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Policy Analysis

World Trade Organization Agriculture Negotiations at MC13

Thinking beyond non-binding food security declarations

Food security is set to be the central focus of agriculture negotiations outcomes at the WTO's 13th Ministerial Conference. However, the success of negotiations, Facundo Calvo argues, depends on the binding nature of commitments, as well as the impact on least developed countries.

By Facundo Calvo on January 12, 2024

Food Security and Least Developed Countries

Nearly all World Trade Organization (WTO) members identify food security as the central focus of an outcome of agriculture negotiations at the WTO’s Thirteenth Ministerial Conference (MC13). However, they have different views on how to achieve this outcome. For some, public stockholding and the special safeguard mechanism, together with domestic support and cotton, should be the key components. Others prefer to focus on transparency and better disciplines for agricultural export restrictions. And still others believe market access for agricultural products can promote food security by increasing the availability and affordability of food.

Yet WTO members seem to agree on one thing: an outcome on food security should benefit least developed countries (LDCs). The UN Food and Agriculture Organization (FAO) reported last year that 265 million people in LDCs were food insecure from 2020 to 2022. In early 2022, the share of imported calories affected by export restrictions was higher for LDCs than for any other group of countries (developing, developed).

Against this background, a first outcome on food security that benefits LDCs could take the form of an exemption from export prohibitions or restrictions (hereinafter, the LDC exemption) that would ensure WTO members do not impose export prohibitions or restrictions when LDCs buy food for domestic consumption. This exemption could be based on a proposal submitted by the LDC Group in October 2023, which also calls for an exemption from export prohibitions or restrictions to be extended to the food imports by net-food-importing developing countries.

While heterogeneous as a group, many LDCs are net food importers. As LDCs are highly exposed to export restrictions on food (as well as similar trade-restrictive measures on fertilizers), WTO members are considering exempting LDCs from export restrictions on foodstuffs. This is something that India is already doing on an ad hoc basis with specific countries, four of them LDCs. After imposing an export prohibition on non-basmati rice in July 2023, India introduced an exemption to its export prohibition and permitted the export of non-basmati rice to seven countries: Nepal, Cameroon, Côte d’Ivoire, Guinea, Malaysia, the Philippines, and Seychelles. A few months later, in December 2023, five countries were also exempted from this export prohibition: Comoros, Madagascar, Equatorial Guinea, Egypt, and Kenya.

An LDC exemption would certainly offer advantages to LDCs. While the World Food Programme exemption from export prohibitions or restrictions, agreed at the Twelfth Ministerial Conference (MC12), is useful for humanitarian purposes, it does not cover most food imports by LDCs, which are not for humanitarian purposes. The share of imported calories by LDCs affected by export restrictions was 29.6% during the 2008 recession, 18.2% during the COVID-19 pandemic, and 26.3% in the first months of the war in Ukraine.

An exemption would allow LDCs to buy food from WTO members that have restricted their exports of food products to all other countries and help shield LDCs from global food price rises that result from major producers applying export restrictions. This is because LDCs would still be able to import the restricted products from the producing country, in theory, at the lower prices prevailing in that country’s market. As LDCs account for a small share of global food imports, the impact of an exemption on prices in the producing country applying export restrictions should be minimal.

While an exemption may help LDCs to continue to import food, it will not solve the challenge that poorer consumers in LDCs face in being able to afford this food.

However, while an exemption may help LDCs to continue to import food, thereby ensuring food availability in LDCs, it will not solve the challenge that poorer consumers in LDCs face in being able to afford this food. Indeed, it is this food access challenge that has been the most significant cause of growing food insecurity of late. To address this challenge, WTO members have the option of supporting mechanisms such as the FAO’s proposed Global Food Import Financing Facility.

It should be noted that LDCs are not always the most exposed to agricultural export restrictions. Small island developing states are at least as exposed to the effects of trade-restrictive measures, which may require broadening the scope of such an exemption and not limiting it just to LDCs. WTO members would also have to reflect on how to avoid the re-exportation of food originally intended for LDCs for their domestic consumption only. This could involve putting in place transparency, anticircumvention, and traceability mechanisms to ensure that food imports are effectively consumed in LDCs (and not re-exported).

Domestic Support and Public Stockholding

While specific outcomes on food security, such as an LDC exemption, are indeed a possibility, the successful conclusion of MC13 would most likely be linked to progress on the seven negotiation issues of the agriculture agenda, most notably domestic support and public stockholding.

The successful conclusion of MC13 would most likely be linked to progress on the seven negotiation issues of the agriculture agenda, most notably domestic support and public stockholding.

