World Trade Organization (WTO) Archives

USW Policy Team Update: Laudeman Discusses WTO Ministerial Conference, Japan Trade Team’s Upcoming Visit to D.C.

The U.S. Wheat Associates’ (USW) Policy Team is busy preparing to host a Japan Trade Team in Washington, D.C. this month. It’s an opportunity for USW Vice President of Policy Dalton Henry and Director of Trade Policy Peter Laudeman to meet face-to-face with valuable customers of U.S. wheat and discuss the U.S. wheat industry.

Last month, Laudeman joined a coalition of U.S. agricultural representatives at the World Trade Organization’s (WTO) Thirteenth WTO Ministerial Conference (MC13) in Abu Dhabi. Trade officials from across the world attended the event to review the functioning of the multilateral trading system and to take action on the future work of the WTO.

In this short video, Laudeman provides an update on the USW Policy Team as the second quarter of 2024 takes shape . . . .

April 15, 2024/by Ralph Loos

Trade Delegation, Trade Negotiations and Barriers, Trade Policy, World Trade Organization (WTO)

U.S. Wheat Associates Sees Positive Outcome at WTO Ministerial Conference

To misquote Mark Twain, reports of the death of agricultural negotiations at the World Trade Organization (WTO) are exaggerated. That is a key message for the world’s wheat growers and buyers following the Thirteenth WTO Ministerial Conference (MC13) in Abu Dhabi, United Arab Emirates. In the WTO photo above, Director General Okonjo-Iweala encouraged members to close remaining gaps to secure outcomes during the Conference.

“Going into MC13 negotiations, we did not want to see any backsliding on past progress made on agricultural commitments at the WTO,” said U.S. Wheat Associates (USW) Director of Trade Policy Peter Laudeman, who joined a coalition of U.S. agricultural representatives at the Conference. “Fortunately, the U.S. negotiating team and many other countries were able to hold firm, particularly against India’s protection of its trade-distorting wheat and rice policies.”

On Feb. 29, 2024, during the Ministerial, Politico Pro trade reporter Doug Palmer provided additional background about the agricultural negotiations.

“The U.S. farm groups contend India’s me-first approach is a non-starter because the “peace clause” agreed in Bali has allowed it to accumulate huge rice and wheat stocks that it buys at above market prices and then sells into world markets at a discount,” Palmer wrote. “They also argue there is a much older mandate for a broad-based negotiation in the 1994 WTO Agriculture Agreement that includes trade-distorting domestic support and market access barriers that countries impose to keep out farm exports.”

For more information about U.S. wheat industry positions on WTO agricultural policy, visit “USW Trade Policy Team Addresses India’s Subsidies, Turkish Flour at WTO.”

Members of a U.S. agricultural coalition met during the WTO MC13 with USTR Chief Ag Negotiator Doug McKalip in February 2024.

USTR Chief Agricultural Negotiator Doug McKalip met with U.S. agricultural industry representatives at the WTO 13th Ministerial Conference in Abu Dhabi in February 2024. Representatives included (L-R) Peter Laudeman, U.S. Wheat Associates: Molly O’Connor, CropLife America; Ambassador McKalip; Maria Zieba, National Pork Producers Council; Karah Fissel, USA Rice; Sharon Bomer Lauritsen, AgTrade Strategies, LLC; Tony Rice, National Milk Producers Federation; and Ben Conner, DTB AgriTrade.

Shared Interests

Laudeman would agree with U.S. Trade Representative (USTR) Ambassador Katherine Tai‘s post-conference statement that, “Members have worked to identify shared interests and build convergence in a collaborative way. Members are identifying new ideas and improvements that can help all of us more effectively resolve disputes and make the system more accessible at the same time.”

The U.S. government negotiating team including USTR Chief Agricultural Negotiator Doug McKalip deserves credit for holding the line on the issues in agriculture said Laudeman who also noted that support existing commitments is more widespread than in the past.

Opportunity to Advance Negotiations

“Many countries that agreed that India’s firm stance on Public Stockholding (PHS) was not productive in advancing agricultural negotiations at the WTO,” Laudeman said. “Notably, many Least Developed Countries recognized that India’s PSH program had negatively affected their own food security.”

