Agriculture Negotiations: Work in the WTO


WTO members are currently negotiating agricultural trade policy reform, with a view to making markets fairer and more competitive, while taking account of concerns such as food security, and the environment. These talks began in early 2000 under the original mandate of the Agriculture Agreement and became part of the Doha Round at the 2001 Doha Ministerial Conference. At the 2013 Bali Ministerial Conference, ministers adopted important decisions on agriculture. More recently, at the 2015 Nairobi Ministerial Conference, WTO members agreed on a historic decision to eliminate agricultural export subsidies, the most important reform of international trade rules in agriculture since the WTO was established.


The negotiations take place in special sessions of the Agriculture Committee. The current chair is Ambassador Gloria ABRAHAM PERALTA (Costa Rica).



Which agriculture topics are WTO members negotiating?


WTO members are pursuing talks on seven negotiating topics in the area of food and agricultural trade. They range from subsidies for farm goods to restrictions on food exports, and the challenge of improving farmers' access to markets.


Also on the agenda are rules governing the procurement of food for public stocks at government-set prices, and a proposed new safeguard mechanism to help developing countries cope with market volatility — two areas which are proceeding in special dedicated negotiating sessions.


Negotiators are also addressing the specific challenges for trade in cotton as well as rules on measures that have comparable effects to export subsidies.

In all negotiating areas, trade officials are also considering how best to improve transparency by making information and data more easily available.



1. Domestic support


Domestic subsidies for the farm sector — or “domestic support” — have long been a focus of WTO agriculture negotiations. Some types of support can distort trade and markets, undermining the ability of farmers and other economic actors to compete fairly. In talks which led to the WTO's Agreement on Agriculture, negotiators agreed to cap and reduce these kinds of support.


WTO members have agreed that further negotiations should aim at additional cuts as part of a wider reform process. Agricultural exporting countries in particular are keen to advance talks in this area, as are poorer countries that cannot afford to provide large subsidies to their own producers. Many countries which subsidise their farm sectors are also exploring how policy reforms could benefit consumers or the environment.


Current WTO rules place no limits on support causing no more than minimal trade distortion. This includes general services provided by governments in areas such as research, infrastructure, or farmer advisory services; domestic food aid; and various kinds of direct payments, such as those provided under environmental programmes. In addition, WTO rules allow developing countries to provide input and investment subsidies without limits subject to some general conditions. They also permit all WTO members to provide certain production-limiting direct payments.


Negotiations on domestic support are seen as a priority by most WTO members. Several agricultural exporting countries — both developed and developing - have argued that trade ministers should agree a framework or work programme for future cuts to those kinds of support that distort trade.


Many developing countries have argued that maximum permitted support levels should be reduced to the existing “de minimis” levels defined as a share of the value of agricultural production, with different thresholds for developed and developing countries. Other countries have said that the focus should first be on making more information on farm subsidies easily available, to allow for informed decisions.


2. Market access


Protecting agricultural markets through border measures such as high tariffs can impede access to markets for farmers as well as raise the cost of food for consumers. In the WTO Agreement on Agriculture, members agreed to convert all their trade barriers at the border into tariffs (effectively taxes on imports). They also agreed to set maximum levels for these tariffs on a product-by-product basis. WTO members agreed that further negotiations to reduce protection would form part of a continuing wider reform process.


In recent years, with most members prioritising WTO domestic support negotiations, talks on market access have moved forward only slowly. Many members have instead sought to improve market access through bilateral negotiations with close trading partners or regional deals among blocs.


Some exporting countries seek to reinvigorate WTO market access negotiations that would cut high tariffs and reduce other trade barriers. These WTO members would like trade ministers to agree on a framework for negotiations in this area. Current talks are also focusing on how countries can improve transparency around changes to tariffs once shipments are already en route.


3. Export competition


Talks on export competition seek to build on the outcome from the 2015 Nairobi Ministerial Conference, when WTO members reached a historic decision to abolish export subsidies and set new rules for other forms of export support.


Some countries consider the Nairobi Decision as “unfinished business”. They would like to explore ways to strengthen rules on export measures that have similar effects to export subsidies. However, many other countries do not see this negotiating topic as a top priority. Negotiators are looking at ways to improve transparency in this area, but without imposing new burdens on poorer countries that may face more difficulty in collecting and reporting trade data.


