Thirteenth WTO Ministerial Conference

Thirteenth WTO Ministerial Conference Thirteenth WTO Ministerial Conference Thirteenth WTO Ministerial Conference

13thMINISTERIAL CONFERENCE : briefing note

Food and agriculture

Updating global trade rules on food and agriculture is a top priority for WTO members, ahead of the organization’s 13th Ministerial Conference (MC13) in Abu Dhabi, on 26-29 February.

Key facts

  • WTO data shows trade in agricultural products grew almost five-fold in the 2000-2022 period, from USD 300 billion to USD 1,488 billion.
  • But markets for food and agriculture remain highly distorted and protected.
  • OECD data indicates support to individual producers amounted to USD 630 billion p.a. in 2020-22, including both budgetary outlays and transfers due to border measures.
  • FAO data also shows that around 9% of the world’s population faced hunger in 2022.
  • Global food prices have fallen steadily from record peaks in March 2022, although restrictions and disruptions continue to affect markets for food and agriculture.

Background

Updating global rules on trade in food and agricultural goods is a top negotiating priority for WTO members. Negotiations in this area began in 2000 under a mandate set out in Article 20 of the Agreement on Agriculture, which was adopted in 1994 at the end of the Uruguay Round. Ministerial conferences in 2015 and 2013 delivered some initial outcomes in the talks, while the most recent conference in 2022 led to a declaration on food security and a decision on humanitarian food aid as part of a package that was agreed by WTO members. However, negotiators have yet to reach agreement on several unresolved topics on the reform agenda.

WTO members' negotiating priorities

While WTO members all agree on the importance of updating current global rules on food and agriculture, they have different views on how best to do so, and what to prioritise.

Many WTO members with competitive agricultural exporters favour cuts to the level of support provided by governments to their domestic agricultural sectors. They emphasise that support which distorts trade and markets can impede fair competition among producers, as well as adversely affecting consumers.

Many WTO members which are categorized as developing countries also say that an update to global rules is needed in this area to make agricultural trade fairer, with some of the poorest members emphasising the particular importance of cotton sector reforms to them. Some large economies say that parallel progress is needed to improve access to agricultural markets, with some smaller exporting members sharing this view. However, many developing countries argue that WTO members should prioritise finding a “permanent solution” to the difficulties that some of them face under current WTO rules when buying food at government-set prices for public stocks.

At the same time, food-importing countries have urged action to address the implications of export restrictions on global markets and food security, with some also emphasising the need to resolve outstanding issues related to measures that are analogous to export subsidies. Least-developed countries have drawn attention to the particular food security and rural development challenges they face. In addition, many developing countries have called for a new safeguard mechanism to be agreed that would help shield their producers from sudden surges in import volumes or price drops, although exporting countries have said this should be tied to overall progress in improving access to agricultural markets.

Current status of the talks

The Chair of the agriculture negotiations, Ambassador Alparslan Acarsoy of Türkiye, has said a critical question members must resolve is whether to adopt a comprehensive approach to addressing all outstanding issues, or whether WTO members can agree to fast-track talks on specific priorities. Since taking on the role in January 2023, he has organised a series of negotiating meetings to try to find ways forward - including talks among the full WTO membership, high level seminars on key topics, small-group consultations in different formats, and bilateral discussions. WTO members have also tabled numerous submissions and engaged in intensive talks with one another.

The Chair introduced a draft negotiation text to the membership on 30 January and circulated a Chair's report on the state of play on 8 February. The text builds on the negotiating submissions and interventions made by members, as well as the Chair's recent consultations in various formats. It aims to strike a balance between all negotiation topics and to provide guidance on the future work of the negotiations.

