World agricultural trade rules established more than 20 years ago need an overhaul, says an independent agricultural research organization.
Agricultural trade is far different than it was when the World Trade Organization agreement was reached in 1994, said Al Mussell, research lead at Agri-Food Economic Systems in Guelph, Ont. and one of the co-authors of the paper Disciplines on Agri-Food Trade: Toward a Renewed Framework.
The WTO agreement focused on establishing greater disciplines in the three pillars of domestic support, export competition and market access.
The paper quotes studies that conclude, “the support disciplines in the WTO agreement were too porous to substantially reduce domestic support in the various countries.”
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The cited studies included the United States, European Union, Japan, Norway, Brazil, China and the Philippines.
The authors also note that declines of support in some countries were offset by increases in others.
“We argue that a more comprehensive framework that goes beyond the original three pillars needs to be designed, supported by a significant research effort, to capture the impacts on trade and trade flows in a substantially changed world for food and agriculture,” said the paper.
Mussell said the current framework is an artifact of the Uruguay Round of WTO negotiations. It protected politically sensitive aspects of agricultural support that the United States, European Union and Japan couldn’t agree on.
“They were sort of set aside into the blue box and some other aspects of trade negotiations so that we were able to get an agreement on agriculture,” Mussell said. “Here we are today and the trade is a whole lot different.”
China and India have emerged as competitors and supporters of their producers and products. The OECD has identified rapid increases in agricultural support in Indonesia, the Russian Federation, Brazil, Kazakhstan and China.
Issues like food security, animal welfare and farm labour standards have become market access issues but don’t fit into the current framework, he said.
And, Mussell said countries are creative when it comes to finding ways to help their farmers.
Disciplines were placed on the aggregate measure of support, which includes market price support, Mussell explained. Countries cut their market price support but implemented programs outside of that.
“We need to go back and revisit this because as far as we can tell there’s a whole slew of support-type programs that just kind of go right around the framework for disciplines that we have today.”
Cereals Canada president Cam Dahl wrote recently that Egypt’s zero tolerance for ergot in wheat, despite the fact that the country’s buying agency recognizes the international tolerance of 0.05 percent, is a symptom of a growing problem.
“As tariff barriers fall some countries use non-science-based grain safety excuses to block trade in an attempt to drive down prices or to prop up their own agriculture industry,” he wrote.
In an interview, Dahl said trading countries are going to have to figure out how to handle protectionist issues like this. Newer agreements such as the Trans-Pacific Partnership build on the WTO’s dispute resolution process and address technical trade barriers, he said.
“The WTO is the home of rules-based trade,” he said. “It has a significant role to play in helping to address some of these non-tariff barriers.”
Mussell said Canada has a huge stake in trade systems that work because of its export dependency and it needs to take these situations seriously.
“Supply management comes under scrutiny all the time and in some ways supply management has been telling us for years that the structure of this is not set up equitably or is not set up just right and I wonder if we maybe should start listening to that a little bit,” he said.
He also said claims under Canadian business risk management programs will rise as prices for cattle, grains and oilseeds drop, and support from other country subsidy programs will also climb.
He said this is a good time to examine how countries support agriculture and how that support fits with WTO commitments.
“This should lead to reconsideration and modernization of our framework for disciplines on agricultural support.”
