Agricultural Export Restrictions Spark Controversy at the WTO

6 April 2011

With food prices at record highs, WTO rules should be changed to prevent countries from restricting agricultural exports if doing so could threaten the food security of others, a group of poor countries that are net importers of food have argued.

Export bans and restrictions introduced by other WTO members would be forbidden in the case of exports to net food importing developing countries (NFIDCs) or to least-developed countries, under the terms of a new proposal presented by the NFIDC group at a meeting of the world trade body's agriculture negotiating committee on Monday.

Currently, WTO rules allow countries to apply export restrictions under the condition that these are "temporarily applied to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting contracting party." However, in order to keep domestic prices under control, a number of major food producing nations have repeatedly imposed export restrictions in the face of rising international commodity prices -- an unpredictable policy that analysts blame for exacerbating price spikes.

Notably, the NFIDC proposal was submitted as part of the broader Doha Round negotiations at the WTO. A detailed proposal to ban agricultural export restrictions represents something of a novel step in the long-struggling trade talks. While the negotiating mandate specifically mentioned improved market access and reductions to export subsidies and trade-distorting domestic support, it did not explicitly refer to export restrictions -- simply mentioning a goal of "correct[ing] and prevent[ing] restrictions and distortions in world agricultural markets."

The provisions on export restrictions in the most recent draft negotiating text, which dates back to December 2008, relate primarily to requirements for consulting with affected countries, notifying and reporting on export restrictions.

Food security threatened, argue importers

"Export restrictions play a major role in fueling soaring international food prices", the proposal claimed, noting that higher prices of cereals, meat and dairy products had driven a UN food price index to a record high in February this year. The food price increases "aggravate poverty levels and seriously threaten NFIDCs' food security", the submission said.

The sponsors also proposed exempting UN humanitarian aid from export prohibitions and restrictions - an idea which has increasingly gained currency in recent months.

The proposal, introduced by Egypt, was broadly welcomed by other WTO members - although some, such as Australia, Brazil and the US, called for export restrictions to be seen as part of a more holistic appraisal of global trade rules.

Developed country importers such as Japan and Switzerland expressed sympathy for the initiative, and said they would look in more detail at the proposal, which highlights the importance of treating developing countries differently.

The Philippines, which is not a member of the NFIDC or LDC groups, said that its citizens had also been hurt by export restrictions, and suggested that the proposal's coverage could be expanded to include other developing countries.

Grain export restrictions trigger controversy

Export restrictions also featured prominently during a meeting of the WTO's ‘regular', or non-negotiating agriculture committee meeting last Thursday. The EU, the US and Japan were among countries that criticised moves by the Ukraine and three other countries to impose export restrictions on wheat, other grains and animal fodder.

With Ukrainian export quotas now due to be extended until July, and other restrictions on exports being notified by the Kyrgyz Republic, Moldova and Macedonia, trading partners warned that the measures announced could hurt producers at home and consumers abroad. Switzerland and Israel also criticised the measures, and asked what had been done to ensure that importing countries' concerns had been taken into account.

Russian and Ukrainian export restrictions have been widely seen as a factor in exacerbating global shortages of key agricultural products in 2010.

Countries confirmed that they had imposed export restrictions on a number of products: wheat and meslin in the case of Macedonia; wheat and meslin in Moldova; hay and fodder in the Kyrgyz Republic and grains in Ukraine. They claimed that the measures would not harm importing countries for a variety of reasons -- some noted that they were net importers of the commodities in question, others said their exports were insignificant on the world market.

G-20: export restrictions on the agenda

The G-20 group of major global economies, under the presidency of France, has prioritised the issue of food price volatility, and is expected to consider whether action can be taken on export restrictions when the group's agriculture ministers meet in June.

A leaked draft report to the G-20 that was authored by various international agencies recommends developing "an operational definition of the food price or food shortage situation that would justify consideration of an export restricting measure." It goes on to propose that export bans be defined "as a time-limited measure of last resort, allowed only when other measures, including triggering domestic safety net measures for the poorest, have been exhausted."

The report, which was discussed in Paris at the end of March by the agriculture ministers' deputies, also proposes allowing humanitarian food purchases to be exempted from export restrictions.

Doha in trouble

In Geneva, delegates questioned how the NFIDC proposal would fare, given the turbulent atmosphere in the troubled Doha talks.

The chair of the WTO's agriculture negotiations, New Zealand Ambassador David Walker, is now widely expected to deliver a 'report' when an Easter target date is reached - rather than a revised draft negotiating text, as WTO Director-General Pascal Lamy had earlier urged.

As Walker began a series of consultations with trade negotiators that is due to run through until 15 April, negotiators told Bridges that they were pessimistic about how much could be achieved, given the impasse in talks between major trading powers.

Some delegates seem now to be looking to Lamy to rescue the faltering talks, as despondency grows over their future direction. The director-general is expected to hold a series of individual discussions with senior trade officials - known as ‘confessionals' - to try to gauge in the next few days whether there is any scope for progress in the talks.

Reporting on a negotiating meeting this week, one delegate euphemistically observed that "There was not a great level of buoyancy in the discussions."

More bluntly, another stated that "Doha is already dead - unless heads of state resurrect it". An OECD summit in Paris at the end of May could provide one chance to do so, the source suggested.

ICTSD reporting.

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