Ambassador Tai went on to say that while the United States is disappointed that WTO members were not able to reach consensus on agriculture, “the United States will continue to engage with other Members to achieve meaningful outcomes on these important issues.”

“The message for our wheat farmers and our customers around the world is that the WTO is not broken yet,” Laudeman said. “And we are still standing up for commitments that have been made and creatively looking for progress in the way forward.”

March 6, 2024/by Steve Mercer

Grain Science, India, Wheat Research, World Trade Organization (WTO)

USW Explores Opportunities to Collaborate with Australia on Policy Initiatives

USW Director of Trade Policy Peter Laudeman (left) chats with NAWG Vice President Of Policy And Communications Jake Westlin during the recent NAFB "Washington Watch" event in the nation's capital. Laudeman is currently in Australia to engage grain industry stakeholders in that country and explore ongoing global issues involving trade, plant breeding technologies and World Trade Organization (WTO) commitments.

USW Director of Trade Policy Peter Laudeman (left) chats with NAWG Vice President of Policy and Communications Jake Westlin during the recent “Washington Watch” event in the nation’s capital. Laudeman is currently in Australia to engage grain industry stakeholders in that country and explore ongoing global issues involving trade, plant breeding technologies and World Trade Organization (WTO) commitments.

U.S. Wheat Associates (USW) Director of Trade Policy Peter Laudeman is in Australia this week to engage grain industry stakeholders in that country and explore ongoing global issues involving trade, plant breeding technologies and World Trade Organization (WTO) commitments.

While a major competitor for U.S. wheat, Australia presents many opportunities for collaboration on policy initiatives that mutually impact both U.S. and Australian producers.

Laudeman will interact with researchers, government regulators, producer organizations, and private sector plant breeding and grain handling companies. His discussions will primarily be focused on the regulatory environment guiding plant breeding technologies, including transgenic and gene edited wheat. Both the U.S. and Australia regulators are reviewing applications to deregulate HB4 wheat produced by Argentinian company Bioceres.

HB4 wheat, a drought-tolerant transgenic wheat, received approval for commercialization and cultivation from Brazil in early March. Brazil joined Argentina, which granted commercialization approval to the genetically modified (GM) wheat in 2022. HB4 wheat is also approved for food and feed use in the U.S., Australia, Colombia, New Zealand, South Africa, Nigeria and Indonesia.

Growing global demand for wheat combined with persistent drought conditions that hamper production is leading the push for greater acceptance of new plant breeding technologies. Bioceres said HB4 drought-tolerance technology has been shown to increase wheat yields by an average of 20% in water-limited conditions.

USW and the National Association of Wheat Growers (NAWG) are guided by jointly approved “Wheat Industry Principles for Biotechnology Commercialization,” which lay out specific steps expected from plant breeding companies if they wish to commercialize transgenic wheat in the U.S.

India’s oversubsidization of wheat and rice is another topic Laudeman will visit while in Australia, which has been a partner with the U.S. in holding other trading partners accountable to their WTO commitments. Australia recently joined WTO counternotification filed by the U.S. against India.

April 27, 2023/by Ralph Loos

Trade Policy, World Trade Organization (WTO)

The Beginning of a New Food Security Initiative?

A new paper on food security submitted by the United States at the World Trade Organization (WTO) has to date received little attention but it could signify a meaningful shift in dealing with agriculture issues at the WTO. That paper, entitled “The World Trade Organization’s Role in Enhancing Food Security” suggests that facilitating rules- and science-based trade should be the basis for building global food security. The concept sets up a new approach to discussing food security issues that will span multiple areas of jurisdiction. Taking a new approach is critical as the current agenda is driven by countries set on only weakening existing WTO rules, which creates a breeding ground for trade distortions.

Those who support an effective and predictable legal architecture for agricultural trade should want to see a WTO that is able to facilitate trade liberalization. This “reset” of the negotiating agenda starts small – the only next steps identified are additional submissions and discussions – but it will take time and sustained effort to overcome the inertia of the current agenda and reestablish the WTO as a useful negotiating tool.

