Food and Agricultural Trade in the New Policy Environment: How Can WTO members Support Economic Recovery and Resilience?

Trade in food and farm goods has been hit hard by both the COVID-19 crisis and tensions between major economies, adversely affecting the food security of vulnerable populations. On November 17, 2020, the International Food Policy Research Institute (IFPRI), International Institute For Sustainable Development (IISD), and Akademiya2063 hosted a virtual regional dialogue for francophone Africa to look at the issues facing the continent in this area in the run-up to the World Trade Organization’s (WTO’s) 12th ministerial conference (MC12).

Panellists included senior government officials from Benin and Niger, experts from IFPRI and the WTO, and a speaker from the Alliance for a Green Revolution in Africa (AGRA).

COVID-19: Staples largely spared as falling demand hits other exports
Event moderator Francine Picard, policy advisor with IISD, began the discussion by asking participants how COVID-19 has affected markets for food and agriculture—the first of four themes addressed by the panellists.

As in other world regions, African countries had benefited from the robust stocks that existed prior to the outbreak of the pandemic, said David Laborde, senior research fellow at IFPRI.

Laborde said trade in staples had been hit less hard than other sectors such as fruit and vegetables or cut flowers, where falling demand and a sharp decline in air travel had disproportionately affected air-freighted goods and other perishable non-essential items.

But the COVID-19 pandemic has also exacerbated other challenges faced by countries in the region, emphasized Francoise Assogba Komlan, the Secretary-General of Benin’s Ministry of Agriculture, Livestock and Fisheries, pointing to the decision to close Nigeria’s border as one example.
Mounkaila Hassane, Director-General of Niger’s Trade Ministry, pointed to the impact of floods on rice cultivation in West Africa as another such case.

Coping Mechanisms in Place

At the same time, panellists emphasized that governments had implemented coping mechanisms that have so far helped people to weather the storm. Food trade was often exempted from border closure measures, Hassane pointed out, and Assogba explained how producers in Benin had benefited from storage aid from surplus production. 

Doaa Abdel-Motaal, senior counsellor in the WTO’s Agriculture and Commodities Division, recalled that many governments had collaborated to issue high-level declarations calling for trade in food and farm goods to remain open during the crisis and for measures to be taken that keep supply chains functioning normally.
Nonetheless, public health measures limiting the movement of people had also constrained trade in food and farm goods, Hassane said, while alternatives such as e-commerce remain poorly developed in many parts of Africa.

“This is not the last such crisis,”

Ousmane Badiane, Chair of Akademiya2063

“This is not the last such crisis,” said Ousmane Badiane, Chair of Akademiya2063, as he underscored the importance of being prepared for further shocks in the future.

Trade Rules to Protect the Weakest

Picard also asked participants to explain how Africa had been affected by tensions between major economies—such as the trade war between the United States and China that has dominated headlines during the Trump Administration.

Antoine Bouët, senior research fellow at IFPRI, said African countries have had to navigate their way through a tide of rising protectionism—although he also said this might now change following the U.S. election.

In particular, falling economic growth in countries like China could mean a decline in Africa’s exports of certain goods to these markets, warned Fadel Ndiame, deputy president of AGRA. He emphasized that African economies are often poorly diversified, with a heavy reliance on a handful of unprocessed commodities such as cotton and coffee.

At the same time, Assogba highlighted the potential for Africa to step in and fill the gap left by the decline in farm exports from other world regions. Tariffs and retaliatory measures on farm trade have seen China seek out new suppliers for key farm goods such as soybeans, a product widely used as animal feed.
Bouët cautioned that African countries have made little use of the WTO’s dispute settlement function, which is designed to defuse trade tensions and provide a peaceful route to settling disagreements over trade when these do occur. 

However, Laborde emphasized that rules were needed to prevent global trade from being governed by the “law of the jungle.”

“The rules protect the weakest countries,”

David Laborde, Senior Research Fellow, IFPRI

“The rules protect the weakest countries,” he told participants.

Diversifying and Adding Value
Abdel-Motaal recalled the importance of the African Continental Free Trade Agreement (AfCFTA), which aims to build on the regional integration that has taken place to date under Africa’s Regional Economic Communities and improve value addition on the continent.

Ndiame underscored the importance of improving the competitiveness of farming in Africa, and suggested that strengthening regional trade could represent a stepping stone toward greater integration on global markets. Assogba also highlighted the potential for geographical indications to ensure recognition for the quality of Benin’s food and agricultural exports within the region.

Alongside Ndiame, Laborde and Assogba also emphasized the importance of the diversification of products and export markets as part of a broader strategy to improve the resilience of African trade to shocks and unexpected events, and increase the extent to which value is added within supply chains on the continent.
“The keyword is ‘invest in agriculture,’” said Picard.

Laborde concurred, saying that governments needed to ensure adequate provision of “public goods” such as infrastructure and information while also creating the conditions for fair competition.

WTO and the Road to MC12
“International trade is a source of income, of opportunity—but also sometimes a source of worries,” Laborde said.

Better rules are needed so that “the actions of some don’t lead to damage to others,” he added, underscoring the importance of trade rules in improving the predictability of the trading system for economic actors.

On issues like cotton production subsidies—where African countries have long called for an update of WTO farm subsidy rules—Laborde argued that compensation should be paid to producing countries in Africa if subsidies proved impossible to reform for domestic political reasons. 

Abdel-Motaal reminded participants that COVID-19 and the election process for the next WTO Director-General continue to overshadow preparations for MC12, the date of which remains uncertain.

However, she emphasized that WTO members don’t need to wait for ministerial conferences in order to make decisions. “Nothing prevents WTO members from producing results immediately,” she said.

Abdel-Motaal pointed to a number of “low-hanging fruits” where negotiating outcomes might be more easily attainable than in other areas, including on topics of importance to Africa. These included issues around improved transparency, rules around tariffs on in-transit shipments, or export restrictions on food—with the last topic being particularly important to net food-importing nations, such as many of those in Africa.

More complex and controversial questions might need to be addressed as part of a work program that WTO members agree to pursue after MC12, she said, with domestic agricultural support and improved market access among the issues that would be addressed in this longer time frame.
 

The video recording for this event is available here.

This was the first of a series of events on the same topic, each with a regional perspective. The events will cover Africa, Asia, and Latin America. For more information on the Regional Series of Dialogues check out this page