The role of the WTO in promoting food security
It is a great honour for me to be able to address you today on behalf of the WTO Director-General, Roberto Azevêdo, whom we have just heard in the video message.
The WTO attaches great importance to its relationship with the FAO, as by working together the two institutions can make a positive contribution to the global effort to eliminate hunger and enhance the food security of countries. As noted by DG Azevêdo in his address, the WTO and FAO collaborate in a number of areas and let me list some of them.
The FAO is an active participant in WTO bodies, including the SPS Committee, the Committee on Agriculture and the Standards and Trade Development Facility (STDF). The WTO values FAO's technical advice and input, particularly in its work on food safety and food security, as well as its monitoring and implementation services in a range of STDF-funded projects. The WTO has also been an active participant in FAO's work, through its participation in a range of meetings, including ministerial meetings, the Committee on Commodity Problems, the Committee on World Food Security and in the food safety area, those of Codex and the IPPC.
The two institutions also collaborate to service the Agricultural Market Information System (AMIS) in support of G20 countries' efforts to achieve greater global coherence in national policy responses to commodity price volatility and have produced joint publications, including the one on trade and food standards, which was jointly launched by DG Azevêdo and DG Graziano in Geneva in July 2017.
This cooperation reflects the confluence of the two organizations' objectives in promoting the realisation of the Sustainable Development Goals. FAO's core mandate includes ameliorating rural poverty, food insecurity and malnutrition, which are reflected in SDG 2 "End hunger, achieve food security and improved nutrition and promote sustainable agriculture". A well-functioning multilateral trading system is imperative for the realization of SDG 2. The contribution that could be made by the WTO is recognised in SDG 17, which underscores the need for the promotion of "a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization".
It is widely acknowledged that trade openness can make a positive contribution to each of the four dimensions of food security as espoused by the FAO, namely availability, access, utilization and stability. Trade openness increases the availability of food by enabling products to flow from surplus to deficit areas, connecting the "land of the plenty to the land of the few". It enhances access as it contributes to faster economic growth, higher incomes and higher purchasing power. Indeed, in response to the transmission of unbiased price signals, it encourages an effective allocation of resources based on comparative advantages, thus limiting inefficiencies.
Trade openness also facilitates utilisation and improved nutrition by increasing the diversity of national diets and accelerating the diffusion of sound SPS regulations around the world. Lastly, it enhances food availability and reduces price volatility, as risks associated with domestic food production are greater than pooled production of countries worldwide.
It follows that an open trading system is an essential element in achieving food security. This is not to suggest that open trade alone can resolve the food insecurity in the world. Trade is an indispensable tool that must be part of a comprehensive policy package encompassing, among others, coherent macroeconomic policies, nutrition policies, research and development, agricultural extension services to achieve food security.
It is also recognized that trade openness could in the short to medium term hamper access to food by the poor and other vulnerable sections of society necessitating the adoption of targeted policies to address such situations.
The WTO disciplines strike a careful balance between the competing demands. The long term objective, as stated in the preamble of the Agreement on Agriculture, is to establish a fair and market-oriented agricultural trading system, while at the same time allowing members to pursue other legitimate objectives and policies to enhance food security. Let me give some specific examples of how the WTO contributes to the food security of countries and the realisation of the SDGs.
Export subsidies: The Nairobi December 2015 Decision on Export Competition was truly historic. After 60 years of special treatment, agricultural export subsidies will be eliminated, in parallel with new disciplines on export finance, exporting state trading enterprises and on international food aid. This constituted the most significant reform of global rules on agriculture trade in the last 20 years. It will help level the playing field in agriculture markets, to the benefit of farmers and exporters in developing and least developed countries and thus contribute to enhanced food security. The Decision delivered on a key target of the second SDG, and was one of the first targets to be met under the UN’s new Sustainable Development Agenda.
SPS Agreement: The SPS Agreement aims to achieve a balance between countries' right to ensure appropriate sanitary and phytosanitary protection, which obviously constitutes a necessary component of a food secure global system, and the avoidance of unnecessary barriers to trade. The Agreement does this by requiring that regulations be based on science, and applied only to the extent necessary to protect human, animal or plant life or health. In addition, members are strongly encouraged to use international standards, guidelines and recommendations as the basis for their SPS measures, where they exist. The SPS disciplines, therefore, facilitate trade and create a more predictable regulatory environment for trade in food and agricultural products, based to the extent possible on a shared assessment of the risks. In that sense, the SPS disciplines contribute to a well-functioning international agricultural trading system which can make a positive contribution to global food security.
