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Trade can help us respond to food security, sustainable development challenges, says DDG Paugam

By Deputy Director-General Jean-Marie Paugam

We are currently facing a dramatic food security crisis. Today I would like to focus on the role that the global trading system plays in combatting food insecurity – and the contribution that could be made by China as one of the leading producers of agricultural produce in the world.

Climate disasters, the COVID-19 pandemic, conflicts, and economic downturns have undermined a decade of progress in combatting malnutrition in the world.

The UN Food and Agriculture Organisation, led by Dr QU Dongyu, estimates that up to 783 million people faced hunger in 2022. And – despite historic progress in China – hunger is still on the rise throughout Africa, Western Asia and the Caribbean.

Nearly 600 million people are expected to face hunger by the 2030 target date for ending hunger and malnutrition from the Sustainable Development Goals. This figure represents 119 million more people than would have been the case without the pandemic and the war in Ukraine, according to the FAO’s latest SOFI report, on the State of Food Insecurity and Nutrition in the World. We need to overcome this setback.

Trade and trade policies have a central role to play to help reverse these dreadful trends. The first simple reason for this is that while some world regions are net food exporters, others are importers – meaning food must be able to circulate freely from regions with surpluses to those with deficits.

China’s impressive experience in reducing the number of hungry people exemplifies the importance of trade for food security. It shows that trade growth is key to raising people’s incomes, creating jobs, and improving diets and nutrition. In 2022, China was the second-largest importer of agricultural goods, 12.3 percent of the global total. But it was also the fourth-largest agricultural exporter, with 4.4 percent of total exports. 188 million Chinese people rely on agriculture, forestry and fishing for employment.

The central purpose of the WTO is to leverage trade to raise people’s standards of living, and advance sustainable development. For all human beings this starts with the capacity to feed oneself.

We can act on three fronts: sustaining immediate responses to the crisis, reforming agricultural trade distortive policies, and preparing for the future.

Immediate responses to the food crisis: preserving food trade flows

I am glad to report that, after food prices hit record peaks in March 2022, and the numbers of hungry people surged to a new high, the WTO has taken a particularly active role in the global response.

We are part of the crisis group led by the UN Secretary-General to coordinate international agencies.

We work with principals at the FAO, IMF, World Bank, and World Food Program to articulate joint responses.

We supported the UN’s efforts, with Türkiye, to ease exports of food and fertilizers from the Black Sea region, which played, and could play again, a crucial role in bringing down global prices and keep food moving around the world, particularly to places where they were most needed.

At the WTO twelfth ministerial conference, in 2022, ministers agreed the first-ever WTO declaration on food security. Two actions were noteworthy: they committed to exercise restraint in the use of export restrictions on food and related products; and they agreed to exempt from export restrictions food purchased by the World Food Program for humanitarian purposes.

The impact of these actions has been positive. We closely monitor the export restrictions imposed by our members on food, feed, and fertilizers and the trend has shown that these were kept under control and even fell from their initial level. As of 25 August, out of 110 such export restrictions imposed since the start of the war in Ukraine, 44 were phased out, bringing the total number down to 66. So, there’s significant room for improvement – but we’re going in the right direction so far.

Ministers also delivered a long-overdue deal to eliminate subsidies to illegal fisheries. Our director-general was delighted to receive China’s instrument of acceptance of this agreement from commerce minister Wang Wentao in Tianjin in June. When it enters into force, this agreement will help secure the livelihoods of the 260 million people who depend directly or indirectly on marine fisheries. Negotiations are now ongoing to reform the other subsidies harmful to ocean life.

Discussions have also been launched on the food security of people in low-income food-importing countries, as well as on food safety and plant and animal health.

Overall, these immediate responses from the WTO its members, and other actors have had real impacts: over the last year, food prices have decreased approximately 20%, before the recent disruptions associated with the suspension of the Black Sea Grain Initiative.