WTO members differ greatly in the way they understand the concept of domestic support—especially in relation to public stockholding. For many developing countries, such as India and China, and negotiation blocs, like the G-33 and the African Group, public stockholding is a stand-alone issue that should be treated on its own merits (and not as part of broader discussions on how to cap and reduce trade-distorting domestic support). For them, any permanent solution on public stockholding, including the way market price support is calculated and the negotiation of the product/country coverage for new public stockholding programs, should be addressed separately from the ongoing negotiations of new modalities to reduce trade-distorting domestic support.

On the other hand, the Cairns Group, a coalition of developing and developed countries that favours liberalizing agricultural trade, as well as the United States, the European Union, and other big players in the WTO agriculture negotiations, largely consider that public stockholding at administered prices should be treated as any other form of trade-distorting domestic support (public stockholding at market prices is already envisaged under the WTO Agriculture Agreement). In other words, while these members recognize there is a mandate to negotiate public stockholding on its own merits, they believe it should be negotiated as part of modalities to cap and reduce all forms of trade-distorting domestic support, including those granted under public stockholding programs.

Even if members reach a consensus on how to deal with domestic support and public stockholding, they will still have to work out a solution to reduce trade-distorting domestic support. Broadly speaking, the Cairns Group favours a holistic approach to reducing domestic support granted under the so-called amber box, blue box, and development box categories of subsidies of the WTO Agriculture Agreement (the latter two impose no limits on the subsidies that members can give). Many developing countries oppose this approach. They disagree with the idea of limiting the subsidies they can provide under the development box, which concerns investment and input subsidies generally available to low-income or resource-poor producers in developing countries.

Tackling Trade-Distorting Domestic Support

WTO members also have different priorities when it comes to reducing trade-distorting domestic support. For many developing countries, including India, China, and those of the African Group, the priority should be to remove the aggregate measurement of support entitlements that a group of WTO members can provide beyond the de minimis subsidies that are allowed to other members. They argue that these additional entitlements allow 32 WTO members (roughly half of them developed—the EU is counted as one) to provide considerable trade-distorting support compared to the total value of their agricultural production and to concentrate subsidies on a few products.

Others, including the African Group and Pakistan, as well as the C4 group of cotton-producing countries of West and Central Africa, also want to rein in green box subsidies, including those granted to cotton farmers. More specifically, these WTO members are targeting subsidies granted under paragraphs 5–13 of the green box, which they say distort global trade and often undercut producers in developing countries. On the other hand, some members argue the green box category of subsidies should remain as they are under the agreement but eventually be expanded to better address climate change, biodiversity protection, and other sustainability challenges.

With regard to public stockholding, a group of developing country WTO members would like to update the method to calculate market price support under the Agriculture Agreement. They argue that current rules to calculate trade-distorting domestic support, which were designed during the Uruguay Round when food prices were significantly lower, should be updated. They say the current methodology of calculating market price support, which is based on a fixed external reference price from 1986 to 1988, makes it harder for them to support their farmers. While other members recognize that updating the method to calculate market price support may be reasonable from a technical standpoint, they fear that doing so could make it easier for WTO members to provide larger amounts of trade-distorting support.

What If There Is No Agreement?

MC12 provides a good example of what may happen at MC13 if WTO members do not bridge their differences: a non-binding declaration on food security with no specific commitments. Similar alternatives could include work programs or frameworks calling on members to negotiate modalities for domestic support and market access by the next ministerial conference, and to instill new energy into negotiations on issues that already have ministerial mandates, such as public stockholding, the special safeguard mechanism, or cotton.

While there is some value in best-endeavour statements and declarations, experience shows that these statements do not always create enough incentives for positive changes of behaviour. For example, after the MC12 food security declaration “reaffirm[ed] the importance of not imposing export prohibitions or restrictions,” WTO members continued prohibiting and restricting exports. A recent WTO report tracking trade measures found that 75 export restrictions on food, feed, and fertilizers remained in place in October 2023. The report underlined that the pace of implementation of new export restrictions by WTO members had increased since 2020, first in the context of the pandemic and subsequently with the war in Ukraine.

A successful MC13 would entail the adoption of binding commitments, rules, and disciplines to better regulate trade in food and agriculture.

A successful MC13 would entail the adoption of binding commitments, rules, and disciplines to better regulate trade in food and agriculture. For domestic support and market access, this means agreeing on modalities to reduce trade-distorting domestic support (including for cotton subsidies), and improved market access for agricultural products, as mandated by Article 20 of the Agriculture Agreement. For public stockholding, this means finding a permanent solution for all developing countries in line with past ministerial mandates. Something similar could be said of the special safeguard mechanism and cotton. For export restrictions, this means promoting transparency and discussing ways to improve current disciplines.

Agreeing on exceptions or carve-outs from export prohibitions or restrictions for LDCs, small island developing states, or any other group of WTO members particularly affected by agricultural export restrictions during food crises, could be a good starting point at MC13. The rest would depend on how members sort out the impasse around domestic support and public stockholding.

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