In a letter addressed to the key government leaders on trade and agriculture in the United States earlier this summer, a number of prominent agricultural groups made their case for sensible and timely reform of the World Trade Organization (WTO). As we rapidly approach the start of the 12th Ministerial Conference (MC12) on November 30th in Geneva, Switzerland, member nations will be coming to the negotiating table against a backdrop of deep divisions and stalemates in the WTO and otherwise unrest on a global scale. Countries are far apart politically, reeling from economic instability, and many continue to work through a pandemic that has ravaged much of the world. If any substantive progress is to be made at the meeting of these nations, MC12 must begin by finding common ground and building trust.
Member nations of the WTO are consistently better off due to global trade. Study after study has shown, on average, that nations with more trade freedom also have higher average national incomes, more food security, more political stability and healthier environments. While reform is desperately needed to restore functionality to the WTO, it must also be acknowledged that the WTO has been indispensable in establishing the “rules of the road” in global trade. Over time, the agreements have brought some degree of clarity and common rules to trade, a nearly impossible feat when balancing the priorities and practices of over 160 countries. These earlier efforts were successful, in part, because of transparency and balance across the agreements and due to the consistent leadership and engagement of major players such as the United States.
While trade is vital to the global economy – and to production agriculture in the United States in particular – WTO negotiations and the dispute settlement process that undergirds the existing agreements are not functioning to the benefit of WTO members. Successive Administrations in the United States have lamented the rulings and procedures of the dispute settlement process and the lack of transparency and abuse of special and differential treatment on the part of certain member countries. These concerns, and others, led to the United States refusing to seat new members of the dispute settlement system’s Appellate Body, ensuring it can no longer hear appeals and effectively grinding the process to a halt.
We have not arrived at this point by accident. As our world has evolved over the past 30 years, so too has agricultural trade. Several developing countries like Brazil, India, and China, are now major agricultural exporters – a reality that must be taken into account. To revitalize and restore confidence in the WTO, attention must be paid to addressing government policies that distort production and trade, including tariffs and trade distorting domestic support, the latter of which can frequently come in the form of non-transparent support that is difficult for trading partners to discern or quantify, allowing some members to circumvent commitments they previously made. Negotiations must also prioritize balance, acknowledging that it is irrational to expect the United States to continue reducing trade distorting support to its producers without trade liberalization through improved market access for exports, or the confidence that any new disciplines would prevent other countries from simply stepping in and seizing upon an opening to create or enhance an unfair advantage.
The WTO is a crucial element in facilitating global trade, but it is in need of reform. The aforementioned letter to USTR Tai and USDA Secretary Vilsack outlined a number of reform priorities and recommendations. While any reform requires balance, we commend their work and suggest the following as particularly important and time sensitive:
- WTO reform should be consistent with Article 20 of the current WTO Agreement on Agriculture by leading toward further market-based and sustainable trade liberalization and reduced distortions, with equal ambition by all major agricultural trading countries, including removing or reducing market access barriers, such as tariffs.
- U.S. agriculture supports a science-based and data-driven approach to any negotiations on climate change and sustainability that embraces innovation and prevents abuse that could lead to disguised restrictions on trade.
- Dispute settlement could be a more effective deterrent to protectionist measures. In addition to reforming and reinstating a functional appellate body, U.S. agriculture would benefit from an active, offensive U.S. litigation agenda and a more streamlined and timely dispute settlement process to level the playing field for American farmers.
- Predictable rules and transparent trade policies enabled by a reformed WTO could lower barriers to access and facilitate greater participation in trade by a wide diversity of stakeholders, while improving the livelihoods of those already engaged in the global marketplace.
These recommendations are widely supported by American agriculture and have the potential to make a tangible impact on increasing market-based agricultural trade to the benefit of all farmers, starting with predictable and transparent government policies. The global marketplace functions best when all of its players are abiding by the rules of the road. We continue to believe that the WTO is the most appropriate avenue for negotiating and adjudicating global trade concerns, but it can only serve that role if it is reformed and modernized to meet the challenges of the day. Achieving broader reform in the longer term requires member countries to find common ground on do-able outcomes in the short term at MC12.
Sharon Bomer Lauritsen is the founder of AgTrade Strategies LLC, a consulting service focused on U.S. agricultural trade policies. She retired from the U.S. government in 2020 with 29 years of experience, most recently as the Assistant U.S. Trade Representative for Agricultural Affairs and Commodity Policy, Office of the U.S. Trade Representative, Executive Office the President. She served at USTR for 15 years, leading agriculture trade negotiations for the United States with a number of countries and at the World Trade Organization.
Bart L. Fischer, PhD, is Co-Director of the Agricultural & Food Policy Center at Texas A&M University and serves on the faculty in the Department of Agricultural Economics. Prior to joining the university in September 2019, he served for 8 years as Chief Economist of the Committee on Agriculture in the U.S. House of Representatives under Chairmen Frank D. Lucas (OK-3) and K. Michael Conaway (TX-11), including responsibility for overseeing the Committee’s agricultural trade policy portfolio.
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