As we approach the Eleventh WTO Ministerial Conference (MC11), taking place from December 10-13 in Buenos Aires, developing countries’ role in the negotiations remains in question. This will be the first ministerial to be held in South America and will provide an opportunity to reduce trade barriers and further liberalize the global trading system. In recent years, developing countries have accounted for an increased share in global trade, making them more relevant players in the negotiations. Any agreement made at the WTO thus has important implications for these countries’ economies and food security.
Africa south of the Sahara continues to face some of the highest levels of hunger in the world, according to the 2017 Global Hunger Index. Trade policy can be an important channel through which to reduce this hunger, helping countries and farmers pool risk and respond better to shocks such as climate change-driven weather events. However, in order for trade to be effective for development, it must be conducted under a cooperative framework, such as that espoused by the WTO. Determining what policy space African countries need in such a framework in order to ensure their food security and gain an equitable position in the global trading system is a crucial consideration going into the WTO Ministerial.
A number of key issues need to be examined when talking about the relationship between Africa and the WTO. One area of interest will be whether WTO members, both developing and developed countries, are willing to commit to further reforms in agricultural domestic support. In addition to supporting agricultural production, these domestic support measures can be used to help agricultural producers adopt climate change adaptation strategies and climate-smart agricultural practices, particularly in developing countries. Thus, further reform of domestic support measures could have implications for Africa’s agricultural sustainability in the face of growing climate shocks.
A landmark achievement of the 1986 Uruguay Round, and specifically of the Agreement on Agriculture (AoA), was the full inclusion of agriculture in a system of multilateral rules and disciplines, particularly disciplines governing agricultural support. Domestic support levels were bound and subject to reduction commitments (20 percent reduction over 6 years for developed countries; 13 percent cuts over 10 years for developing countries). Significantly, countries were encouraged to adopt support policies that had minimal production- and trade-distorting effects and which were exempt from reduction commitments (the so-called green box).
Research has shown that trade-distorting support as measured by the total aggregate measurement of support (AMS) has declined substantially for the major subsidizing countries over the last 20 years. Major domestic policy reforms in Japan, EU, and US have resulted in support levels for those countries significantly below bound levels.
Despite those reductions in AMS levels, however, concerns about domestic support levels remain. First, the AoA also contain provisions that exempt large levels of trade-distorting support from reduction commitments. Those exemptions include certain direct payments to farmers where the farmers are required to limit production (sometimes called “blue box” measures covered under Article 6.5 of the AoA), certain government assistance program to encourage agricultural and rural development in developing countries (covered under Article 6.2 of the AoA), and other support on a small scale (“de minimis”) when compared with the total value of the product or products supported (5 percent or less in the case of developed countries and 10 percent or less for developing countries).
In addition, while the levels of non-green box support, or Overall Trade Distorting Support (OTDS), have largely declined in developed countries since 1995, support in advanced developing countries such as Brazil, China, India, and Indonesia has increased, though from very low levels. Support has largely been in the form of input subsidies (India and Indonesia) or investment subsidies (Brazil), but market price support has grown as well (China).
Both of these situations highlight that, while the Uruguay Round was a start, there remains the need for further reform of the WTO’s OTDS measures and domestic support measures. However, such further reforms need to take into consideration the impact that domestic support policies in both developed and developing countries will have on economies, specifically producers, in Africa south of the Sahara. Of particular concern is the impact of domestic support policies on African cotton producers. Cotton is a significant cash crop in the region, and the cotton trade has been poorly addressed by existing WTO disciplines. More attention needs to be paid specifically to how market orientation/export policies and tariff and non-tariff barriers on the cotton industry could impact the cotton trade, and thus domestic food security, in Africa south of the Sahara.
In addition to domestic support policies, public stockholding policies have long been a stumbling block in WTO negotiations. Several developing countries, most notably India, have argued that the WTO’s existing farm subsidy rules constrain their ability to purchase food from domestic producers at administered prices in order to ensure food security during times of shock and food crisis, while other countries fear that stocks nominally procured for food security purposes may end up being exported and distorting global trade. A “peace clause” was established a the Bali WTO Ministerial in 2013 that allowed developing countries to continue their food stockpiling programs until a permanent solution is found; however, this permanent solution has yet to be reached. The question remains how to accommodate public stockholding programs that are truly designed for food security purposes while still requiring countries to abide by the WTO’s domestic agricultural support obligations.
Market access forms another complex issue contributing to the debate regarding Africa and the WTO. Improving African countries’ terms of trade with the rest of the world is an important step in driving development and reducing hunger and poverty in the region. Among the market access topics that need to be addressed by the WTO are the discipline of export restrictions, the reduction of tariff escalations faced by African countries, and the impact of phasing out some African countries from the LDC status in terms of export.
Finally, the WTO negotiations are not the only trade agreements impacting African countries. Global and regional trade integration, including a proposed African continental free trade area (CFTA), need to be conducted in parallel with multilateral WTO negotiations.
In order to address all of these issues, African countries will need to take a more proactive approach to the upcoming WTO negotiations in order to strengthen their negotiating positions. This is particularly true in a context in which more and more African countries are moving out of low-income/LDC status into middle-income economies with different sets of rights and capacities in terms of trade and farm policies. A well-informed, structured approach to the negotiations, rather than a simply defensive approach, will help ensure that African countries can identify and ask for what they truly need to ensure their food security and economic growth.
In this light, the Africa south of the Sahara Food Security Portal is collaborating with FAO’s Global Forum on Food Security and Nutrition (FSN Forum) to hold a series of online discussions regarding Africa’s role at the WTO. The virtual dialogue on the Africa south of the Sahara Food Security Portal took place on Monday, November 27; you can view the dialogue forum, as well as the full list of discussion questions here. The FSN Forum will consist of a three-week event beginning on Monday, November 20; the event will be facilitated by Georgios Mermigkas and Ishrat Gadhok of FAO's Trade and Markets Division.