Info Service on WTO and Trade Issues (Dec11/04)
20 December 2011
Third World Network
NFIDCs, food security discussed in WTO
Published in SUNS #7264 dated 21 November 2011
Geneva, 18 Nov (Kanaga Raja) - The issue of food security and the situation
of the least developed countries (LDCs) and net food-importing developing
countries (NFIDCs) were discussed at the regular session of the World
Trade Organization's (WTO) Agriculture Committee this week.
According to trade officials, at the meeting on 17 November, the Committee
also discussed, amongst others, information that members have recently
submitted on their agricultural domestic support and other measures,
in particular China's latest notification (G/AG/N/CHN/21).
Trade officials said that a discussion was held on the situation of
net food-importing developing and least developed countries, during
which the UN Food and Agriculture Organization (FAO) highlighted that
the world food import bill is set to reach $1.29 trillion in the current
In its submission to the Agriculture Committee (G/AG/GEN/98), the FAO
said that at some $250 billion more than the previous year, the food
import bill in 2011 would represent a record in both level and increase.
The global food import bill will be marked by year-on-year double-digit
percentage increases for all food categories, which are all highly likely
to reach record levels in 2011, said the FAO, noting that rising expenditures
on grain-based products and vegetable oils have fuelled much of the
increase at the world level.
It added that the combined purchase of food commodities falling within
these two categories are now foreseen to account for 36 percent of the
entire cost of importing food, contributing to well over a third of
year-on-year increase in the global bill.
Rapidly rising import costs in 2011 are not only confined to grains
and vegetable oils, said the FAO. For instance, world bills for sugar
and beverages are anticipated to increase by as much as 23 percent while
livestock products (meat and dairy) could rise, on average, by 19 percent.
With the inclusion of fish, imports of animal-based proteins are valued
at $365 billion, firmly establishing this product group as the most
expensive in the globally traded food basket.
The FAO submission underscored that for the most economically vulnerable
group of countries, the increase in the cost of purchasing food on the
international market in 2011 has outpaced the global average. For instance,
the food import bill of Low-Income Food-Deficit Countries (LIFDCs) could
register a 27 percent jump, and that of the LDCs is expected to climb
by 32 percent, some 5 percent more than the average global rise and
by far exceeding the record increase of the 2007-08 high-price year.
Putting these numbers in greater perspective, said the FAO, the cost
of imported foodstuffs for vulnerable countries could account for roughly
17 percent of all their expenditures on merchandise imports, compared
with a world average of around 7 percent.
Also at the meeting, the World Bank, in its submission (G/AG/GEN/96),
said that trade policy responses - including export restrictions and
import barrier reductions - appear to have been important influences
on price levels and volatility in recent years.
It said that for the 2005 to 2008 period, data suggest that a large
number of countries - and countries that account for a large share of
production and consumption - responded to higher world prices with price-insulating
policies such as export restrictions or import duty reductions.
However, the World Bank added, the use of these policies by countries
that collectively account for a large share of consumption creates a
collective action problem - the more countries insulate, the more unstable
the world price becomes.
"If all countries resist a price increase arising from a series
of bad harvests or an increase in biofuel production, the effect is
to push up the world price even more. While insulating policies can
lead to a relative stabilization of domestic prices in those countries
that undertake such policies in the short run, they can only work as
long as not all countries undertake similar policies. Over the longer
term, fundamental shifts in demand and supply conditions will also lead
to structural changes in prices that will have to be reflected in domestic
At the same time, said the World Bank, insulating policies that achieved
relative price stabilization have increased global volatility of prices,
and contributed to pushing global prices higher by stimulating demand.
This has particularly affected NFIDCs, whose domestic prices depend
on the world market. So from their point of view, the situation is worse
as the increase in the volatility of world prices directly increases
the volatility of their food import bills.
"To minimize the impact of future food price spikes, clear commitments
to avoiding the use of export restrictions on food will be needed. This
should be particularly applied to humanitarian aid, as this will be
of critical importance to maintain price stability in periods of food
stress," the World Bank said.
According to trade officials, the World Bank's assessment that price-insulating
policies by WTO members during the crises have magnified price movements
elicited a critical response from some delegations.
Trade officials said that Argentina particularly reacted to the World
Bank's view that "trade policy responses - including export restrictions
and import barrier reductions - appear to have been important influences
on price levels and volatility in recent years," and that "to
minimize the impact of future price spikes, clear commitments to avoiding
the use of export restrictions on food will be needed. This should be
particularly applied to humanitarian aid, as this will be of critical
importance to maintain price stability in periods of food stress."
According to trade officials, Argentina said that the World Bank's focus
is wrong, and overlooks the destabilising impact of subsidies and other
policies in rich countries which distort agricultural trade markets.
Trade officials said that in this year's discussion, delegations made
reference to the wider concerns raised by the G-20 leaders and to proposals
to include food security on the agenda of the upcoming eighth WTO Ministerial
Conference in Geneva (15-17 December).