The World Food Program has acknowledged that the WTO Decision has greatly assisted their operations by enabling them to feed more hungry people around the world.

Structural responses to food insecurity: reforming agricultural trade distortions

Over the last three decades, the WTO’s agreement on agriculture, has provided a solid foundation for the growth of world trade in food and farm goods. But world trade in agriculture remains severely distorted by high levels of subsidies and market barriers. An update to the agreement is long overdue: this remains the WTO’s central mission in the fight against food insecurity.

It is possible: WTO members delivered a major step forward when they agreed to eliminate agricultural export subsidies at the Nairobi ministerial conference in 2015.

But since then, WTO members have struggled to make progress on pending topics, ranging from the reform of domestic farm support to market access, export restrictions on food, and the special needs of developing countries, including in areas such as cotton.

One thorny area are the rules limiting the support that countries can provide when governments purchase food at minimum prices to build public stocks. Some developing countries want these rules to be modified, especially the method for calculating support levels. Others fear that accumulated stocks could ultimately be released onto world markets, and argue for wholesale reform of farm support rules so producers can compete fairly.

The WTO agricultural negotiations have stalled for far too long over this issue. Like other seemingly intractable issues, it can be resolved. We know the parameters and, as we have shown in the past, if WTO members engage in straightforward discussions and exercise flexibility where needed, it can be resolved. China can bring its valuable experience and help broker a solution to this issue.

Looking forward: engaging on climate and sustainability

While we have been too slow in tackling current trade distortions, today’s food security challenges are set to become more acute: climate change, biodiversity loss, and challenges related to land and water management are adding to current food security threats and compel us to accelerate the change toward sustainable agriculture.

The Trade Policy Reviews that we conduct with Members at the WTO already show that ever more countries see climate change severely impacting their trading capacities, undermining their agricultural production potential, and devastating their export infrastructure as natural disasters strike.

A lot of knowledge has already been accumulated on this matter. For instance, the WTO’s 2022 World Trade Report highlighted how trade can help adapting to climate change, by reducing distortions, improving competition, and ensuring that the true costs of food and farmed goods are reflected when traded internationally.

It also makes the case for reinforcing the provision of public goods – for example, by improving the availability of advisory services, or investing in new crop varieties and livestock breeds that are more resistant to climate impacts.

Some international economic institutions, and several WTO Members, have advocated for reforming and repurposing the hundreds of billions of dollars in global farm support to better contribute to fighting climate change, and to address other important shared goals. Others suggest that trade rules should foster and facilitate the dissemination of pro-climate innovations in agriculture.

Our director general, Doctor Okonjo-Iweala, has been urging leaders, including recently at the Paris Climate Finance Summit in June to frame these issues within their global strategies to address climate change These questions clearly need to be discussed and tackled so we can prepare the WTO for the future.

Here again, the Chinese experience shows that it is possible to move ahead with reforms to farm supports. According to China’s most recent domestic support notification to the WTO (for calendar year 2020), nine-tenths was declared as “green box” – the category for support that causes no more than minimal trade distortion and includes environmental programmes.

These are the three fronts where the WTO must boldly act to contribute to food security: the immediate, the structural, and the forward-looking.

Excellencies, ladies and gentleman, I want to leave you with one clear message:

Trade can, and must, help us respond to the food security and sustainable development challenges we face. And the time is now.

We know what is to be done. When trade ministers meet next February at the WTO’s ministerial conference in Abu Dhabi, they will have a unique opportunity to ensure that trade contributes to strengthening global food security. Abu Dhabi can be a defining moment for a more food-secure and sustainable future.

Trade and agriculture ministers need to work together to overcome the negotiating stalemate. And political leaders can send clear signals from the G20 and the UN General Assembly in September.

China’s leadership and active engagement will continue to be crucial to ensure that substantive progress is made in achieving food security for all countries. This is why I feel that this conference is an important opportunity for exchange of views and experiences.

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