Export restrictions: The possible negative effects of export prohibitions and restrictions on foodstuffs on international price volatility and global food security, by reducing supplies on the global market and aggravating increases in world prices, have been well documented following the 2008 food crisis. Such measures may, however, be justified to prevent or relieve critical shortages of foodstuffs in a country. WTO provisions address this delicate balance. WTO members are currently negotiating in Geneva possible new provisions aimed at improving the transparency of such export restrictions measures, with a view to enhancing the predictability and stability of markets and thereby contributing to global food security and the realisation of SDG 2.
Public stockholding for food security purposes: This issue is also currently being discussed by WTO members, with a mandate agreed at the December 2013 Bali Ministerial Decision to negotiate on a Permanent Solution for adoption by MC11. The text of the Bali decision as well as the current discussions in the WTO demonstrate here again the attempt by members to find the right balance between the sovereign right of each member to put in place programmes to ensure food security on its territory and the need to ensure that stocks procured under such programmes do not distort trade or adversely affect the food security of other members.
I could have also added in this list, though outside the scope of agriculture negotiations, fisheries subsidies, which are explicitly mentioned in one of the targets under SDG 14 "Conserve and sustainably use the oceans, seas and marine resources for sustainable development", and I quote: "By 2020, prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, eliminate subsidies that contribute to illegal, unreported and unregulated fishing and refrain from introducing new such subsidies, recognizing that appropriate and effective special and differential treatment for developing and least developed countries should be an integral part of the World Trade Organization fisheries subsidies negotiation".
State of play in the WTO agriculture negotiations
Let me turn to the current state of play in the agriculture negotiations.
Our meeting today is very timely as we have seen a burst of activity in recent weeks. The Special Session of the Committee on Agriculture and the related dedicated sessions on public stockholding for food security and the Special Safeguard Mechanism chaired by Ambassador Karau from Kenya met last week. The week before also saw the gathering of 41 trade ministers in Marrakesh to review progress in the negotiations in the run-up to the Buenos Aires Ministerial Conference. A meeting of the WTO General Council is scheduled to take place at the end of this week.
So what is the situation today and what are the prospects for an agricultural outcome at MC11? The situation is very fluid, as is usually the case in the run up to every Ministerial Conference. The negotiations thus far have focussed on the following issues: domestic support; public stockholding for food security purposes; cotton domestic support; export restrictions; market access; the Special Safeguard Mechanism for developing country members; and other issues, including export competition and SPS issues.
It is clear that with the limited time available, there is need for prioritisation of the issues. In fact, this was the subject of discussions among ministers in Marrakesh. There appears to be agreement among the members that priority should be given to issues in respect of which there is a possibility of an outcome at MC11. Where there are wide divergences in members’ positions on a negotiating subject, the emerging consensus is that it should be taken up in a post-MC11 work programme.
With the exception of public stockholding for food security purposes in respect of which members agreed at the Bali Ministerial Conference to negotiate a permanent solution for adoption by MC11, it is clear that negotiations will have to continue on all the other issues after MC11.
Let me now be more specific and briefly describe the state of play on all these issues using the categorisation adopted by Chairman Karau. Issues in the first category are those that many members consider that a substantive outcome could be achieved at MC11. In this category are domestic support, PSH, cotton and export restrictions.
With respect to domestic support, many members have affirmed that it is a priority for them and that there should be an outcome at MC11. Consequently, there has been enhanced engagement on the substance of the issues in recent weeks. There are now several ideas on the table on what could constitute the core elements of a possible outcome. Several members have expressed their support for an overall limit on trade distorting support, whether based on a percentage of the value of production or on a monetary ceiling. By contrast, many members have expressed support for the idea that the AMS entitlements of developed members should be eliminated as a first step in order to level the playing field before discussing further disciplines. The divergences in members’ positions are wide and further engagement is needed to bridge the gaps.
