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Agricultural News

Food Secruity at the Heart of Bali Trade Deal

Sun, 08 Dec 2013 07:29:45 CST

Food Secruity at the Heart of Bali Trade Deal Ministers from 159 countries have reached a deal intended to boost global trade at a meeting in Bali, Indonesia. The World Trade Organization's first comprehensive agreement since it was formed in 1995 involves an effort to simplify the procedures for doing business across borders. There will also be improved duty-free access for goods sold by the world's poorest countries. Credit for the deal has been given to Roberto Azevêdo of Brazil, who quickly brokered the agreement after taking over the Director-General position in September.

The deal, which could add about one trillion dollars to world trade, gives developing nations more scope to increase farm subsidies. According to the US Trade Representative's office, the new multilateral agreement struck at the 9th Ministerial Conference in Bali, Indonesia takes important steps to address some key issues with regard to agricultural trade. The trillion dollar figure comes from the Washington-based Peterson Institute for International Economics- who estimated in a report earlier in 2013 that the customs measures could create a trillion dollars in economic activity and 21 million jobs if properly implemented.

The United States has put food security including increasing the productivity and trade of agricultural products front and center on the global development agenda. This commitment of the United States to enhancing global food security has been enshrined in efforts from the L'Aquila initiative, which mobilized over $20 billion for food security, to the Feed the Future initiative to the New Alliance on Food Security and Nutrition. In the WTO, the United States has been highlighting and discouraging the use of trade distorting policies that can undermine the food security of other nations. Because of the trade-distorting nature of market price supports to farmers, the WTO has clear criteria and limits on such support, including when farmers are offered an administered price for crops used as part of a program of public stockholding of food. But a number of developing countries utilize this type of support to create stockpiles of staple foods for feeding programs, and spending on these programs has increased. A new decision by WTO Members will now provide developing country Members who may be in danger of breaching their domestic support limits for these programs freedom from legal challenge, to give them time to bring their policies in line with their WTO commitments.

India led the campaign, by insisting that it should be allowed to subsidise grain under its new food security law. But according to BBC, "there is a strong possibility that India's policy would break WTO rules that limit farm subsidies." In threatening to block the deal, India broke from other major "ermerging economies" like China, Russia and Brazil- who strongly supported the language approved in Bali.

A "peace clause" was agreed to, under which members agree not to initiate WTO disputes against those breaching the subsidy limits as part of a food-security programme. That pause in trade litigation withinn the WTO would last for at least four years under this proposed agreement. USTR oficials contend that the United States worked to ensure that this freedom from challenge is only available to Members if their programs do not distort trade, and if they meet certain transparency conditions to share the details of their support mechanisms.

Export competition in the WTO covers ag export subsidies, ag export credits, food aid, and the operation of agricultural exporting state trading enterprises (STEs). WTO export competition rules aim to preserve well-functioning markets by facilitating competition amongst market actors. The new Ministerial decision on export competition will require transparency to help Members understand how their trading partners are proceeding toward this commitment; this is most meaningful with regard to state trading enterprises, where transparency is currently limited. The MC9 export competition result also ensures a balanced approach across all forms of export competition, including export subsidies, export credits, food aid, and STEs. A key priority for the United States, it also provides an important impetus for Members to resume the WTO agriculture negotiations, addressing the other pillars of these negotiations market access and domestic support along with export competition.

WTO Members have also reached an understanding on the administration of Tariff Rate Quotas (TRQ) that facilitates increased opportunities for U.S. farmers, ranchers, workers, and food processors to enhance exports to a number of WTO Member countries, including the European Union, Japan, Norway, and Switzerland. This understanding provides American agricultural producers more market access by addressing the issue of chronically low fill rates in Members' WTO bound TRQs. Further, the Understanding provides an increased level of transparency regarding how Members are filling their TRQs.

The agreement marks WTO's first global trade agreement since it was created in 1995. It also rescues the WTO from the brink of failure and will rekindle confidence in its ability to lower barriers to trade worldwide, after 12 years of fruitless negotiations. Azevêdo has vowed to build on the success of Bali to tackle the long suffering stalemate of the Doha Round of trade negotiations. Discussions among ministers at Bali included whether to tackle the Doha Round in smaller bites or resume efforts to finish it as a whole.



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