s measures adopted at the border to avoid the transmission of COVID-19, Nepal’s import ban and Russian Federation’s import restrictions in response to COVID-19).”
The July 28, 2020 meeting was typical. It included a discussion about the United States’ stimulus packages along with calls for members to live up to their transparency obligations on measures related to the pandemic. An information session on COVID-19 followed, with presentations by other organisations and think tanks.
Topics discussed included the disruption to supply chains, and constraints that developing countries face in notifying emergency measures.
Transparency remains an issue. Only six countries have formally notified export restrictions on agricultural products to the WTO in 2020 — although least-developed countries are not required to. In September 2020, Japan, Israel, South Korea, Switzerland and Taiwan complained that 10 members had 15 export restrictions they had not notified.
Global Trade Alert, meanwhile, reports 54 controls (admittedly a broader category than “restrictions”) from 33 countries.
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
Photo/image credits: Charts and tables as captioned
• Woman in supermarket | Anna Tarazevich via Pexels, CC0
• Ambassador Gloria Abraham Peralta chairing her first meeting of the agriculture negotiations | WTO