Regarding public stockholding for food security purposes, there is convergence of views among members that it is a priority issue and that a permanent solution should be found at or before MC11 in accordance with the Bali and Nairobi Ministerial Declarations. It is also seen by some members as a gateway issue for the whole MC11 package. There are currently two proposals on the table. The first is a proposal by the G-33, a group of developing countries which have been advocating relaxation of the conditions in the Bali interim solution. The other is a joint proposal by the European Union, Brazil, Colombia, Peru and Uruguay. They both advocate exempting the support provided under PSH programmes from AMS calculation, although the attached conditions differ.
Some members have expressed a preference for the approach followed in the Bali interim solution, under which the AMS calculation methodology would remain unchanged, but a developing country member’s compliance with the Agreement on Agriculture shall not be challenged through the WTO dispute settlement mechanism if it complies with the conditions in the Decision. Members’ positions on the core issues (country and product coverage; transparency requirements; safeguards and anti-circumvention provisions; and legal certainty) have not evolved significantly. The negotiations have also been complicated by the linkage being made between the PSH issue and domestic support generally by some members.
With respect to cotton, an outcome is also seen as a priority for a large number of members, who believe that it would send a positive signal about the commitment of the WTO to facilitate the fuller participation of LDCs in the multilateral trading system. Some delegations have, however, cast doubts about the possibility of achieving an outcome by MC11, in light of the overall negotiating environment, especially taking into account the de facto link between the overall negotiation on domestic support and the negotiation on cotton domestic support.
Regarding export restrictions, many members support a limited outcome focused on enhancing transparency in export prohibitions and restrictions. A textual proposal by Singapore has attracted broad support among the membership. As special and differential treatment for developing countries, the text seeks to exempt from its coverage foodstuffs purchased for non-commercial humanitarian purposes by the World Food Programme. Some members have, however, sought clarification of certain elements in the proposal, while others have cautioned against imposing onerous notification requirements on developing countries. Other members would like the scope to go beyond notification and transparency elements. Last but not least, most members consider that an outcome on export restrictions cannot be envisaged absent a more comprehensive outcome in the agricultural negotiations.
Under the second category are issues (market access, export competition and SPS-related issues) in respect of which most members consider a post-MC11 work programme as the most realistic outcome, taking into account the gaps in negotiating positions.
With respect to market access, there is growing acknowledgement, including among the proponents, that the best possible outcome would be a detailed post-MC11 work programme. The proponents had suggested focusing first on issues like tariff simplification, tariff peaks, tariff escalation and bound in-quota tariffs, but this suggestion has not been well received by some members who are against a "pick and choose" approach. Other members have also stated that all market access negotiations in agriculture cannot proceed in isolation. All market access negotiations (agriculture, non-agricultural market access and services) should proceed in parallel. The issue of elimination of the current Special Agricultural Safeguard has also been raised specifically by some members.
Regarding export competition, some members have expressed the need to reaffirm the fact that export competition was still an unfinished business and that the disciplines of the Nairobi Ministerial Decision on Export Competition should be revisited and improved.
With regard to SPS issues, the main question is in which WTO forum should they be discussed.
The issue of a Special Safeguard Mechanism falls in the third category by itself. It will be recalled that a Decision was adopted in Nairobi recognizing that members should pursue negotiations on this issue in dedicated sessions. Many members consider that a substantive outcome on SSM cannot be realistically achieved at MC11, absent a broader outcome on market access. However, some G33 members insist on having a substantive outcome at MC11, either on a price-based or on a volume-based SSM. Members would need to enhance their consultations on the way forward on this issue.
From the foregoing, it is clear that we have a difficult road ahead. Members are determined to have a successful Ministerial Conference at Buenos Aires. It is widely recognised that an outcome on agriculture, however limited, would contribute to the realisation of this objective.
As previously mentioned, apart from PSH, where there is a ministerial mandate to find a permanent solution at MC11, almost all the decisions taken would have a work programme component. Thus, Buenos Aires should not be seen as an end in itself; it is a stop on the long and tortuous road. With determination and flexibility on all sides, members will be able to overcome their differences and fulfil their objective to establish a fair and market oriented agricultural trading system that will contribute to ending hunger, achieving food security and improved nutrition and promoting sustainable agriculture. A fair, robust and dynamic agricultural trading system will contribute to the realization of the 2030 Agenda for Sustainable Development Goals.