How can LDCs best advance food security and rural development in Nairobi and beyond?
In least developed countries (LDCs), around one in four people are estimated to be undernourished — some 250 million people in total. LDC governments have a number of options to try and ensure that trade rules help improve food security and rural development, both on the road to Nairobi and beyond.
With the majority of food-insecure people living in rural areas, trade rules and policies that affect agriculture remain important in tackling rural poverty, raising farm incomes and creating decent jobs. Though governments in poor countries can already take a number of steps under WTO rules to support agriculture and boost farm productivity, distortions on global markets for food and farm goods continue to undermine the viability of farming in the world’s poorest countries, while trade barriers prevent otherwise competitive farmers from accessing markets or adding value to the goods they produce.
Arguably, the WTO remains a key forum for LDCs to pursue their negotiating objectives in these and other trade areas. While bilateral and regional negotiations often place LDCs at a disadvantage in talks with stronger trading partners, the multilateral system allows otherwise weaker countries to pursue shared goals on trade together.
However, LDCs have yet to see return on their investment in disappointing talks on the WTO’s long-running Doha Development Agenda, which was first launched in 2001. Deep-seated differences between major players — especially from the largest developed and developing countries — have caused significant tension between the WTO members, and often held hostage the LDCs’ concerns, including food security.
Meanwhile, many governments have sought to pursue their trade goals through other means — such as through the fast-growing web of preferential deals. The recently-concluded Trans-Pacific Partnership is one of the most high-profile examples of a phenomenon which risks leaving LDCs on the sidelines, neither benefitting from new market access arrangements nor participating in the design of new norms and standards.
Nairobi is key
The WTO’s 10th Ministerial Conference in Nairobi, Kenya could offer LDCs an important opportunity to achieve tangible progress on long-standing food security and rural development concerns. As the first such gathering in an African country, there are widespread expectations that this WTO ministerial conference should deliver real outcomes on issues of importance for the world’s poorest countries.
In recent months, Roberto Azevêdo, the WTO’s Director-General, suggested that LDC and development issues should form one of the three main focus areas for ministers at the conference. The other two, transparency, and export competition in agriculture, could also deliver significant results for LDCs.
At the same time, other issues that LDCs have highlighted as important — such as domestic agricultural support — remain bones of contention among major trading powers such as the US, China and India. Navigating the areas of common interest and divergence will be one of the most significant challenges LDCs will have to address both in the run-up to Nairobi and beyond.
Negotiating issues such as cotton, which members agreed a decade ago to address “ambitiously, expeditiously and specifically”, illustrates clearly the potential pitfalls LDCs could face. Negotiators have had to tread a difficult line between crafting ambitious but realistic demands for meaningful reform of US cotton subsidies, while also taking into consideration Washington’s calls for trade concessions in other key countries such as China.
On market access, while some WTO members have provided duty-free quota-free market access for the bulk of LDC exports, others, including many developing countries, have not done so. If LDCs could secure an outcome that improved their access to markets abroad, this could be a significant element in a broader Nairobi package.
LDCs have supported calls for a special safeguard mechanism to help raise tariffs temporarily in the event of a sudden surge in the volume of imports or a price depression. However, while the G-33 group has called for progress in this area at the Nairobi ministerial, it remains unclear what kind of concessions agricultural exporting countries may seek in return for greater flexibility in this area — and what sort of treatment they might envisage for LDCs.
Although many countries have already effectively phased out export subsidies and similar measures, a Nairobi outcome under the ‘export competition’ pillar could still be important to LDCs.
Equally important could be any progress in ensuring that trade rules help vulnerable consumers in poor food-importing countries to access food at affordable prices, even when prices spike on world markets. To do so, tighter disciplines might be needed on the ability of non-LDC food-exporting countries to impose export bans and other export barriers on foodstuffs that LDCs might need to procure.
‘Export competition’ in agriculture
Although many countries have already effectively phased out export subsidies and similar measures, a Nairobi outcome under the ‘export competition’ pillar could still be important to LDCs. These types of subsidy instruments have long been seen as particularly trade-distorting under WTO rules, and members agreed to eliminate them completely when they met at the trade body’s Hong Kong ministerial ten years ago.
Along with export subsidies, WTO members will need to revisit the fine print of the draft agriculture deal that was prepared back in 2008, to see whether negotiators wish to make any change to the text. LDCs will have a particular interest in the talks on food aid, but potentially also on other issues such as export credits and exporting state trading enterprises.
WTO members have agreed that in-kind food aid for humanitarian emergencies should be protected under a ‘safe box’ in the negotiations on agriculture. However, new disciplines on the export of food in non-emergency situations could be important in safeguarding the livelihoods of farmers in LDC countries.
In the next few weeks, negotiators are expected to begin looking in more detail at issues such as proposed new rules on the ‘monetisation’ of food aid — meaning the sale of in-kind food aid in recipient countries to fund development activities. The US, which provides some aid in this form, is reportedly keen to revisit existing clauses which would prohibit this practice except under certain circumstances.
Washington is also expected to lock horns with farm exporting countries that would like to require shorter repayment periods for export financing, as well as with Beijing and some developed countries on issues such as exporting state trading enterprises. Producers in LDCs could benefit if new rules in these areas reduce trade distortions that impact on their own farm production.
And what happens next?
Casting a long shadow over Nairobi, and potentially even undermining progress in the talks themselves, is the vexed question over what will happen to issues that members can’t resolve at the conference. People in LDCs will arguably be affected by the outcome to this question — although their governments will also have a role in determining what this outcome might be.
The fruitless talks this year on agricultural domestic support are just the most recent illustration of how little common ground members appear to have on this critical question.
Most developing countries and LDCs are adamant that unresolved Doha issues should be addressed as a priority — with agriculture chief among them. However, developed countries are increasingly vocal in arguing that the Doha framework has failed to deliver real results, and needs to be replaced by something new.
At the heart of this stand-off is a difference of opinion over the question of special and differential treatment, in particular the nature of the concessions that large developing countries can reasonably be expected to shoulder, given their greater importance in the share of world trade, but also the relative poverty of their citizens compared to those in countries classed as developed. The fruitless talks this year on agricultural domestic support are just the most recent illustration of how little common ground members appear to have on this critical question.
By presenting negotiating proposals that can be addressed irrespective of the form that future negotiations take, LDC negotiators seem to have successfully positioned themselves in this debate by focusing as much on substance as on process. The extent to which WTO talks on trade actually deliver improved food security and rural development outcomes will depend in part on the willingness of trading partners to respond meaningfully to the issues that LDC countries have raised. But it may also depend on the extent to which LDC negotiators themselves are able to navigate the increasingly complex web of negotiating frameworks and national policies that are shaping the fast-changing landscape of markets for food and agriculture.
Global leaders recently agreed to a new set of sustainable development goals which include the target of ending hunger and malnutrition by 2030. Governments will need to revisit the global rules on trade they crafted two decades ago if these ambitious objectives are to be achieved on time.
The challenges that remain should not be underestimated. Rapid population growth means that, while the group of LDCs has seen its share of hungry people fall since the start of the 1990s, the absolute number of people without adequate nutrition has risen by about 40 million over the same period. Climate change is also due to create new disruptions on global markets, increasing the frequency and intensity of extreme weather events, and altering temperature and precipitation. If global markets are to help promote food security and rural development, governments must ensure that the Nairobi outcome represents a real step forward.
Author: Jonathan Hepburn, Agriculture Programme Manager at ICTSD.