Whither Multilateralism?

Joseph W. GlauberInternational Food Policy Research InstituteKraft LectureUniversity of Manitoba21 October 2016

Or wither multilateralism…

Making America Great Again?

US net exports as percent of GDP

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%1

85

0

18

55

18

60

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15

Surplus driven by productivity growth (Gordon)

Growth in global agricultural trade

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20001

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81

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Bil USD

Source: WTO

Launch of Doha Round

Growth in trade volumes, selected product

groups

0%

50%

100%

150%

200%

250%

300%

Oilseeds

Wheat

Rice

Feed grains

Beef and veal

Swine

Poultry

Source: USDA, PSD database

Growth of South-South Ag Exports

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400

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

South-South North-South

Bil USD

Source: UNCTAD

Growing share of developing country exports go to

other developing markets

0

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100

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400

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Exports to Developed Markets Exports to Developing Markets

Bil USD

Source: UNCTAD

Largest Developing Country Exporters

2013 ExportsBillion USD

Change from 2009 Share to Developing Markets

Brazil 84.6 +59% 66%

China 46.1 +65% 56%

India 41.8 +188% 79%

Argentina 40.6 +50% 74%

Indonesia 34.7 +67% 68%

Thailand 32.7 +53% 67%

Malaysia 26.5 +47% 76%

Mexico 22.0 +52% 12%

Ukraine 16.1 +83% 59%

Turkey 16.1 +58% 56%

World 1,502.7 +49% 39%

Source: Flake and Flake (2015) and UNCTAD (2015)

Doha Development Agenda, RIP

• 2001: Launch post 9/11• 2003: Cancun ministerial => emergence of G20/G33/C4• 2004: Framework Agreement => tradeoffs (CCPs for SSM/SP)• 2005: Hong Kong ministerial => elimination of export subsidies• 2006: Geneva meltdown => EU market access v US domestic

support• 2007: G4 process => Potsdam (EU/US v BZ/India)• 2008: July ministerial => breakup over SSM (India v US)• 2013: Bali ministerial => trade facilitation; public stockholding• 2015: Nairobi ministerial => export competition

Nairobi Package

• Export subsidies eliminated– Developed countries: 2020– Developing countries: 2023– Dvlping use of marketing and internal transportation subsidies (Art 9.4): 2028– Volume standstill based on average of previous 5 years

• Export credits—repayment period restricted to 18 months– Developed: end of 2017– Developing: end of 2020

• Food aid– Best efforts on cash versus in kind

• State Trading Enterprises– Best efforts

Nairobi Package

• Special Safeguard Mechanism– Recognizes right of developing countries to have SSM (HK ministerial)– Committee on Agriculture will have special session to discuss

• Public Stockholding for Food Security Purposes– Reaffirmed Bali declaration—peace clause for stockholding practices; vulnerable to SCM

challenge– Permanent solution to be found by MC11 (2017)

• Cotton– Market access—Developed and developing countries “in position to do so”: duty free/quota free

access to LDCs– Domestic support—recognize efforts to reform policies; more to be done– Export competition—immediate phase out for dvlpd; by 2017 for dvlpng

• Market Access—• Domestic support—

Average bound MFN tariffs for agricultural products

Source: WTO

Average applied MFN tariffs for agricultural products

Source: WTO

Applied versus bound tariffs

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0 50 100 150 200 250

Ap

plie

d M

FN R

ate

Bound MFN Rate

Tariff overhang

Source: WTO

Impact of DDA reduction formula on applied tariff

rates

Most market access gains concentratedin key developed countries

Minimal access in developing countries due to high tariff binding overhang

Source: Laborde 2014.

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0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Tari

ff R

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(%

)

Implementation Year

Japan’s Beef (Chilled/Frozen) Import Tariffs But, far from comprehensive

• Sensitive products remain protected under TPP

– Dairy

– Sugar

– Rice

• More access for SeP under Rev4?

– Limited tariff lines

– TRQs

DDA v TPP

WTO bound

Current applied

TPP (-82%)

DDA (-57%)

• Labor

• Environment

• Cross border services trade

• E-commerce

• SPS

• Dispute settlement

• GMO approvals

• SPS harmonization

• Growth hormones

• Geographical indications

“Deep” agreements => standardization and

harmonization of standards

TPP TTIP

Domestic support levels

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45

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Producer Subsidy Equivalentas percent of value of farm production

Source: OECD

Composition of domestic support

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10%

20%

30%

40%

50%

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90%

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

OECD Average

Tied to output Tied to inputs Decoupled from production

Source: OECD

Producer Subsidy Equivalents

0

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30

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PSE Coupled PSE

Source: OECD, calculations by author

Percent of value of production

Composition of Domestic Support2014

Source: OECD

percent

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10%

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30%

40%

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100%

Brazil Russia Mexico China Turkey Indonesia Korea

Output Input other coupled decoupled

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35

1980 1990 2000 2010 2020

World

Growth of Agricultural Insurance ProgramsPremium volume

Source: Glauber 2015

$ billion

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China US

Source: Glauber 2015

$ billion

China corn support

Source: Gale 2015

China corn

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Harvested area Ending stocks

Source: USDA, PSD database

Thous ha Thou tonnes

Estimated change in outlays, FY 2014-23, by WTO

classification under 2014 farm bill

-50

-40

-30

-20

-10

0

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$ billion

Green Amber

Net change:Green: - $52.8 bilAmber: +$32.3 bil

Source: Glauber and Westhoff 2016

Implications for the WTO

• Do new mega-regionals establish standards for global trade?

• Multi-lateralize mega-regionals?

– Expansion to TPP: Indonesia, Philippines, Korea, …

– China? India??

– Brazil

– LDCs

• If inclusive, brought into the WTO

• If exclusive, does WTO primary role becomes dispute resolution?

• What if TPP fails to be ratified?

With no agreement on domestic support, dispute settlement

likely venue for addressing adverse trade effects

• US—Upland Cotton

• US—Country of Origin Labeling

• 2014 farm bill:

– Peanuts

– Soybeans

– ARC/PLC for cottonseed

• Developing country subsidies

Conclusions

• Rise of protectionist sentiments—hopefully temporary? – In US, failure to address adverse effects of globalization

• For agriculture, growth in demand is outside of US and Canada• US and Canada are well poised to take advantage of that growth, but the degree of

access to those markets must not be limited by the demand of sensitive commodities within our countries

• While most gains of liberalization are in market access, the other pillars must not be ignored (indeed the exchange rate may be quite high)

• Bilateral agreements and mega-regionals like CETA, TPP, TTIP and NAFTA have potential to provide significant market access gains and progress in resolving NTBs, BUT unless plura-lateralized through WTO have potential to weaken the multilateral system and risk leaving many members (particularly developing countries) disadvantaged

• Important for world for US to retake a leadership role in Geneva