The World Trade Organization will convene this Sunday in Buenos Aires for its 11th ministerial meeting and the U.S. will be taking a clear message on agriculture: The WTO, which includes every major trading country, needs to find a new path forward to improve global trade.
There are still WTO members – especially developing countries – trying to further insulate themselves from global trade and urging WTO acceptance of their protectionist practices, but that has to change, said Jason Hafemeister, associate administrator of USDA's Foreign Agricultural Service, who sat down for an interview with Agri-Pulse.
“There are still too many high tariffs, there are still too many trade-distorting subsidies," Hafemeister said. "Can the WTO create an agenda to attack these problems? That’s a challenge for the WTO.”
Perhaps one of the biggest irritants to the U.S. are countries like China and India that subsidize domestic production of grains such as corn, wheat and rice in order to build up massive stockpiles.
While President Donald Trump has been extremely critical of the WTO and its methods of resolving disputes between members, his administration has fallen behind efforts begun during the Obama administration to challenge trade barriers in countries like China.
In September 2016, the U.S. Trade Representative announced it was officially challenging China’s artificially high prices for wheat, corn and rice. Those supports, the U.S. charged, distort world markets and cause billions of dollars in losses every year for U.S. farmers and exporters.
Subsequently, the USTR under the Trump administration announced it would continue the WTO battle against China’s floor prices and stockpiling.
An Iowa State University study this year estimated that U.S. wheat exporters have lost roughly $700 million in revenue because of China’s domestic support programs that far exceed levels allowed for in the WTO.
An initial round of talks between the U.S. and China to hash out the U.S. complaint failed and the U.S. officially requested the WTO form a dispute-settlement panel to adjudicate the issue.
The Trump administration’s decision to carry on with the WTO complaint in September elicited immediate praise from U.S. Wheat Associates.
“Trade enforcement is crucial for building confidence in existing and new trade agreements,” said USW Chairman Mike Miller in September. “The Trump administration’s actions should send a signal that strong and enforceable trade rules are vital to the United States and to U.S. farmers, specifically.”
Hafemeister said there are no plans yet for U.S. and Chinese negotiators to huddle on the sidelines of the Buenos Aires meeting and discuss the U.S. complaints. The USTR also challenged China in the WTO over the country’s failure to import enough wheat, corn and rice to meet its tariff rate quotas. When China joined the WTO in 2001 it agreed to import billions of dollars of agricultural commodities under a system of tariff rate quotas, but those imports never fully materialized.
“There’s no negotiation planned with China,” he said. “Both of those actions are right now moving through litigation. Of course, you always hope a country would be willing to settle out of court, but right now there’s no sign that China’s interested in a negotiated settlement.”
And now, ahead of the biannual ministerial meeting, U.S. Wheat Associates tells Agri-Pulse it is standing behind the Trump administration’s agenda.
“USW continues to support the WTO’s mission to liberalize trade,” spokesman Steve Mercer said. “Looking ahead to the Buenos Aires ministerial, we do not want to see the disciplines in the WTO Agreement on Agriculture weakened by exempting price supports for public stockholding programs run by major agricultural trading nations, especially since some of those same countries are blatantly ignoring their current WTO commitments.
“A binding, enforceable dispute settlement mechanism is critical for U.S. wheat farmers, and we have been very pleased with the Trump administration’s aggressive use of the WTO dispute settlement process to make sure countries abide by their WTO commitments in agriculture. It is critical that the Buenos Aires ministerial does not weaken WTO agriculture disciplines or enforcement mechanisms.”
But that will be a major challenge for the 22-year-old WTO and its current roster of 164 members, said Hafemeister, who stressed that many countries are having trouble letting go of the failed Doha Development Round of WTO talks.
The Doha Round began in 2001 and stalled in 2008 over proposals to protect developing countries like Brazil, China and South Africa.
“A lot of the difficulties we’re having right now are with what you would call emerging countries,” Hafemeister said. “Big ag producers who are now starting to ramp up their protectionism … Countries who have developed generous subsidy policies to encourage over-production … These are some of the same markets that hold some of the biggest potential for us as export markets.”
One of those markets is India and it is expected to propose new WTO rules at the Buenos Aires meeting to allow countries to create stockpiles by setting up minimum support prices.
Hafemeister stressed that this will be opposed by the U.S.
“We cannot be supportive of the pretense of developing countries trying to stockpile grains as an excuse for those types of measure,” he said. “On the other hand, we do have some countries that do want to engage in those kinds of policies and are looking for the WTO to approve of those policies - so there’s a real fundamental disagreement there.”
India has been the most vocal about support for stockpiling, but other supporters include China, Indonesia and the Philippines, he said.
With that issue not likely to succeed, the ministerial promises to result in little or no concrete agreements, Hafemeister said, but stressed the outcome will be nonetheless important if a new tone can be set for future meetings.
“I think the big challenge facing the WTO is reorienting its agenda towards its core function of how do we liberalize trade and open markets. How do we reduce trade distorting measures? That’s what the WTO has got to get refocused on and hopefully this meeting will move the organization forward towards that goal.”