4. Export restrictions


Restrictions on food exports is a topic that has risen up the WTO negotiating agenda since the food price spikes of the late 2000s. This is when food importing countries became more concerned that existing WTO rules in this area may not be sufficient to protect consumers from the potential negative effects of these measures on price levels and volatility in other countries, especially in poor ones. Today, two main issues are the focus of negotiators' attention in this area.


One is the question of whether WTO members can agree to exempt from export restrictions food which is bought for humanitarian purposes by the United Nation's World Food Programme (WFP). There is general agreement that the UN agency's valuable work is critical for saving lives in emergencies, and merits wholehearted support from the WTO membership. At the same time, some developing countries say that any new commitment in this area should acknowledge the food security needs in the country where food is procured.

Another question is whether members can agree to improve transparency by making information about export restrictions more easily available to food importing countries, including through the advance notice they provide of measures to be imposed. A group of countries for whom food imports are important have argued in favour of action in this area.


5. Cotton


Cotton has been high on the WTO agriculture agenda since 2003, when four West African cotton producing countries proposed a special sectoral initiative to address the problems they face in this area. Reforming cotton subsidies that distort world markets was and remains an important priority for the group. However, progress has been slow as some WTO members want to address this issue as part of the broader discussion on domestic support.

As in other negotiating areas, negotiators have also been discussing the question of how best to improve transparency and access to relevant data and information. Separate talks are also taking place on how to support the development of the cotton sector in the most vulnerable cotton producing countries.


6. Special safeguard mechanism


A large number of developing countries would like WTO members to agree on a new “special safeguard mechanism” which they could use to raise tariffs temporarily in the event of a sudden surge in import volumes or a fall in prices. At the 2015 Nairobi Ministerial Conference, trade ministers agreed that talks in this area would proceed in dedicated negotiating sessions.


However, progress has been slow, as many agricultural exporting countries — both developed and developing — have said they think any new safeguard of this sort should be part of broader negotiations on how to improve access to markets.


7. Public stockholding for food security purposes


Food price inflation in the late 2000s sparked renewed concern among some developing countries that WTO farm subsidy rules could limit their ability to buy food at government-set prices, as part of their public stockholding programmes for food security purposes. While there is no limit on how much food governments can buy at market prices under these programmes, support provided to farmers through government-administered minimum prices needs to be counted towards a country's overall limit on farm support under WTO rules.


At the WTO's Bali Ministerial Conference in 2013, WTO members agreed not to challenge the consistency of the support provided under public stockholding programmes with the Agreement on Agriculture. This was on the proviso that developing countries complied with certain conditions, such as providing more information on how these programmes operated, and how stocks were procured and released. Two years later, at the Nairobi Ministerial Conference, ministers agreed that talks aimed at a “permanent solution” in this area would also proceed in dedicated negotiating sessions and under a separate track.


Many developing countries see a negotiating outcome as a high priority. However, a number of exporting countries, both developed and developing, have said that a solution in this area should not allow countries to distort trade and undermine food security elsewhere — for example, by enabling countries to export subsidised food that was bought for public stocks. Talks continue on how to resolve this question in a way that addresses the concerns of all WTO members.


FAQ


1. Why are WTO members negotiating with one another on agricultural trade?

WTO members are negotiating on agricultural trade with a view to making markets fairer and more competitive. Current talks began in early 2000 under a mandate set out in Article 20 of the WTO Agreement on Agriculture, which was adopted in 1994 at the end of the Uruguay Round. This refers to the objective of establishing a “fair and market-oriented agricultural trading system” through progressive reductions in support and protection. It also says that talks should take into account other objectives and concerns mentioned in the Agreement's preamble - such as equity among WTO members, food security and the protection of the environment.


While policies and markets have evolved since the Agreement on Agriculture was concluded, these same goals continue to underpin WTO members' efforts to improve how markets for food and farm goods function, now and in the future.


2. Do the WTO agriculture negotiations cover trade in food too?

WTO negotiations on agriculture cover basic farm goods, such as wheat, milk and live animals as well as food products derived from them, such as bread, butter and meat. Processed agricultural products such as chocolate and sausages are also included — as are wines, spirits and tobacco products, fibres such as cotton, wool and silk, and raw animal skins for leather production. The full list of products covered is provided in Annex 1 to the Agreement on Agriculture.


Forestry products are not included, nor are fish and fish products — so talks on fisheries subsidies are taking place separately at the WTO.


