Saturday, April 20, 2024

Subsidies a bridge too far for WTO talks

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Many points of difference kept trade ministers at odds at Abu Dhabi meeting.
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Trade Minister Todd McClay says the reluctance of the large developed economies to rein in their massive agricultural subsidies is as much to blame for failed global trade talks as demands by India for a free pass for subsidies for its own farmers. 

India has copped criticism for blocking an agreement to tackle nearly a trillion dollars of global agricultural subsidies at a meeting of World Trade Organisation ministers in Abu Dhabi in early March.

The United States and the European Union were both critical of India’s refusal to back an agreement without first getting support for its request to make permanent subsidies paid to its farmers for the purposes of building the country’s public stockholdings of food. 

But McClay, who played a prominent role at the meeting of 166 WTO ministers, said those critics were not without blame for the failure to advance agricultural talks.

“Where the agricultural negotiations fell down was the inability or unwillingness of developed countries to talk about subsidies.

“It was the very clear view of the majority of countries at the WTO that those two issues of public stockholding and domestic subsidies needed to be dealt with at the same time and those developed countries wouldn’t – and without one it was hard to do the other.”

That was not to say NZ backed India’s request, McClay said.

NZ is one of a number of agricultural exporting countries concerned about the seepage of subsidised Indian food production onto world markets. 

Backing India’s request risked entrenching the problem and undermining an earlier WTO ban on export subsidies, the countries believed.

“The rights of developing countries to have food security to feed their people is important. It just shouldn’t destabilise markets,” McClay said. 

Also of interest to NZ exporters ahead of the Abu Dhabi meeting were efforts to restore the WTO’s system for settling trade disputes between members. 

The NZ government has previously used the system to overturn a ban on apple exports to Australia and trade barriers faced by beef to Indonesia, along with securing successful outcomes in numerous other trade disputes.

However, the system has been in limbo since 2019 when the US withheld its approval for appointments to the system’s appellate body. 

The meeting wrapped up without an agreement to restore the appellate body, although McClay said an earlier commitment to have the system back online by the end of the year had been reaffirmed by ministers.

“Elections particularly in the US may have an impact on that but from a NZ point of view we fought hard for a commitment to that deadline and now we know we need to work towards it and there is a clear expectation from ministers that it will be achieved by the end of 2024.”

One bright spot in the meeting, which also failed to extend the scope of a previous agreement to tackle fishing subsidies as had been hoped for, was an 11th hour agreement to roll over a longstanding moratorium on duties on transnational e-commerce transactions.

Extending the moratorium was seen as a major test of the WTO, with failure likely to have severely stretched its free trade credentials.

McClay, who as facilitator of the e-commerce discussions played a major role in seeing through the moratorium extension, dismissed those calling into question the WTO’s future as has become customary following successive disappointing ministerial meetings going back more than a decade.

He said renewed calls for the WTO to abandon its consensus-based decision-making were not practical either.

“The only way you can move away from the consensus decision-making process would be by consensus and I do not think you would get that.”

McClay said trade ministers had been left with too many differences to bridge to get agreements over the line in Abu Dhabi.

He said countries need to work harder between ministerial meetings so that ministers could be left to focus on the thorniest issues when they come together every two years.

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