WTO in crisis mode as free trade regime unravels: CAFTA

The World Trade Organization’s dispute settlement mechanism is in ruins. It has been replaced by an interim mechanism, but only 30 percent of WTO member countries have agreed to participate.  | File photo

Export group says 93 governments have implemented more than 200 restrictions and measures that affect trade

The World Trade Organization is operating in crisis mode in an attempt to protect the rules of trade, which are under siege, says the Canadian Agri-Food Trade Alliance.

“Many in Geneva and others around the world have worked to protect the rules, save the system and literally hold it together,” CAFTA executive director Claire Citeau said during a presentation at the recent Agricultural Excellence Conference.

Trade and foreign affairs ministers from exporting nations have been “doubling down” on meetings with counterparts around the world to solidify relationships in a growingly hostile trade environment, she said.

“Every week the threat and lists of non-tariff barriers grow and agri-food continues to be the weapon of choice.”

Ninety-three governments around the world have implemented more than 200 restrictions and measures impacting trade, said Citeau.

“The pandemic has really exacerbated the trade tensions,” she said.

There is growing talk of self-sufficiency and nationalism around the world. Meanwhile, WTO officials are trying to protect rules-based trade and keep countries honest with dwindling resources.

“The problem is today the unravelling is a big worry,” said Citeau.

For instance, the WTO’s dispute settlement mechanism is in ruins. It has been replaced by an interim mechanism but only 30 percent of WTO member countries have agreed to participate.

But not all is lost. There are attempts to revitalize the beleaguered WTO. Ministers of the Ottawa Group, which usually leads WTO reform, have gone from meeting once a year to every two to three months.

Citeau said there have been some encouraging discussions on how to modernize and reform the organization.

“We have not seen that kind of activity, dare I say enthusiasm, at those tables for some time,” she said.

Citeau said Canada needs to continue pushing for rules-based trade and it also needs to ensure existing free trade agreements are enforced.

“Overall, we need better accountability, implementation and enforcement of free trade agreements. I like to call this FTA aftercare,” she said.

Canada and the European Union’s Comprehensive Economic and Trade Agreement (CETA) is falling short of expectations with countries like Italy flagrantly violating the agreement.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnerships (CPTPP) has been better, although Vietnam continues to block access and Malaysia has yet to ratify the pact.

The Canada-United States-Mexico Agreement (CUSMA) has issues that are affecting the exports of processed food and sugar-containing products.

Fawn Jackson, director of government and international affairs with the Canadian Cattlemen’s Association, said there are issues with the Canada-Korea Free Trade Agreement.

For instance, Canada can’t ship cattle older than 30 months to that market. It is also significantly behind the U.S. and Australia in the tariff reduction schedule.

She thinks it is time to revisit and update the agreement.

Jackson said Canada is negotiating an interim agreement with the U.K. that looks a lot like CETA. She said the permanent agreement needs to look more like the CPTPP.

And the CPTPP needs to be expanded to include markets like Thailand, Taiwan and South Korea.

Jackson also mentioned that COVID-19 has emboldened countries around the world to heavily subsidize their farmers and Canada and other exporting nations need to “be adamant that those programs are rolled back in a timely manner.”

Jennifer Marchand, government relations leader with Cargill Ltd., said Canada needs to continue investing in railway and port infrastructure and ensuring there are no more disruptions to the system.

“Efficiency is really going to be the name of the game,” she said.

“We’re going to need bigger and longer trains.”

Farmers and grains companies are going to need to continue to innovate, she said. Future diversification will be more about offering innovative products than finding new geographic markets.

Some current examples include high oleic canola, non-GM soy flakes and mid-protein wheats, said Marchand.

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