Agriculture and the World Trade Organization / by Mark Langevin

The Committee on Agriculture Special Session (COASS) of the WTO was held last week on July 19 to 20, 2017. The meeting anticipates the 11th WTO Ministerial meeting to be held in Buenos Aires in December. Nothing surprising happened at last week’s meeting, but a few comments are in order since agriculture remains the largest obstacle to concluding the Doha round in the Trump era.

First, the COASS meeting is important because it provides an arena to advance interests, proposals, and possible solutions to the political and structural bottlenecks that plague the international trading relations between developed and developing nation-states. It is an X-ray that all can see.

Last week the European Union, Brazil, Colombia, Peru and Uruguay floated an updated proposal to gradually phase out domestic subsidies for tradable agricultural commodities, including cotton. The proposal is sensible, really offering member-states the opportunity to decide what level of subsidies should be permitted today, and then setting up a rational system to phase them out, in a graduated process that favors developing nations, but only modestly and during a short time frame. It also allows the least developed nations (few of which are commodity exporters of any consequence) greater latitude.

This element of the proposal reads:

A) Developed Members shall not provide tradedistortingdomesticsupportinexcessof [X%]  ofthetotalvalueofagriculturalproduction  asof[2018],  whiledevelopingMembers shall not provide trade distorting domestic support in excess of [X+2%] of the total value of agriculturalproductionasof[2022]. 

 

Or

 

B) Developed Membersshallnotprovidetradedistortingdomesticsupportinexcessof [X%]  ofthetotalvalueofagriculturalproductionasof[2018],  whileDevelopingMembers shallnotprovidetrade-distortingdomesticsupportinexcessof[X%]  asof[XXXX].  From [2022] until[XXXX],  developingMembersshallnotprovidetrade-distortingdomestic supportinexcessof[X+Y%]  ofthetotalvalueofagriculturalproduction. 

Thisparagraph shall not apply to least developed Members

Of course, the placeholders are key, but global trade liberalization depends on agreeing to their numbers. Otherwise, fences will be built and the Trump era will confirm, possibly codify the process of hand picking markets, diversionary regional trade agreements, and increasing inequalities among member-states of the WTO.

It would seem impossible to focus on the placeholders and get an agreement in the era of Trump, but stranger things have happened… Trump’s election for one.

The document also provides a way forward for cotton, and consistent with the overall logic of the proposal. Accordingly, the proposal reads,

Members shall review the impact on trade of the product specific limit for cotton no later than [2019]  with a view to agreeing on the next steps to be taken in phasing out trade-distorting domestic support provided for cotton.

The proposed meeting in 2019 could provide the big bang that most cotton producers around the world are looking for. By 2019 the Trump effect, namely the open defense of nationalistic protectionism will have already reached its rhetorical apex, and its main proponent, the Trump government may be in intensive care. Also, the U.S. Congress is unlikely to pass a Farm bill in 2018, so 2019 could be a critical year that repeats a duel between beneficiaries of U.S. agricultural socialism (subsidies) and opponents of such fiscal largesse.

Yes, all quiet on the WTO agricultural front for now, but expect the next two years to heat up considerably.