Members have been engaging in intensive text-based negotiations in February and organizing small-group consultations on the margins. The Chair circulated a revised negotiation text on 16 February. This text was submitted as a potential outcome document for ministers to consider at MC13. The Chair also circulated a document, JOB/AG/259, containing the compilation of members' textual suggestions and proposed annexes.  The Chair acknowledged that, while progress had been achieved in the drafting sessions, members' negotiating positions remain divergent on several issues. He highlighted three key areas requiring in his view political guidance. These are: 1) the way forward regarding the negotiations on public stockholding programmes for food security, by which developing countries  buy food at government-set prices for public stocks; 2) the balance across all negotiating topics, including timelines for further work, expected outcomes by MC14, and the extent to which instructions to negotiators provide specific details; and 3) the possible immediate outcomes that could help people in the most vulnerable countries, such as the least developed countries and net food-importing developing countries.

More details are available here.

Domestic support

Subsidies that distort trade and production continue to undermine fair competition on global markets, by disadvantaging those producers in countries which do not — or cannot — provide these forms of support. In talks which led to the WTO's Agreement on Agriculture, negotiators agreed to cap and reduce these kinds of support.

Subsidies which cause no or  minimal trade distortion are allowed without limits under current WTO rules. This category of support 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 Article 20 of the Agreement on Agriculture, members agreed to pursue further negotiations aimed at substantial and progressive reductions in trade distorting support, as part of a wider reform process. Virtually all WTO members consider that domestic support to the farm sector is central to the agriculture negotiations. However, their views diverge on how best to address the issue.

In recent months, members have tabled several negotiating proposals. The Cairns Group of developed and developing country agricultural exporters have proposed a 50% cut (or another percentage to be agreed upon) in the global level of WTO members’ “entitlements” to support agriculture by the end of 2034. Others, including some emerging economies, have proposed that members first eliminate trade-distorting support that exceeds de minimis thresholds (defined as a share of the value of agricultural production, and set at different levels for developed and developing countries). These countries  also favour maintaining current flexibilities for developing countries to provide input and investment subsidies under Article 6.2 of the WTO Agreement on Agriculture.

The Chair of the agriculture negotiations has said that members’ positions continue to diverge, including on: whether to agree a numerical target for subsidy cuts; the timeframe for reducing members’ current ceilings on support; whether or not members’ cuts ought to be proportionate to their capacity to distort global markets; and the scope of subsidy categories that should be included under their reduction commitments.

Public stockholding for food security purposes

Public stockholding programmes are used by governments to purchase, stockpile and distribute food when needed.  Some developing countries have expressed concerns that WTO farm subsidy rules could limit their ability to purchase 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 is considered trade-distorting and needs to be counted towards a country's limit on trade-distorting agricultural subsidies under current WTO rules.

At the WTO's Bali Ministerial Conference in 2013, WTO members agreed on an interim “peace clause”. Under this, they agreed not to challenge, under the WTO’s dispute settlement system, support provided by developing members under their public stockholding programmes. 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. They also agreed to negotiate on an agreement for a “permanent solution”.

Two years later, at the Nairobi Ministerial Conference, ministers agreed that these negotiations would proceed in dedicated negotiating sessions and under a separate track. However, no outcome was reached by the agreed deadline of the 11th Ministerial Conference, which was held in Buenos Aires in 2017.

Many developing countries continue to see a negotiating outcome in this area as a high priority. However, a number of exporting countries, both developed and developing, have said that a solution 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.

A proposed draft ministerial decision that was put forward by a group of developing countries in June 2022 was not adopted at the 12th ministerial conference, while an alternative proposal tabled by Brazil similarly did not generate consensus among members. More recently, Cairns Group countries have proposed establishing a permanent solution as part of broader talks on domestic support.

Cotton

Cotton has been high on the WTO agenda since 2003, when four West African cotton producing countries (Benin, Burkina Faso, Chad, and Mali- the Cotton-4 Group) proposed a special sectoral initiative to address the problems they face in this area. Reforming cotton subsidies that distort world markets remains an important priority for the group, which has since also been joined by Côte d’Ivoire. However, progress has been slow, as some WTO members want to address this issue as part of the broader discussion on domestic support.

