BY: Joseph Glauber, IFPRI
On November 9, IFPRI co-hosted a conference with the International Centre for Trade and Sustainable Development and FAO in Geneva on agricultural trade outcomes at the upcoming Nairobi Ministerial. The conference brought together current and former trade officials and experts from around the world to talk about the importance of trade for food security and rural development.
The Doha Development Agenda (DDA) was launched back in 2001; yet despite success in areas such as trade facilitation, reaching agreement on the major “pillars” (market access, domestic support and export competition) has eluded negotiators. Moreover, the world has changed considerably since 2001. Agricultural trade has more than tripled, for instance. Agricultural prices in 2014 were more than 50 percent higher than average prices over 2002-2004, even after adjusting for inflation, and while prices have declined in 2015 due to large global supplies, demand and trade remain at record levels.
Nonetheless, significant trade distortions remain. Tariffs remain high for key commodities such as dairy, meats, and sugar. Despite reforms in domestic support programs in developed countries, producers in many developed countries continue to benefit from government support that insulates production decisions from market signals. Additionally, government support among large emerging developing countries like China and India has grown considerably over the past 10 years. Use of export subsidies has declined significantly since the 1990s, but there are still concerns about the use of subsidized export credits and non-emergency food aid that sometimes ends up displacing local production and depressing local prices. Lastly, the use of export restrictions such as export bans has exacerbated global food shortages and price volatility.
Complicating progress in the DDA has been the growth and proliferation of bilateral and mega-regional trade agreements such as the Trans-Pacific Partnership (TPP), the Regional Comprehensive Economic Partnership, and the Transatlantic Trade and Investment Partnership. Such regional agreements promise increased market access for agricultural producers but typically do not include disciplines on domestic support. Concern was raised at the conference that the potential trade gains in agreements like the TPP may lessen the appeal of a broader multilateral agreement (which would by nature include “costs” such as constraints on domestic support).
Expectations for Nairobi have centered on completing a package of deliverables that would include duty-free/quota free market access for least developed countries, elimination of export subsidies and disciplines on food aid and export credits, and progress in addressing global cotton subsidies. Additionally, some developing countries continue to push for safeguard mechanisms and new rules on food security reserves; these two topics remain contentious, and agreement among members has proven elusive to date. Lastly, trade ministers will try to chart a path beyond Nairobi regarding the shape and substance of future agricultural negotiations.
Unfortunately, the lack of progress in the negotiations, particularly since 2008, has created much frustration and distrust. Much of the discussion at the conference concerned how WTO members might rebuild trust in the negotiating process by “good faith efforts” such as an agreement to undertake disciplines for a limited amount of time with the idea that reform efforts could be revaluated in the future.
As global population and income growth spurs food demand, agricultural trade is expected to grow even more important. Trade improves resource allocation, and therefore the ability to purchase food, as well as the transmission of food to where it is needed. Food security thus benefits from an open trading environment with minimal distortions. Progress in Nairobi will be an important step towards limiting those distortions.
Joseph Glauber is a Senior Research Fellow at the International Food Policy Research Institute (IFPRI) in Washington, DC. Prior to joining IFPRI, Glauber served as Chief Economist for the U.S. Department of Agriculture. From 2007 to 2009, Glauber was the chief agricultural negotiator in the Doha talks for the office of the U.S. Trade Representative.