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Improving the multilateral foundation for agricultural trade

15 Nov 2019

The multilateral trading system faces a momentous reform objective as it heads towards next year’s WTO Ministerial Conference in June. With the objective of establishing “a fair and market-oriented agricultural trading system", a range of policy domains relevant to AMIS is being examined.

As a priority, alternative approaches to reduce trade-distorting support are being studied. Simultaneously, negotiators are exploring options to ensure that subsidized stockholding for food security, if exempted from stricter disciplines, does not displace competitive suppliers or adversely impact their livelihood security due to price distortions.

In market access, interest is clearly shifting towards fostering predictability, including by simplifying complex forms of tariff bindings; reducing the gap between applied and bound tariffs; ensuring that shipments en route are given due consideration when applied tariffs are suddenly modified; improving tariff quota administration; and promoting the integration of competitive exporting countries in global value chains (e.g. tariff peaks and escalation).

Since the 2015 landmark agreement to eliminate export subsidies, all WTO Members with scheduled reduction commitments, with the exception of three developing countries, have taken the required implementation steps. Many participants are now keen to refine specific export competition elements, ensuring that past achievements are not circumvented through the operations of exporting state trading enterprises, international food aid, or subsidized export credits.

While the right to temporarily institute export restrictions and prohibitions to relieve critical domestic food shortages has long been recognized, the debate focuses primarily on transparency requirements and the need to mitigate supply disruptions and price volatility. Furthermore, a proposal to exempt WFP food procurement for humanitarian purposes from export restrictions remains on the table.

A successful outcome of the WTO Ministerial Conference would contribute towards better targeted domestic and trade policy, smoother international supply chains, and revitalized business environments. Clearly, as negotiators ponder the opportunities and practical trade-offs, landing zones will largely shape up based on political sensitivities and vulnerabilities; the technical complexity of the subject matter; as well as perceived linkages with other fields of WTO activity of crucial relevance to grain trade competitiveness globally such as non-tariff measures; non-agriculture market access; and services.