“Global agricultural trade needs to be rethought”

Interview: Gaby Allheilig

You say that we need a completely new approach, and that it must promote sustainable food systems worldwide. How do you reach that conclusion?

Today, international trade is mainly regulated by the WTO Agreement on Agriculture. This entered into force in 1995, after agricultural trade was taken up in the canon of world trade under pressure from countries in the Global South. These countries argued that they have a comparative advantage in the global agricultural market and therefore a right to free markets without distortion from tariffs or subsidies. The process was designed to lead to as much “free trade” as possible over time. This was also based on the assumption that it would lead to greater food security worldwide. But that promise was never fulfilled, while the approach was misguided from the outset.

What happened?

The situation is complicated. The current Agreement on Agriculture primarily consists of rules for tariffs and subsidies. Tariffs and tariff-equivalent measures were frozen at 1995 levels, with the promise of reducing them over time. But subsequent rounds of negotiation were by and large unsuccessful, so the reduction never took place. This has led to a situation in which some countries are allowed to levy very high tariffs, while other countries’ tariffs are “frozen” at a low level. Besides, countries aren’t obligated to align their tariffs with sustainability goals.

And the subsidies?

The countries committed themselves under the Agreement on Agriculture to reducing their subsidies or aligning them with environmental objectives. But the rules weren’t strict enough, such that the targets weren’t achieved in this area either. The result is that OECD countries continue to support their agricultural sectors with very high subsidies, without being required to take environmental and social regulations seriously.

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“The current Agreement on Agriculture perpetuates major inequalities”

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What does this mean for the global agricultural market?

Overall, it means that rich countries and large export-oriented producers who choose not to take environmental and social standards seriously have an advantage on the world market. In this way, the system causes many problems and perpetuates major inequalities.

For example?

Subsidized goods from Europe and the US and products from agricultural exporters from countries like Brazil and Argentina have been displacing local production in poor countries for many years. This has given rise to new dependencies; urban populations in many places rely on these cheap foodstuffs. At the same time, many countries are trapped in their role as exporters of raw materials. Indeed, processed goods from the Global South still have a very difficult time on the world market.

What’s the consequence?

Local agriculture and local food systems have been severely weakened. But from a sustainability perspective, they need to be strengthened and made more diverse. Trade is important in this respect – but it should complement local systems, not replace them.

And is that what you intend to address?

With our proposal, we wish to correct the big shortcomings of today’s Agreement on Agriculture, such as unequal protection of local systems and the lack of requirements related to sustainability and fairness. Our aim is to motivate countries to use trade measures carefully, with a view to advancing sustainable food systems worldwide.

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“One lever for change is the way in which trade is regulated”

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All the international efforts aimed at sustainability are currently threatening to fail: the 2030 Agenda, the Paris Agreement, biodiversity targets, etc. And now new rules for agricultural trade are supposed to fix things?

The current situation creates problems worldwide: In many places, agriculture is too intensive and too unbalanced, destroying the natural resource base. In addition, far too many people continue to suffer from hunger. Added to that are the bad working conditions, violations of land and human rights, and too little value creation in the areas where the raw materials originate.

Solving all these problems demands various measures on different levels, beginning with soil cultivation and agroecological production methods. However, a new global framework that provides the right market incentives is also absolutely essential.

Which brings us back to the trade framework – but can it fix the situation?

An important lever for change is the way in which trade is regulated. Indeed, this determines what products reach which markets: Is it raw materials or processed goods that are traded? Where do the products come from – monocultures or diversified agriculture? Does trade complement local production or displace it? These are just a few of the questions that arise.

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“Every country is already required to make its food systems sustainable”

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Instead of reforming the current agreement, you propose a completely new system. Where do you plan to start?

It’s important to point out that we’re not the only ones thinking along these lines. Similar goals are also being pursued by the trade proposal of La Via Campesina, by the German National Academy of Sciences Leopoldina, Yale University, and especially the Canadian Université Laval with its Proposal for an International Convention on Agricultural and Food Diversity and Sustainability.