Several members welcomed the G-20's creation of the Agricultural Market
Information System (AMIS), hosted by the FAO and with the participation
of a number of international organizations including the WTO.
Trade officials said that one of the proposals for the upcoming Ministerial
Conference has come from the net food-importing developing countries,
and African and Arab Groups.
The issue was discussed at a specially convened meeting of the Agriculture
Committee on 16 November.
According to trade officials, the proposal, presented by Egypt, would
ask WTO members' ministers to recognize that ensuring food security
for their populations is governments' first priority.
It proposed that the Ministerial Conference direct the General Council
to set up a comprehensive work programme for least developed and net
food-importing developing countries, to: ensure these countries have
access to adequate supplies of basic foodstuffs; consider new rules
to exempt them from other WTO members' export restrictions, particularly
major exporters; and help these countries have access to trade finance,
for example, through a revolving fund offering concessional terms.
While the idea of a work programme received support from some members
at the 16 November meeting, several other members said that they needed
more time to consider the proposal, which they had just only received,
said trade officials.
According to trade officials, some members argued that the WTO is not
in a position to ensure food security for anyone, only to devise rules
that improve the conditions for food supplies.
Several members noted that the Committee has already spent several years
discussing inconclusively the possibility of a revolving fund, some
adding that finance of this kind is the responsibility of other organisations
such as the International Monetary Fund.
According to trade officials, a large number of questions were posed
on the possibility of discussing new rules and how this would relate
to the agriculture negotiations in the Doha Round.
Some members were of the view that price volatility and food insecurity
are caused by a range of policies that distort markets, not only export
Other members said that giving importing countries "policy space"
to ensure secure supplies should be balanced with exporting countries'
own right to "policy space" in order to ensure their populations
have food supplies, said trade officials.
No decisions were taken, said trade officials.
The members that spoke on this issue included: Bangladesh, Japan, Canada,
Nigeria, Australia, Switzerland, Jordan, the European Union, Thailand,
Dominican Republic, Honduras, El Salvador, Colombia, Bolivia, Tanzania,
Zambia, Israel, Argentina, Cuba, the United States, Venezuela, China,
Philippines, Brazil, Indonesia and South Africa.
Agriculture Committee Chair, Jonas Skei of Norway, said that he will
write a letter to the Chair of the General Council briefly stating that
the proposal was circulated and discussed and that a brief summary will
According to trade officials, the Secretariat will produce the summary
report, and the Committee's annual report will be updated, the Chair
told the 16 November meeting.
Meanwhile, the United Nations Special Rapporteur on the right to food,
Olivier De Schutter, has made some recommendations to put the human
right to food at the top of the WTO agenda.
In a press release issued on 16 November, he said: "The world is
in the midst of a food crisis which requires a rapid policy response.
But the World Trade Organization agenda has failed to adapt, and developing
countries are rightly concerned that their hands will be tied by trade
"Food security is the elephant in the room which the WTO must address.
Trade did not feed the hungry when food was cheap and abundant, and
is even less able to do so now that prices are sky-high. Global food
imports shall be worth 1.3 trillion USD in 2011, and the food import
bills of the least developed countries have soared by over a third over
the last year. The G20 has acknowledged that excessive reliance on food
imports has left people in developing countries increasingly vulnerable
to price shocks and food shortages," De Schutter said, adding:
"The WTO must now do the same".
"We must avoid face-saving, short-term solutions aimed at hauling
Doha over the line," the rights expert said.
"Instead, we should grasp the opportunity to ask what kind of trade
rules will allow us to combat food insecurity and realize the human
right to food."
Noting that higher tariffs, temporary import restrictions, state purchase
from small-holders, active marketing boards, safety net insurance schemes,
and targeted farm subsidies are increasingly acknowledged as vital measures
to rehabilitate local food production capacity in developing countries,
De Schutter said that WTO rules leave little space for developing countries
to put these measures in place.
"Even if certain policies are not disallowed, they are certainly
discouraged by the complexity of the rules and the threat of legal action,"
the rights expert said. "Current efforts to build humanitarian
food reserves in Africa must tip-toe around the WTO rulebook. This is
the world turned upside down. WTO rules should revolve around the human
right to adequate food, not the other way around."
"If the Doha Round is to move forward, it must lift any possible
constraints on policies aimed at securing the right to food: such measures
should include food stock-holding that aims to reduce price volatility
and ensure access to adequate food at the local level," the rights
expert further said.
In a briefing note on the subject, the Special Rapporteur recommended,
amongst others, that a panel of experts be convened to systematically
analyse the compatibility of existing WTO rules, and those under consideration
in the Doha Round, with best practices and current national and international
food security strategies and policies.
He also recommended that a protocol be established to evaluate and monitor
the impact of trade liberalization on world food prices; that a substantive
discussion be initiated at the WTO of the medium and longer-term implications
of the lessons learned since the 2007 global food prices crisis for
the international trade regime, including the new consensus on the role
of States in reinvesting in food security at national level; and for
WTO Members to consider a food security-based waiver for situations
where trade commitments restrict a countries' ability to pursue national
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