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Trying to spark hope after WTO damp squib

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At least subsidy billions are still on the table as meeting adjourns, exporters say.
For DairyNZ, Newstead, Hamilton, Monday 29 July 2013. Photo: Stephen Barker / Barker Photography. ©Dairy NZ.
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Exporters are trying to see the bright side of yet another failure by global trade ministers to make any significant progress towards scrapping nearly a trillion dollars in agricultural subsidies.

The biennial meeting of 166 World Trade Organisation countries wrapped up in Abu Dhabi over the weekend with no agreement on agricultural subsidies or tariff reductions. 

The WTO’s director-general, Ngozi Okonjo-Iweala, said officials from member countries would continue to work towards a draft agreement that hopefully could be considered for signing at the next meeting of trade ministers in two years’ time.

“I see negotiations as a process. Of course it would have been great if we could finally close that.

“I think when we return to [the WTO headquarters in] Geneva the members will better understand what each others’ concerns and reservations are right from the top, from the ministers. That will facilitate moving now in a better way than it did before,” she said.

Apart from an agreement to roll over a longstanding moratorium on tariffs on e-commerce transactions the meeting failed on a number of fronts. 

This included a failure to extend the scope of an agreement to tackle fishing subsidies and limited progress in rescuing the WTO’s system for settling trade disputes between members. 

It continues a long run of failed WTO ministerial meetings over a decade or more.

As has often been the case in the past, India was to blame for the go-slow in the agricultural talks. 

India refused to back an agreement without first getting support from other members to make permanent a dispensation for subsidies paid to its farmers for the purposes of building food reserves. 

New Zealand joined the United States and others in blocking India’s request on the basis it undermined an earlier ban on export subsidies agreed by WTO members. 

The executive director of the Dairy Companies Association of NZ (DCANZ), Kimberly Crewther, said exporters were frustrated at the lack of progress at the latest global trade talks.

But the high stakes meant NZ had little choice but to continue to back the WTO.

The latest research from the OECD shows $817 billion of subsidies are paid annually to farmers around the world. 

DCANZ research has shown that a halving of European subsidies alone would lift global prices by 8% to the benefit of NZ farmers. 

“DCANZ will keep working to illustrate the damage that is being done and hopefully that will feed into the impetus towards a future deal,” Crewther said.

“If you were to look for a silver lining it is in the fact that there is still a deal on the table … that officials will continue working on.”

The government’s former agricultural trade envoy, Mike Petersen, said a small country like NZ has little option but to continue to back the WTO despite its recent poor record.

NZ will continue to do its best to offset the lack of progress in global trade talks through its network of free trade agreements.

But while these boost export returns by reducing tariffs and non-tariff barriers faced by exporters in overseas markets, they have no role to play in reducing global agricultural subsidies.

“We can’t, for example, as a CPTPP [Comprehensive and Progressive Agreement for Trans-Pacific Partnership] set of countries say we want to have subsidies abolished,” Petersen said.

“It has to be done on a multilateral basis.

“We will try and get better market access through those free trade agreements but we really need the WTO to play its part.”

Petersen said the US had not given the WTO its full backing – either under the current administration of President Joe Biden or that of his predecessor Donald Trump. 

As well as rendering the dispute settlement system inoperative, it had also hindered global trade talks.

“The US is really important to getting countries like India and developing countries back on the path to having the right discussions.

“The US can exert leverage on countries like India that we desperately need back at the negotiating table,” Petersen said.

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