Ahead of WTO Talks, Remembering the Nexus of Agricultural Trade and Development
October 1, 2015
Trade, including agricultural trade, is a powerful engine for economic progress and development. With growth in the agriculture sector at least twice as effective at reducing poverty as growth in other sectors, it is important for legislators and policymakers to consider how agricultural trade can be better utilized to bolster development.
Inclusive agricultural trade policies promote market development, raise local incomes, and improve food and nutrition security for millions of smallholder farmers, handlers, aggregators, and food processors. Markets and trade play a crucial role in economic growth and development, as well as strengthen global food security by increasing access to food. Agricultural trade enables food to flow from areas of surplus to areas of shortages in local, regional, and global markets.
According to the World Trade Organization (WTO), global agricultural trade totaled $1.7 trillion out of a total global trade of $18.5 trillion in 2013. Despite occupying less than 10 percent of the total trade pie, agricultural trade fosters robust debates in the international community. Controversies surround farm subsidies, export subsidies, export bans/restrictions, high tariffs, and protectionist policies that are often disguised as sanitary and phytosanitary measures widely practiced by both developed and developing countries.
From December 15–18 of this year, trade ministers, leading trade experts, and negotiators from 161 countries will gather in Nairobi, Kenya, for the Tenth Annual WTO Ministerial Conference. Negotiations will build upon the Bali Package successfully negotiated in 2013 to support the Doha Development Agenda through lowering trade barriers around the world to increase global trade. The Doha Agenda provides a mechanism through which the WTO member countries can negotiate a balanced outcome to meet the growing and changing demand for food and agricultural products over the coming decades. The importance of elevating agricultural trade negotiations during the conference in Nairobi is integral to the success of the post-2015 development agenda.
Two of the major barriers to agricultural trade are inefficient border inspections and weak infrastructure that contribute to billions of dollars in agricultural losses each year. It is estimated that a truck carrying agricultural produce across West Africa is required to make 30 or more stops at check points for various inspections. The WTO’s Trade Facilitation Agreement, which is currently being implemented, has the potential to benefit both developed and developing countries by streamlining and expediting cross-border inspections. If inspection procedures were standardized and harmonized and border check points reduced, truck travel time between West African countries could be decreased by more than 50 percent, resulting in savings of hundreds of millions of dollars.
Government subsidies to farmers are known to distort international agricultural trade. The WTO member countries present in Nairobi should strongly consider negotiating a balanced outcome, which includes, among other provisions, elimination of export subsidies and a substantial reduction in farm subsidies, which are widely doled out by developed and advanced developing countries to their farmers. Without these reforms, millions of smallholder farmers in developing and least developed countries cannot compete with subsidized food products being exported by developed and advanced developing economies.
Increasing agricultural production, using good agricultural practices and innovative technologies, is the first step for many farmers across the developing world to raise their incomes and sustainably improve their livelihoods. However, storage and transportation of crops lags behind pre-harvest technological innovation. According to the UN Food and Agriculture Organization, 30 to 50 percent of agricultural produce across the world is lost in transit or storage due to post-harvest losses. Investments in infrastructure, such as roads, storage facilities, and food processing plants, are of utmost importance as the international community carves out a new agricultural development agenda. The World Bank, the International Monetary Fund, and other international organizations are in an ideal position to provide financing for infrastructure projects that empower smallholder farmers and enable them to gain access to regional and international markets.
The role of the private sector, leveraged primarily through public private-partnerships, is becoming increasingly critical in helping smallholder farmers, especially women farmers, store, process, and sell their produce in local, regional, and international markets.
Inclusive and sustainable trade mechanisms are integral to the future of agricultural development. WTO member countries can empower farmers through non-trade-distorting policies, effective infrastructure development schemes, and public-private partnerships that could lead to economic growth and better lives across the world. It is of increasing importance that policymakers and trade negotiators prioritize smallholder farmers in their conversations, especially in Nairobi, in order to capitalize upon the momentum from Bali the WTO has established. The time to act is now, and we sincerely hope that those in Nairobi recognize the unique opportunities that lie ahead.
Ambassador Islam A. Siddiqui is a senior adviser to the Global Food Security Project at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Caitlin Allmaier, program coordinator and research assistant for the CSIS Global Food Security Project, contributed to this commentary.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the authors.
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