Wednesday, July 6, 2022

WTO fails on agriculture in Geneva but NZ still optimistic

A series of agreements at the World Trade Organisation (WTO) last week are being seen as good for New Zealand, even though they will have little direct impact and even though agricultural reform completely failed.

That is because the agreements revitalise an institution that had been growing moribund against New Zealand wishes.

The agreements came at the 12th conference of WTO Ministers (MC12), which extended its schedule for a day and then sat all through the night, finally reaching consensus just before dawn on several issues.

New Zealand’s trade minister Damien O’Connor was there, though he left for other meetings before the end of the talks.  

MC12 was the first ministerial meeting since 2017 and became bogged down in lengthy and sometimes heated argument before reaching agreement just before sunrise.

“At last, we delivered!” the WTO Director General Ngozi Okonjo-Iweala tweeted ecstatically.

“A successful MC12 with 6 plus solid deliverables! Sincere thanks and congratulations to Ministers, Ambasadors, Senior Officials and Secretariat Staff for making this work!”

“It means the WTO is starting to function again as it should, which is the world’s trading partners coming together to work out how the multilateral trading system should operate.”

Stephen Jacobi
New Zealand International Business Forum

The breakthroughs included a deal to reduce subsidised fishing, which New Zealand and other nations say is a dangerous practice that causes environmental damage.

Other issues included a partial waiver of intellectual property (IP) rights for Covid-19 vaccines.

And there was an extended ban on e-commerce tariffs, which are widely thought to be be unenforceable anyway.  None of these changes are of direct benefit to New Zealand.    

But Stephen Jacobi of the New Zealand International Business Forum says the fact that agreements were reached was a good thing for countries like New Zealand.  

“The delegates can go home happy knowing that they did a good piece of work,” he said.

“It means the WTO is starting to function again as it should, which is the world’s trading partners coming together to work out how the multilateral trading system should operate.”

In tangible terms, New Zealand has always wanted an end to trade-distorting subsidies for agriculture, but there was no progress on this, as there hasn’t been for 20 years.

All that happened was a commitment to talk some more about it.

Okonjo-Iweala spoke candidly about this failure in her closing address at the conference.

“While we all agree on the vital importance of agriculture in our economies, differences on some issues, including public stockholding for food security purposes, domestic support, cotton and market access, meant that we could not achieve consensus on a new roadmap for future work,” she said.

“But here too, members found a renewed sense of purpose: they are determined to keep at it on the basis of existing mandates with a view to reaching positive outcomes at MC13.”

There were other omissions too, such as a failure to revitalise the inner workings of the WTO, by restoring a quorum of judges to its appellate body.

But Jacobi thinks the agreements that were reached constitute a milestone.

“The WTO is back in the business of making decisions and that is a good thing.

“It was a more successful meeting of the WTO than we have seen in recent times.”

This view was shared by Julien Chaisse, a law professor at the City University of Hong Kong.

He told Al Jazeera the agreement represented a “great dawn” for international trade and multilateralism.

The only tangible outcome of MC12 that affects agriculture was a decision to exempt food bought for humanitarian purposes from export prohibitions.  This was an attempt to alleviate worries about food security because of the war against Ukraine.

But New Zealand exports different food products to different markets and does not have export bans anyway, so it will not be affected.

New Zealand has repeatedly said it wants a robust WTO to guarantee that trade is done acccording to agreed international rules.

But in fact, this country has done well, with or without the WTO.

In the five years between this WTO Ministers meeting and the previous one, total primary sector exports rose from $38.2 billion to $54.3 billion annually.

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