Saturday, April 13, 2024

McClay to be heard in WTO talks about talks

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Minister will have a key role, but the most that can be expected from Abu Dhabi is a consensus to keep negotiating, analysts say. 
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Expectations are low for any significant progress towards scrapping nearly a trillion dollars in subsidies paid annually to farmers around the world when global trade ministers meet this week. 

Trade Minister Todd McClay will have a key role at the biennial meeting of 163 World Trade Organisation (WTO) ministers starting today in Abu Dhabi but he’s unlikely to return home with anything much New Zealand farmers can cheer about.

The glory days of the WTO and its trade-liberalising predecessor, the General Agreement on Tariffs and Trade (GATT), would appear long gone.

The Doha round of global trade talks, which were started more than two decades ago with the aim of extending the substantial cuts made to tariffs and subsidies following the Uruguay round in the mid-1990s, have been stalled for more than a decade.

If anything, the liberalisation of global trade has gone backwards as the large economies of the United States, European Union, China and India have showered subsidies on their own industries and raised tariffs in an attempt to build up their own producers at the expense of those of their rivals. 

The credibility of the WTO as the arbitrator of trade disputes between countries has also taken a blow with the refusal by the United States in 2019 to allow its appellate court to operate. 

Stephen Jacobi, the executive director of the International Business Forum, which represents major exporters including Fonterra, Silver Fern Farms, and Zespri, said there was a zero chance of an agreement for further cuts to agricultural subsidies and tariffs at the Abu Dhabi meeting.

The most that can be expected is a consensus to keep negotiating with the hope of making more progress towards such an agreement at the next meeting of ministers in two years’ time. 

Ministers will also consider a request by India for a permanent dispensation for subsidies paid to its farmers. India was granted a temporary pass by WTO members in 2013. This was to help it build up food reserves to use in times of food shortages to keep its poorest from starving. 

Making the dispensation permanent is opposed by the US as well as developing countries such as Indonesia and Thailand. 

They share NZ’s concerns that the subsidies have led to excess production of commodities such as rice, which has seeped into export markets and depressed prices.

Jacobi said NZ fears that progress made in reducing subsidies for agricultural exports at previous WTO meetings could unravel if India’s request is granted.

“We may not care about them exporting subsidised rice but it would not just be subsidised rice. 

“The rules that apply to one country would apply to others.

“Other countries that would love to get back into the export subsidies game might see this as an opportunity.”

Jacobi said latest OECD estimates show there are already $817 billion in agricultural subsidies being paid to farmers by governments around the world every year. 

Reinstatement of export subsidies would not be something a small, unsubsidised economy like NZ could stand, he said.

“Not only would we not have our own export subsidies, but even if we did we would not be able to match the export subsidies that used to be used by other exporting countries,” Jacobi said.

Jacobi said McClay is poised to play a key role in Abu Dhabi as one of three deputy chairs and the meeting’s facilitator on a proposal to rollover a long-standing moratorium on tariffs on cross-border e-commerce transactions.

India has lined up against the majority of WTO members to oppose the moratorium’s extension although there is concern it is cynically using that position as a bargaining chip in the talks on agricultural subsidies. 

While it would be disappointing for the WTO should it fail to roll over the moratorium, it would be unlikely to be the organisation’s death knell, Jacobi said.

The GATT and WTO agreements still act as the baseline for global trade agreements and cannot just be abandoned and started again, he said. 

“We all support the thing we have got even though what we have got isn’t really fit for purpose and we would have shown that it is not fit for purpose in the future because in a whole new area such as digital trade the members would have shown they couldn’t work out something sensible.”

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