Core Elements of Food Security

The paper focuses on food security, which is understandable since it is a major agenda item at the WTO. The war in Ukraine has put the issue in the spotlight; meanwhile, India continues to use a façade of food security to insist that WTO rules shouldn’t apply to them. That dynamic creates pressure to do something but action for its own sake can lead to poor outcomes for the trading system, especially if India is able to get the WTO to endorse its vision of food security. Unfortunately, there is no consensus on the time-tested ideas identified by the U.S. paper, namely that trade is critical to these core elements of food security:

Movement of Food – An open trading system is more resilient because it allows countries to adapt quickly to supply chain shocks. An open system also provides access to a more varied and nutritious diet, which is another important component of food security.
Innovation – Legal frameworks need to incentivize innovation while recognizing that one-size-fits-all practices are not possible and should not be imposed on trading partners.
Development – Support for trade facilitative infrastructure coupled with access to markets and innovations can reduce poverty and enhance food security.
Sustainability – Producers need policies that empower them to transition to more sustainable production practices and adapt to shocks. Well-intentioned but badly structured policies can have negative effects on the environment and trading partners.

Multiple WTO Jurisdictions

Those issues cut across WTO committee jurisdictions, which is why the paper was submitted to seven separate committees, not only the Committee on Agriculture. It also identifies in general terms how the WTO can enhance food security in work under these four categories.

Time will tell if this submission by the United States will be a soon-forgotten document with nice ideas leading nowhere, or if it is the beginning of a thoughtful, creative, and proactive approach to the cross-cutting issues facing agriculture and global food security. Private sector involvement and sustained leadership by like-minded governments will be critical in determining its future.

By Ben Conner, Partner, DTB AgriTrade, LLP

April 17, 2023/by Steve Mercer

Dalton Henry, Trade Policy, World Trade Organization (WTO)

Good Things that Did and Did Not Happen at the WTO Ministerial

Late spring is a notoriously busy time on U.S. farms. This may partly explain why last month’s World Trade Organization (WTO) Ministerial meetings in Geneva largely came and went without much notice from U.S. farmers or farm media. Or maybe U.S. farmers have tuned out the inner machinations of a 25-year-old organization that has been promising a new agricultural agreement for more than two-thirds of its existence. Whatever the reason, the actions, both those taken and not taken, will impact U.S. wheat farmers.

The actions taken of note at the WTO Ministerial include a new declaration on sanitary and phytosanitary (SPS)* regulations and a commitment by countries to exempt humanitarian purchases by the World Food Programme from export restrictions. The latter is of little consequence to U.S. producers as U.S. laws around export restrictions are pretty tight, part of what has made the United States the most reliable wheat supplier in the world. The SPS front, though, holds more promise.

Fastest Growing Trade Barriers

Non-tariff barriers to trade (which include SPS regs) represent what we on the U.S. Wheat Associates (USW) policy team have called “the fastest-growing segment of trade barrier impacting wheat trade.” We have worked on more non-tariff barriers than traditional tariff barriers in the last calendar year. Non-tariff barriers include rules such as maximum residue limits (MRL) on pesticides and limits on weed seed species or insects. Many SPS regulations are critically important to protecting plant and human health, but, in recent years, many countries have found they are a convenient way to protect domestic producers or otherwise frustrate international trade. That the SPS rules received a major update for the first time in their existence at the WTO Ministerial and that the notoriously protectionist European Union joined in supporting them notes just how important they have become to facilitating trade.

Attempts at Weakening WTO Rules

It may seem odd to celebrate actions not taken, almost as though no progress represents a successful outcome. However, that has increasingly been the case for U.S. agriculture at WTO Ministerial meetings in the last decade.

With all hopes of securing meaningful new market access for agriculture essentially dashed since 2008, several developing countries have tried to weaken existing rules. India has been notorious for this, insisting that its public stockholding programs be exempt from subsidy limits – despite exporting substantial wheat and rice stocks from those so-named food security programs. India secured a limited exception to those subsidy rules during the Bali ministerial in 2013. Developing countries also substantially, though temporarily, weakened rules on export subsidies – widely recognized as the most trade distorting form of domestic support during the Nairobi ministerial in 2015.

With those two events as background, an informal coalition of U.S. agricultural groups – “Aggies for WTO Reform” – attended the WTO Ministerial, received briefings from the U.S. government and WTO representatives, and advocated with other country delegations to hold firm in the original rules of the WTO.