3. Why do WTO members want to reduce support to agriculture?

In the Agreement on Agriculture, WTO members agreed not to cap or reduce some kinds of support which cause no more than minimal distortion to trade — including government services such as research programmes, advisory services for farmers, pest and disease control, or rural infrastructure. The same is the case for certain programmes involving direct payments to producers, such as environmental programmes. Support under these categories can be increased without any restriction if it complies with the conditions set out under WTO rules.


However, because it can unfairly affect the competitiveness of producers in countries which do not or cannot provide subsidies, government support which is linked to prices or production was reduced and capped.


The Agreement on Agriculture says that support provided by a government need not count towards maximum permitted limits if it is below an agreed percentage of the value of agricultural production. Direct payments under production-limiting programmes are also exempt from counting toward these limits. Finally, certain types of support provided by developing countries, such as input and investment subsidies, are also exempt subject to certain conditions.


In current trade talks, WTO members are seeking to build on past progress in reducing support that distorts trade and to ensure the WTO rulebook remains fit for purpose in the years ahead.


4. What about border protection? Why do WTO members want to reduce it?

Many farmers face difficulties in being able to access markets. Among the obstacles they face, government policies that protect markets by restricting trade — such as high tariffs — are important. These measures can also limit the ability of farmers and others to add value to farm goods.


Slow progress in this area of WTO agriculture negotiations has meant that many countries have focused their efforts to improve access to agricultural markets through preferential agreements with their main trading partners, or in regional blocs. Others have also taken steps to reduce barriers to their markets in order to make food and farm goods less expensive for consumers to buy. The objective of reducing protection nonetheless remains an underlying goal of WTO members in the negotiations on agricultural trade.


5. Have WTO members made any progress in the agriculture negotiations?

Yes — although not as much, or as quickly, as many of them would like.


In 2015, WTO members reached in particular a historic decision to abolish agricultural export subsidies, and set new rules for other forms of farm export support. The agreement is particularly important for farmers in poor countries who cannot compete with subsidised exports from richer countries. It also makes it easier for farmers in exporting countries to be able to compete fairly on world markets.


The deal was also important in achieving progress on the commitments which world leaders made in the United Nations' Sustainable Development Goals (SDGs), which made explicit reference to the objective of eliminating export subsidies under target SDG 2b.


The agreement was part of a package of agriculture trade measures agreed at the Nairobi Ministerial Conference. It came two years after another farm trade package was agreed at the Ministerial Conference in Bali, Indonesia, facilitating imports that are allowed under tariff rate quotas, adding various types of general services provided by developing countries to the list of services exempted from subsidy ceilings, and addressing problems developing countries faced under WTO farm subsidy rules when buying food at government-set prices as part of their public stockholding programmes for food security purposes.


Trade negotiators are currently trying to make progress in the talks ahead of the organisation's 12th Ministerial Conference, which is due to take place from 30 November to 3 December 2021 in Geneva. Due to persistent gaps between negotiating positions between WTO members, ministers are expected to be unlikely to reach a comprehensive solution to all the problems facing food and agriculture markets today at the conference. However, they may be able to take decisions on some key topics and chart out a path forward for future progress.


6. What could WTO agriculture negotiations mean for food security?

A clause in the WTO Agreement on Agriculture makes clear that ongoing trade talks in this area must take into account food security and other concerns such as those set out in the Preamble to the Agreement.


Progress in WTO talks on food and agriculture can help improve the availability of more diverse, nutritious food at more affordable prices. As trade in food and farm goods can help create jobs and raise incomes, better functioning markets can also improve access to food by helping to overcome poverty and unemployment, especially in developing countries. By improving stability and predictability, WTO talks to update the global trade rulebook could help limit extreme food price volatility and cushion market actors from unexpected shocks.


Rising average incomes have meant that demand for food is growing, especially across the developing world, as more people are able to afford sufficient, safe and nutritious food for themselves and their households. In many regions, the rate at which demand is set to increase is expected to outstrip growth in farm output — meaning that, while farmers will need to continue boosting yields sustainably, trade will become more important in meeting this rising demand.


Dedicated talks are also taking place on the WTO farm subsidy rules that apply when developing country governments buy food at government-set prices as part of their public stockholding programmes for food security purposes.


