Ag groups recognize need for WTO

Maintaining rules-based system of trade offers many benefits to U.S. agricultural trade.

Jacqui Fatka, Policy editor

September 24, 2020

5 Min Read
WTO DG Candidate .jpg
The WTO leader selection process for 2020 includes director-general candidate Dr. Liam Fox of the United Kingdom.WTO

For months, the World Trade Organization has been in a tailspin as the U.S. and others blocked appellate judge nominations, and in recent months, the director-general stepped down a year early. Now, agricultural groups are calling on U.S. Trade Representative Robert Lighthizer to support a new WTO director-general who can reinvigorate and facilitate needed reforms.

In a forum earlier this summer, Joe Glauber, senior research fellow at the International Food Policy Research Institute and former chief economist at the U.S. Department of Agriculture, said the U.S. refusal to appoint new appellate members has rendered the WTO appellate board useless. The appeals process, which has so far worked very well for agriculture in confirming 80% of cases brought against U.S. agriculture, can’t function without an appellate board.

The Trump Administration’s frustrations -- and even some starting during the Obama Administration -- focused on the ability of WTO rulings to supersede national laws at the expense of WTO regulations.  However, the appeals process allows for the proper checks and balances to determine if each country plays “fair.”

John Clarke, European Commission director for international relations, said “WTO is in crisis” but added “don’t throw out the baby with the bath water” in trying to make the needed changes. Clarke argued that it doesn’t need fundamental changes, just improvements.

Agricultural groups are now speaking up, too, about the importance of the WTO multilateral system to manage disputes between countries.

In WTO’s first two decades, overall trade in goods has nearly quadrupled, while WTO members’ import tariffs have declined by an average of 15%. More than half of world trade is now tariff free. WTO affords U.S. agricultural producers and exporters most favored nation (MFN) treatment in 163 countries, representing more than 80% of the global economy.

“The WTO provides rules to guard against arbitrary use of technical regulations or standards to block imports, such as actions associated with sanitary and phytosanitary measures that lack a clear basis in science and are protectionist in intent,” the agricultural groups said in the letter.

The letter was sent to Lighthizer as well as leaders of the Senate Finance Committee, House Ways & Means Committee and Senate and House Agriculture committees. It calls for effective WTO reform that would enhance the ability of American agriculture to access foreign markets and maintain transparency and accountability critical to future export growth that supports American jobs. It also identifies characteristics desired in the next WTO director-general.

"While the WTO has been beneficial for U.S. agriculture, its rules have not kept pace with changes in the global economy, and improvement is needed to hold members accountable and improve the organization’s governance,” the organizations said in the letter. “Continued U.S. membership and active participation will help ensure that necessary reforms are undertaken and that the WTO will continue to play an important and effective role in economic development of the United States and its trading partners."

The letter noted that a transition in WTO leadership presents the opportunity to successfully implement reform and reinvigorate its negotiating function, which is necessary to achieve progress on a wide variety of international agricultural trade reforms. The letter identifies desired characteristics of the next WTO director-general, including:

  • Proactive leadership of WTO and advocating for a rules-based trading system;

  • A vision for WTO reform and resiliency in the future;

  • Adept at navigating across disparate member country positions and a demonstrated ability to build coalitions;

  • Ability to balance political and management experience and acumen;

  • Ability to explore creative solutions and flexible thinking, and

  • An appreciation of the complexities of agriculture and food trade structures and global supply chains.

American Farm Bureau Federation president Zippy Duvall said, “Farmers and ranchers across the U.S. depend upon the WTO’s international system of trade rules to facilitate growth in agricultural trade. We may not always appreciate WTO delays or decisions, but it is critical for the U.S. to remain engaged with the WTO in a leadership role. Exports are fundamental to the success of U.S. agriculture, and the WTO helps to create a level playing field for trade.”

John Bode, Corn Refiners Assn. president and chief executive officer, added, “As long as exports are important to U.S. agriculture, WTO membership will be essential. This is critical to the one-fifth of the U.S. economy that is agriculture related.”

In 2019, U.S. animal feed and pet food manufacturers exported roughly $12.5 billion in products, including $10.8 billion in feed and feed ingredients and $1.7 billion in pet food products. These exports have supported U.S. agriculture’s $16 billion trade surplus and are vital to the industry’s success, the American Feed Industry Assn. (AFIA) noted.

“The WTO provides the foundation for rules-based trading and a vehicle to enforce them,” AFIA president and CEO Constance Cullman said. “Without this system, the U.S. animal food industry would not be able to compete fairly in the global market.”

National Association of State Departments of Agriculture CEO Dr. Barb Glenn said, “Departure from the World Trade Organization would be determinantal to the success of the very industry that feeds our families and 20% of the U.S. economy.”

“It is imperative that we maintain a rules-based system of trade. International trade is the lifeblood of American agriculture,” said Brian Keuhl, co-executive director of Farmers for Free Trade. “The WTO has been critical to our success. An effective, functioning WTO is essential to U.S. agriculture.”

Association of Equipment Manufacturers president Dennis Slater said, “A WTO that reinforces rules-based trade is vital to solve the diversity of complex challenges currently unfolding across the globe. Reform within the WTO will make American farmers more competitive in the global marketplace and create more demand for agricultural equipment. Without a strong commitment to uphold the rules of the WTO or capability to reform the institution, the next WTO director-general will be unable to hold members accountable or negotiate new initiatives benefiting global trade and investment.”

Signatories of the letter include: American Farm Bureau Federation, American Soybean Assn., National Corn Growers Assn., National Milk Producers Federation, Corn Refiners Assn., United Fresh Produce Assn., National Association of State Departments of Agriculture and other industry groups.

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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