We build on this proposal and argue that every country is already legally required to move towards sustainable food systems. This obligation emerges from international public law, in particular from existing international agreements on biodiversity, climate, human rights, and labour rights.

And what do you propose?

We envision a package of measures that must be considered as a whole. For one thing, we propose that the use of trade instruments like tariffs, export restrictions, subsidies, and competition rules must be geared towards achieving sustainable food systems. At the same time, these instruments may not cause any harm to trading partners and must be structured fairly. This basic idea is also reflected in the underlying principles of our proposal.

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“Trade instruments must pursue the goal of sustainable food systems”

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What does this mean concretely?

If countries want to use trade instruments, they must present a concrete strategy that uncovers current deficits and explains how they intend to address them. Additionally, member states are required to introduce consistent and stringent competition rules to prevent abuse of market power.

According to current thinking, this distorts trade.

Yes, but that’s too simplistic. We’re turning the tables and arguing that a framework that promotes sustainable food systems is, in principle, sound. This can also include trade measures.

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“Context-appropriate approaches are needed”

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That would mean that every country could formulate and adopt different measures.

Exactly, because context-appropriate approaches are needed. In Switzerland, a sustainable food system means something else than in Senegal. Each country or group of multiple countries would formulate it for itself, though basic rules would need to be maintained everywhere.

How is this supposed to work?

The countries or regions have to communicate transparently in advance which trade instruments they wish to use and why. The “do no harm” principle is important to us here: A country must carefully assess how the measures it chooses will impact other countries. The objective is to prevent unjustified harm to anyone.

Further, we stipulate an obligation for rich countries to guarantee fair prices and open their markets to processed goods from poorer countries in order to address historic structural inequalities. Finally, countries have the right to hinder or restrict market access for goods whose production has caused serious harm to public goods elsewhere.

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“We also want to build a bridge between the separate worlds of Geneva and Rome”

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Who is supposed to monitor things if every country can pass different measures?

Every agreement requires an institutional architecture. We’ve developed one. It’s primarily based on deliberation, cooperation, exchange, and trust. We envision an Advisory Committee that can advise countries on how to develop a strategy for sustainable food systems and adjust their trade instruments accordingly.

Our goal is to bring together the two currently separate worlds of Geneva – the seat of the WTO and other trade-oriented institutions – and Rome – the seat of the FAO and the Committee on World Food Security – and to strengthen cooperation among key international organizations. This also includes human rights institutions.

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“Trade is a cross-cutting issue that touches on various levels”

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So, then there is no oversight after all?

Yes, there is; we’ve also provided for supervisory instruments. All member states must submit regular reports outlining their actions, on which they receive feedback. At the same time, we’ve provided for a dispute settlement procedure. This comes into play particularly if one country feels it’s been harmed by the measures of another country.

Like at the WTO today?

It’s similar, but not the same. In contrast to the current WTO architecture, the process we’re proposing is more inclusive. Today, it’s the prerogative of a state’s trade delegates to represent their country’s interests. We want to change that, because trade is a cross-cutting issue that touches on various thematic areas. In our view, experts from diverse specialist fields must be included in the negotiation of the more detailed texts and in implementation.

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“We want to establish new ideas”

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In your proposal, you call for a rule-based system with an international agreement. Should this be implemented within or outside the WTO?

We purposely left this question open. It’s conceivable that, over the long-term, the WTO will develop a willingness to more fundamentally review existing rules, make them more differentiated and nuanced, and align them much more strongly with sustainability standards. But we can also imagine that the issue of agricultural trade could be embedded in an existing or new UN process.

At a time when the UN is coming under increasing pressure?

Of course, we don’t assume that our proposal will be implemented exactly as it stands.  The Model Treaty rather demonstrates that new approaches are possible. It’s offered to inspire bold thinking and open up space for new ideas – in the hope that in 20 years, the global community will make a serious attempt to make agricultural trade fairer and more sustainable.

At some point, new ideas have to emerge. Together with other similar initiatives, we’re opening up the discussion on this topic. We invite everyone to join with us or with new groups in further developing, reimagining, and expanding the proposed approaches into new areas of market regulation.

More on the project and the principles developed within it
and on the iatp website