Trade Rules for the Greater Good

Those original rules have been critical to the expansion of U.S. agricultural trade since the WTO was formed in 1996. The chart below, shared with USW’s board of directors in early 2022 by USDA Acting Undersecretary for Trade and Foreign Agriculture Jason Hafemeister, shows the double-sided value to world economies from the WTO. By standardizing the rules of trade and reducing barriers in its initial agreement, the WTO enabled a tremendous rise in exports of U.S. agricultural products while simultaneously lifting millions of people worldwide out of poverty.

So, in looking back at another WTO Ministerial meeting, there may be much to be said about its shortcomings and the need for improvements, but history shows when countries stick to the rules and agreements, trade – and people – win.

*The U.S. Trade Representative defines SPS measures as rules and procedures that governments use to ensure that foods and beverages are safe to consume and to protect animals and plants from pests and diseases.

By USW Vice President of Policy Dalton Henry

July 7, 2022/by Amanda Spoo

China, Trade Negotiations and Barriers, Trade Policy, World Trade Organization (WTO)

China Exceeded Annual Wheat TRQ Volume in 2021

China’s latest customs numbers are in, and the news is significant. After clearing 933,500 metric tons of wheat through customs in December, China in calendar year 2021 exceeded its 9.636 million metric ton (MMT) annual wheat TRQ (tariff rate quota) established in its World Trade Organization (WTO) membership. The official tally was 9.718 MMT of imported wheat.

According to customs, Australian wheat and U.S. wheat at more than 2.7 MMT each were China’s largest suppliers in 2021. The difference between them is a mere 9,000 metric tons. That is about the volume that fits into one hold on a bulk freight vessel.

Customs data showed China exceeded its annual wheat TRQ in part by importing 2.544 MMT of Canadian wheat and 1.412 MMT of French wheat in 2021. The volume China imported from those four wheat suppliers indicates to U.S. Wheat Associates (USW) that buying from deep and transparent markets with good ocean shipping infrastructure is still attractive to China’s buyers. The remaining 3% of its total 2021 imports arrived from Kazakhstan and Russia.

Image of U.S. HRW wheat and list of functional benefits included to show how China exceeded its annual wheat TRQ with help from USW.

Introducing HRW Wheat. China imported a significant amount of U.S. hard red winter (HRW) wheat in 2021. So in September, USW used presentations (above) and technical demonstrations to help Chinese millers and grain buyers understand the functional benefits of HRW.

U.S. Wheat Demand

In December, a private buyer purchased a small container-load of U.S. wheat. That helped lift China’s total U.S. imports in the second half of calendar year 2021 t0 848,000 metric tons. The obvious, recent slow-down in U.S.-origin wheat arrivals is disappointing. But it is not surprising. In fact, U.S. export wheat prices are now above domestic Chinese prices on a Cost and Freight basis.

China’s private milling and wheat food manufacturers serve an increasingly sophisticated consumer market. Their demand for four classes of high-quality U.S. wheat remains strong. That is why our experienced, professional USW China team members continue to educate industry customers about U.S. wheat value and functionality. We are pleased that COFCO, China’s state trading company, welcomes our activities that, we believe, helped China exceed its annual wheat TRQ.

Practical Guidance

A good example from 2021 was a three-day “Contracting for Wheat Value” seminar in July for 32 participants representing 11 non-state and state Chinese trading companies and mills. The goal of the seminar was to help the participants become better-prepared buyers. USW provided practical guidance on writing contract specifications that take advantage of U.S. wheat crop and market situations and much more. According to input from the meeting participants, our goal was achieved.

Chinese wheat buyers participated in a USW Contracting for Wheat Value seminar in 2021, part of effort to help China exceed its annual wheat TRQ in 2021.

Contracting for Wheat Value. USW combined an in-person meeting in Guangzhou, China (above), with video and virtual presentations in July 2021 to help Chinese wheat buyers better understand the U.S. wheat export system.

Policy Plays Its Role

We also respectfully look for help from policymakers on both sides. Since the Phase One agreement, U.S. wheat sales to China are far above USW’s pre-trade war average. As USW Vice President of Policy Dalton Henry noted one year ago, policymakers “would do well … to pick up where Phase One left off and continue to build on the tremendous export potential for China.”