Trade ministers at the 2005 Hong Kong Ministerial Conference reaffirmed the 2004 General Council Decision to address both trade and development assistance aspects related to the sector.

On trade, ministers committed to address cotton “ambitiously, expeditiously and specifically” within the agriculture negotiations by reducing in trade-distorting support and improving market access for cotton exports from least developed countries. On development assistance, the Director-General initiated a consultative process with development partners that has contributed financial and technical support to cotton-producing developing countries.

At the Nairobi Ministerial Conference in 2015, the cotton sector benefited from the agreement to eliminate export subsidies on agricultural goods. WTO members also agreed to fast-track disciplines on other forms of export support for cotton. Finally, WTO members agreed that cotton and related exports from LDCs would benefit to the extent possible from duty-free and quota-free access to markets in developed countries, and also in developing countries that were in a position to offer this.

While WTO members’ negotiating positions on cotton trade are still far apart, the Cotton-4 Group continues to call for reductions in trade-distorting domestic support to the sector, and for greater transparency.

Market access

Protecting agricultural markets through border measures such as high tariffs can impede access to these markets for exporting farmers — and also raise the cost of food for consumers. In the WTO Agreement on Agriculture, members agreed that further negotiations to reduce protection would form part of a continuing wider reform process. However, members remain divided on whether talks on the topic are currently mature enough for a tangible result.

Some members see an outcome on market access as important in balancing commitments they may need to make in other areas, such as domestic support. However, others have made clear they do not see an intensification of talks in this area as a priority at this stage: these members have argued in favour of prior technical discussions to prepare the ground for negotiations, and a focus on steps to improve transparency in this area.

In November 2023, Argentina, Brazil, Paraguay and Uruguay proposed expanding access to agricultural markets.

Some members contend that WTO members should prioritise cutting trade-distorting domestic support before taking steps to expand market access. Some others are of the view that it is unrealistic to expect progress on this topic to be achieved at MC13 given the limited time left.

Special safeguard mechanism

A large number of developing countries have said they would like WTO members to agree on a new “special safeguard mechanism” (SSM), 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 decided that talks in this area would proceed in dedicated negotiating sessions, with members reporting on progress to the General Council.

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.

Export prohibitions or restrictions

While quantitative export restrictions can be temporarily applied on foodstuffs to prevent or relieve critical shortages, many countries are also concerned about the potential negative effects of these measures on price levels and volatility in other countries, especially in food importing ones, and the resulting impacts on the ability of poor consumers to access the food they need.

Following food price spikes in 2007-08 and 2010-11, and more recently in 2022, this topic has risen up the WTO negotiating agenda.

At MC12, members agreed to a Ministerial Decision that exempts from export restrictions food bought by the World Food Programme for humanitarian purposes.

Currently, talks on export restrictions focus on two subjects: options for improving the transparency and predictability of these measures; and whether WTO members can agree to exempt poorer food-importing countries from export restrictions, such as LDCs and Net Food Importing Developing Countries (NFIDCs). The United Kingdom, LDCs, and Japan have all submitted proposals in this area.

Export competition

WTO talks on export competition cover various measures which can have effects on trade comparable to those of export subsidies. Talks in this area 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” and would like to explore ways to strengthen rules in this area. However, many others do not see this negotiating topic as a top priority and emphasize the need to focus on a better implementation of the Nairobi Decision.

Transparency

Transparency is a cross-cutting issue. While transparency, particularly through notifications, remains central to the regular Committee on Agriculture's work in monitoring members' adherence to their agricultural commitments, members consistently emphasize the significance of enhanced transparency across negotiating topics. This is to facilitate their informed participation in the negotiations and ensure robust follow-up on their obligations. Simultaneously, several developing members stress the need to ensure that transparency obligations are not unduly burdensome, and that they consider their capacity constraints.

At the 12th ministerial conference, WTO members emphasised the importance of promptly sharing relevant information about policies that may affect trade and markets, including by complying with WTO notification commitments and by actively participating in other relevant mechanisms for information exchange.