Agriculture and trade in agricultural goods support families and communities around the world – and agriculture is a key part of almost every World Trade Organization Member’s trade. The new multilateral agreement struck by the WTO Membership at the 9th Ministerial Conference in Bali, Indonesia takes important steps to address some key issues with regard to agricultural trade.
The United States has put food security – including increasing the productivity and trade of agricultural products – front and center on the global development agenda. This commitment of the United States to enhancing global food security has been enshrined in efforts from the L’Aquila initiative, which mobilized over $20 billion for food security, to the Feed the Future initiative to the New Alliance on Food Security and Nutrition. In the WTO, the United States has been highlighting and discouraging the use of trade distorting policies that can undermine the food security of other nations. Because of the trade-distorting nature of market price supports to farmers, the WTO has clear criteria and limits on such support, including when farmers are offered an administered price for crops used as part of a program of public stockholding of food. But a number of developing countries utilize this type of support to create stockpiles of staple foods for feeding programs, and spending on these programs has increased. A new decision by WTO Members will now provide developing country Members who may be in danger of breaching their domestic support limits for these programs freedom from legal challenge, to give them time to bring their policies in line with their WTO commitments. But the United States worked to ensure that this freedom from challenge is only available to Members if their programs do not distort trade, and if they meet certain transparency conditions to share the details of their support mechanisms.
Export competition in the WTO covers ag export subsidies, ag export credits, food aid, and the operation of agricultural exporting state trading enterprises (STEs). WTO export competition rules aim to preserve well-functioning markets by facilitating competition amongst market actors. The new Ministerial decision on export competition will require transparency to help Members understand how their trading partners are proceeding toward this commitment; this is most meaningful with regard to state trading enterprises, where transparency is currently limited. The MC9 export competition result also ensures a balanced approach across all forms of export competition, including export subsidies, export credits, food aid, and STEs. A key priority for the United States, it also provides an important impetus for Members to resume the WTO agriculture negotiations, addressing the other pillars of these negotiations – market access and domestic support – along with export competition.
WTO Members have also reached an understanding on the administration of Tariff Rate Quotas (TRQ) that facilitates increased opportunities for U.S. farmers, ranchers, workers, and food processors to enhance exports to a number of WTO Member countries, including the European Union, Japan, Norway, and Switzerland. This understanding provides American agricultural producers more market access by addressing the issue of chronically low fill rates in Members’ WTO bound TRQs. Further, the Understanding provides an increased level of transparency regarding how Members are filling their TRQs.
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