It is true that some uncertainty will remain in U.S.-China trade relations. It is also true that opportunities will emerge to do business in China. USW has support from our farmers and USDA Foreign Agricultural Service export market development programs. And USW will stay engaged in keeping our Chinese customers informed about the quality, variety and value of U.S. wheat. So hopefully, next January, we will see that China has once more exceeded its annual wheat TRQ.

Finally, we wish all our customers and friends peace and good health in the Year of the Tiger!

By Jeff Coey, USW Regional Vice President, China, Hong Kong and Taiwan

January 27, 2022/by Steve Mercer

India, Trade Negotiations and Barriers, Trade Policy, World Trade Organization (WTO)

Congress Shines Spotlight on India’s Trade-Distorting Domestic Wheat and Rice Support

U.S. Wheat Associates (USW) is very pleased that several members of Congress have asked Secretary of Agriculture Tom Vilsack and U.S. Trade Representative Katherine Tai to pursue a World Trade Organization (WTO) case against India’s trade-distorting domestic wheat and rice support.

In separate letters to those officials, members of the U.S. Senate and House of Representatives noted that while India is limited to providing 10% support for crop inputs under its WTO agreement, the government subsidizes half the total cost of wheat and rice production and recently announced a massive new subsidy for fertilizer. The letter also reminds Ambassador Tai and Secretary Vilsack that the United States counter-notified India’s claim that it meets WTO limits on price support. However, India’s government continued raising the guaranteed prices it pays to purchase wheat and rice.

India’s subsidies lead directly to domestic supplies that far exceed India’s acknowledged need for stockkeeping – stocks the government cannot store effectively. As a result, the government unloads stocks into the export market, often at prices below what it paid to purchase the wheat. USDA estimates Indian wheat exports for the marketing year ending June 30, 2022, will be 5 million metric tons (MMT). This leaves almost 28 MMT of wheat stocks remaining.

Chart shows Indian wheat production and exports to illustrate trade distorting wheat and rice subsidies

India’s wheat subsidies encourage over-production, pushing India into the global export market. As a result, stocks exceeding the government’s ability to store wheat periodically distorts trade. Source: USDA Foreign Agricultural Service Production, Supply and Distribution Databases.

The distortion of international wheat and rice trade from these policies is severe, costing U.S. wheat farmers more than $500 million per year in lost income according to a 2020 Texas A&M University study commissioned by USW and USA Rice.

Wrong Subsidies, Wrong Time

Subsidies encouraging over-use of agricultural production inputs are not appropriate when the world is concerned about agriculture’s environmental footprint. We ask the question why is India subsidizing fossil fuel and chemical fertilizer use? Why is India subsidizing over-production that encourages the cultivation of more marginal land?

U.S. wheat and rice farmers rely on open markets and fair trade to sustain their ability to feed the world. USW joins members of Congress and the National Association of Wheat Growers in calling on India to adhere to its international commitments and willingness to work with USDA and the Office of the U.S. Trade Representative to maintain the competitiveness of U.S. wheat in the world.

Graph shows various wheat subsidies reported to WTO.

The U.S. government submits this data to the WTO by the U.S. government as part of a counter-notification. This data shows a wide discrepancy between actual domestic wheat support and the Indian government’s submission.

January 19, 2022/by Steve Mercer

Shelbi Knisley, Trade Policy, World Trade Organization (WTO)

U.S. Agricultural Organizations Ask for Positive Reforms at the World Trade Organization

U.S. Wheat Associates (USW) recently joined a coalition of several U.S. agricultural organizations calling on the Biden Administration to work toward reforms to the World Trade Organization (WTO) “that lead to a market opening agenda for agriculture and a better functioning institution.”

USW signed the July 23, 2021, letter to U.S. Trade Representative Katherine Tai and Secretary of Agriculture Tom Vilsack because it believes the WTO’s mission to liberalize global trade has benefitted the wheat farm families the organization represents and the world’s wheat importers. As the coalition stated on liberalized trade, “It helps connect American farming communities to peoples around the globe.”

Since it was formed in 1995, global wheat trade has doubled. The WTO provides a trade dispute mechanism that has identified the need to amend trade-distorting practices such as China’s domestic wheat support and unfilled wheat import tariff rate quota.

