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With one in six people around the world almost entirely dependent on international trade to meet their food needs, agricultural trade can clearly play a pivotal role in both addressing and exacerbating food security challenges. While progress has been made to bring attention to food security needs in trade negotiations in recent years, harmful policies like temporary food export restrictions are still a common reaction to price spikes, market disruptions, and production shortfalls – shocks that are likely to become increasingly frequent due to climate change and ongoing conflicts. A new policy brief from the Peterson Institute for International Economics examines how the World Trade Organization (WTO) can close the gaps in current agricultural trade policies to better ensure global food security, particularly for vulnerable populations and in times of food crisis.
Current WTO rules ban agricultural export subsidies and forbid the use of discriminatory sanitary and phytosanitary barriers. WTO member countries are allowed to regulate their food imports within agreed-upon limits, and food-producing countries are allowed to subsidize their agricultural production (again, at agreed-upon limits). While export restrictions are generally prohibited, member countries are currently allowed to temporarily restrict agricultural exports “ . . . to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting contracting party.”[1]
The problem, as the brief’s authors point out, is that the definition of “critical”, “temporary”, and “essential” are left to the discretion of the country imposing the export restriction. Member countries are also under no obligation to take into consideration potential harmful impacts on global markets or the food security of other countries when enacting such restrictions. This question of the proper balance between a country’s rights to protect its domestic interests and its obligation to protect (or at least not harm) global markets and other countries continues to plague WTO and other trade negotiations.
Export restrictions and duties, such as those recently imposed by India on several rice varieties, can increase global commodity prices and make it harder for low-income countries reliant on food imports. If multiple countries impose such restrictions during times of natural or man-made shocks, it can have a significant harmful effect on food security around the world. The brief emphasizes that we are currently seeing such a scenario play out: Since the Russian invasion of Ukraine, 28 countries have enacted export restrictions of varying types and durations, impacting as much as 17 percent of the world’s traded food and feed products.
The need for open and predictable agricultural markets is clear, say the brief’s authors. So what steps can the WTO realistically take to encourage such an environment?
WTO rules regarding agricultural export restrictions should be strengthened, including defining terms such as “critical shortage”, enacting requirements for advance notice of new restrictions, and establishing concrete steps for exporting countries to take to show they have given “due consideration” to the needs of low-income importing countries.
The brief also emphasizes global trading rules must also keep the needs of exporting countries in mind and ensure these countries have appropriate market access. WTO deliberations should focus on better balancing the needs of net food-importing and food-exporting nations and highlighting these nations’ mutual interests in order to find common ground. One of these mutual interests is environmental sustainability – also a key WTO priority. Open trade can support sustainability by reducing the use of unsustainable agricultural production practices that countries may otherwise engage in if they are aiming for agricultural self-sufficiency to make up for a lack of trade opportunity.
Finally, any reform will require collaboration and communication. The brief calls for “enhanced consultative mechanisms, international review, and immediate and full transparency”[2] in order to achieve the “grand bargain”[3] needed to facilitate open trade and ensure the long-term functioning and resilience of global markets.
[1] Wolff, Alan W. and Joseph A. Glauber, 2023. “Food insecurity: What can the world trading system do about it?” Peterson Institute for International Economics Policy Brief 23-15, p. 7
[2] Ibid, p. 12
[3] Ibid, p. 9