Access to food in food-importing countries can also be affected when other countries prohibit or restrict the export of food. Existing rules in the Agreement on Agriculture require WTO members to give due consideration to the food security of importing members when they impose such measures to protect their own food security. WTO negotiations are also looking at how to address this issue — including the question of whether an agreement can be found to exempt from these measures food which is bought by the United Nations World Food Program for humanitarian aid.


Current WTO rules allow governments to provide domestic food aid to people who need it. Government spending for this purpose is allowed without any limits under the existing Agreement on Agriculture. WTO members also reaffirmed in the Nairobi Decision on Export Competition their commitment to provide an adequate level of international food aid to the most vulnerable populations in the world, in particular to people in emergency situations, and agreed on disciplines aimed at preventing or minimizing commercial displacement that could harm local producers.


7. How can WTO agriculture negotiations help with recovery from the COVID-19 pandemic?

The COVID-19 pandemic has caused significant disruption to markets for food and agriculture, as well as to the global economy. It is one of the factors identified by UN agencies as having contributed to a worsening food security situation in recent years, not least as the impact on jobs and incomes has undermined access to food for many people, especially in developing countries. Nonetheless, agricultural trade has been relatively resilient, especially for commodities such as cereals and oilseeds, despite initial supply chain disruption which affected perishable farm goods in particular.


WTO negotiations on agriculture can make an important contribution to the COVID-19 recovery by helping to improve how markets for food and farm goods function. In particular, by updating the global rulebook, WTO members can contribute to improving the stability and predictability of global trade, thereby also strengthening resilience to future shocks. These steps are complementary to the important work members are conducting in the Committee on Agriculture, where information about COVID-19 measures has been shared with the membership in a bid to improve transparency.


8. What could WTO negotiations on food and agriculture mean for the environment?

The protection of the environment is among the "non-trade concerns" which WTO members have agreed should be taken into account in the negotiations. Since the conclusion of the Agreement on Agriculture, a number of environmental issues have emerged as being critically important, including climate change, biodiversity loss, deforestation, and land and water management. To address these challenges, governments will need to take steps to strengthen their environmental regulations and governance frameworks. Existing WTO rules and progress in future negotiations could also complement these initiatives.


Climate change in particular is expected to affect markets for food and agriculture through an increased frequency and intensity of extreme weather such as droughts, floods and tropical storms as well as through shifts in temperature and precipitation patterns. Low-income producers and consumers are particularly vulnerable to such shocks as well as to the impact of more gradual changes that affect livelihoods and food security.


By addressing distortions and protection in global markets for food and agriculture, WTO talks could make these markets more sustainable, stable and predictable. The talks could also improve the competitiveness and resilience of producers - especially those that are most vulnerable — while also improving food security for consumers. At the same time, with the farm sector needing to contribute to broader climate mitigation efforts, an outcome from the WTO agriculture negotiations would lead to a more efficient allocation of scarce global resources - for example, by reducing levels of support for farm goods that are associated with unusually high levels of greenhouse gas emissions.


In addition, existing WTO rules allow governments to strengthen resilience to climate impacts by addressing problems associated with persistent under-investment in the farm sector — including through strengthening their support for government services such as farmer extension and advisory programmes, rural infrastructure, research, or pest and disease control. Action in this area can also help reduce greenhouse gas emissions at the same time.


9. Which topics are being negotiated?

The WTO talks on food and agriculture currently cover seven negotiating topics.


These cover the domestic support that WTO members provide to their farm sectors; market access; export competition, which includes measures that are seen as having comparable effects to export subsidies; export prohibitions and restrictions; and the area of cotton, where negotiations on trade are taking place in parallel to talks on development assistance.


Talks in two other areas are proceeding in dedicated sessions: these include negotiations on a new "special safeguard mechanism" to allow developing countries to raise tariffs temporarily in the event of a sudden surge in import volumes or price depression; and talks on public stockholding programmes for food security purposes, where WTO members are negotiating how farm subsidy rules should apply when developing countries buy food at government-set prices as part of these programmes.


Domestic support is considered by most delegations as the most crucial topic in the agriculture negotiations. In addition, calls for a permanent solution on the issue of public stockholding for food security purposes have continued to enjoy broad support.


Sources:

https://www.wto.org/english/tratop_e/agric_e/negotiations_explainer_e.htm

https://www.wto.org/english/tratop_e/agric_e/faqs_e.htm



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