However, the letter also pointed out that “When the WTO functions poorly, and other governments get away with treating U.S. agriculture exports unfairly, trust erodes in our government and international institutions. To restore trust, WTO reform is needed.”

Leading issues of discussion at the WTO include challenges on tariff implementation, domestic support, transparency, sustainability, and climate. Following are some of the areas the coalition would like the U.S. officials to address at the WTO Ministerial Conference (MC12) in late November 2021:

Public stockholding (PSH) disciplines – PSH programs may serve a laudable food security goal but often lead to excessive domestic stockpiles, as we have seen in India and China. Those stocks lead to lower global prices and may force U.S. farmers to compete with subsidized exports.
Special safeguard mechanism (SSM) rules – SSM’s allow developing countries to temporarily impose import tariffs to protect domestic producers from competition, and at times may unfairly tax U.S. exports.
Domestic support limits – Domestic support, a subsidy that encourages production, is one of the most discussed topics in Geneva. Some countries want the U.S. and EU (both of whom are within the limits they agreed to) to slash their farm program spending, while the U.S. argues that many advanced developing countries are dramatically exceeding their own limits. The coalition supports negotiating new limits on domestic support if market access is also considered.
Export restrictions are policies that may limit the amount of a product being exported from a country in the form of a tax or set quantity. Some countries will impose export restrictions on commodities to control domestic prices. During the COVID pandemic, Russia imposed export restrictions on wheat exports to control domestic wheat prices. Countries are expected to consider a proposal to exempt purchases by humanitarian organizations like the World Food Program from these limits.

Addressing transparency is a leading concern because it has a significant effect on market access and export competition. For example, global wheat production and trade are negatively impacted by India’s domestic support policies for wheat. Resolving such issues would help the market operate more freely and allow more fair and equal trade for all wheat producers.

The world continues to change, and the demand on the agricultural industry to feed more people in more environmentally and socially sustainable ways is increasing. The coalition supports using science-based approaches to embrace innovations and technologies to address these challenges of sustainability and climate. Also, with this, the coalition supports a declaration on sanitary and phytosanitary (SPS) measures, which would establish a committee on SPS measures to focus on harmonized regulation, risk analysis, sustainability, and innovation at the WTO.

USW remains committed to the WTO’s mission and believes that, with positive reforms, the organization can once again become a functioning, trusted institution for equal and fair trade for the people of the world.

By Shelbi Knisley, USW Director of Trade Policy

August 9, 2021/by Amanda Spoo

China, Trade Negotiations and Barriers, Trade Policy, World Trade Organization (WTO)

Chinese Government Grain Policy TRQ Dispute Moving Ahead

By Ben Conner, Partner, DTB AgriTrade

Over the last several years, U.S. Wheat Associates (USW) and other industry groups have demonstrated how the policies of a few advanced developing countries are distorting world wheat trade and hurting farmers in the United States and other wheat exporting countries. Chinese government grain policy attracted special attention, leading to two dispute cases at the World Trade Organization (WTO), one on excessive subsidies and one on China’s administration of a tariff rate quota on wheat, corn, and rice. By April 2018, WTO dispute panels had sided with the United States in both cases.

Today, the official settlement process for one of those cases has entered the next phase. On July 26, 2021, the United States asked the WTO Dispute Settlement Body (DSB) for authorization to raise tariffs on imports from China due to its failure to comply with the DSB recommendations on its tariff-rate quota (TRQ) administration. China blocked the request, which puts the matter before an arbitration panel. Simultaneously, China made its own request for another panel to review whether it has brought its policies into compliance.

Very close observers of WTO processes might experience deja vu because this is exactly what happened with the case on China’s subsidies for the same commodities last summer.

The next step is for the WTO to form two panels to review the requests of both China and the United States. The compliance panel will look at whether China’s TRQ administration is now functioning on a “transparent, predictable, and fair basis … using clearly specified administrative procedures,” as required by the DSB recommendations. An arbitration panel will review the U.S. request to raise tariffs and decide whether its methodology is appropriate.

Two Reasons for the Challenge

Why is the U.S. government taking this step forward on this case? After all, China has been importing record amounts of wheat and corn since the signing of the Phase One deal (rice is notably lagging) that included implementation of the WTO recommendations on TRQs and subsidies. There are two main reasons.

Procedurally, the U.S. government had to continue extending the window for China to comply (they had already agreed to seven extensions), allow that window to expire with no further action and forfeit its right to suspend concessions, or request that right within 20 days after the window expired. It chose the third option.

Even though China has allowed higher imports, there is still little clarity on how TRQ shares are allocated and reallocated.

If the process remains opaque and unpredictable, China will not be in compliance with its TRQ obligations, which could prevent imported wheat with qualities supplementing Chinese domestic wheat from reaching the Chinese wheat millers who could use it most effectively. It is encouraging that the U.S. and Chinese governments are continuing this case as it will help resolve disagreements over whether China is in compliance with its TRQ commitments and exert pressure to fix problems with Chinese government grain policy permanently.

July 28, 2021/by Erica Oakley

Trade Policy, World Trade Organization (WTO)

World Trade Organization (WTO) Rules Matter to Farmers and Buyers

By Ben Conner, Partner, DTB Associates

The World Trade Organization (WTO) is preparing for its 12th Ministerial Conference (MC12) in Geneva at the end of the year; meanwhile, there is widespread concern that the organization is drifting into irrelevance. But for U.S. farmers, the rules established by the WTO are directly relevant to their work in the fields, and their customers depend on the rules to ensure access to a reliable supply.

Here is a not-at-all unrealistic scenario:

Wheat farmers gather for a meeting at the local country elevator where they sell their crop. The manager tells the farmers that the elevator will not be able to buy any wheat treated with a very effective, foliar disease control product approved for use on wheat in the United States. The reason: the government of an overseas market has announced a zero tolerance for residues of that product on imported wheat and the grain trade cannot accept that risk.

This is but one illustration of the influence that policies in one country can have on practices in another. WTO rules – agreed to by almost every country – set parameters for these policies to ensure that they do not unjustifiably restrict trade. In this scenario, the country imposing the residue restriction may be acting consistently with WTO rules (though it is more unlikely if the U.S. Environmental Protection Agency has approved the treatment) but it must be able to demonstrate that it met the criteria laid out in the relevant WTO agreements.

Monthly WTO Committee Meetings

Every month, representatives from WTO member countries meet in committees to probe policy development on issues just like this. They ask things like: what is the policy’s objective? Does the scientific evidence justify that conclusion? Did you consider the trade effects of that subsidy? Why are companies complaining that they cannot get an import license from your customs agencies? When will you submit transparency notifications? This work almost never makes the news but is a critical part of the statecraft needed to reduce friction in international trade.

Image representing trade barriers and the WTO role in preventing them.

“When countries impose trade barriers even after receiving extensive pushback in the World Trade Organization (WTO) committees, there will not be a quick solution and it will disrupt trade.”

The farmers in the fungicide scenario will almost certainly not be able to rely on the WTO committee process nor the dispute settlement mechanism to fix the problem before marketing their grain. When countries impose trade barriers even after receiving extensive pushback in the WTO committees, there will not be a quick solution and it will disrupt trade. Yet the committee process itself helps limit the number of ideas that ultimately become trade barriers. Questioning trade practices helps provide clarity, draw attention to a problem that can lead to a negotiated solution, build coalitions around a particular concern, and can serve as a prelude to dispute settlement litigation.

A WTO that Works

A functioning WTO is perhaps more important for agriculture than any other sector. Global agricultural trade is particularly complicated and there is little more sensitive than the food we eat. There are reasons why agriculture is the only economic sector with its own multilateral trade agreement, though other WTO agreements on sanitary and phytosanitary measures and technical barriers to trade are arguably even more important for the sector. Because of their sensitivity, agriculture issues are sometimes impossible to resolve through negotiation and the backstop of a litigated outcome (with the possibility of retaliation) is the only way to get a government to back down from a harmful trade policy.

Farmers prefer to use the most effective tools available for their crops. When it comes to agricultural trade policy problems, the most effective tools are often found at the WTO. Regardless of what happens at MC12, limiting trade barriers will require robust engagement by governments and industry in the often invisible work of this critical institution.

May 13, 2021/by actualize