A resolution by a World Trade Organisation conference to eliminate agricultural export subsidies is good news for New Zealand. We may believe it when we see it, but it is good to see the subject is alive again in the WTO. The world body has taken a back seat in the drive for more liberal and binding trade rules since the Trans-Pacific Partnership negotiations gained momentum. The Doha Round proved the global organisation had become too big and diverse to carry the task of trade liberalisation on its own. New Zealand led the way in opening an alternative track to free trade in regional agreements. The successful conclusion of the TPP has revived Europe's interest in a transatlantic agreement and now, it seems, the WTO has been spurred to action.
Agricultural trade barriers are a good problem for the Geneva-based body to take on. The powerful "Brics" (Brazil, Russia, India, China, South Africa) that stymied the Doha Round may be less protective of farm exports than of investment, services and other subjects of the round. Agricultural subsidies are typically instruments of wealthy industrial economies that can afford to prop up traditional rural communities, and do so for reasons of sentiment and scenery rather than economic advancement. When subsidies enable their farmers to put products on world markets below cost, it is less developed economies that suffer most.
New Zealand is a successful exporter of farm products against subsidised local production in many of its markets but stands to gain greatly if the practice can be prohibited by an eventual global agreement. Our agriculture leaders have greeted a decision at a meeting in Nairobi at the weekend as if it is binding on WTO members. Fonterra's chairman John Wilson said, "The Nairobi outcome takes global trade rules one essential step towards a level playing field for dairy trade." Federated Farmers national president William Rolleston said, "We hope there are more deals of this nature to come from the WTO."
Our new Trade Minister, Todd McClay, noted export subsidies on industrial goods had been illegal for 50 years. Failure to agree on the same rule for agriculture at the weekend, he said, would have been "nothing short of disastrous". Mr McClay will get used to some disappointments on that scale, but it is encouraging that the first global trade ministers' meeting he has attended has produced a promising result.
It is not clear how this agreement will bind WTO member countries. The world's top 21 food- producing countries pay subsidies totalling $722 billion a year, according to a Worldwatch Institute survey last year. Some of the worst offenders, notably Canada and Japan, are in the TPP agreement, which was destined to disappoint food exporters from the moment they entered the negotiations. But the New Zealand Government calculated it was worth settling for a disappointing TPP for the sake of progress towards free trade generally. Its calculation seems to be right. The TPP has left room for the WTO to regain the leading role in trade liberalisation. Just as the Cairns group of farm producers pressed strongly for the Doha Round, we may see momentum build from Nairobi for another tilt at a global fair deal for agriculture. Here's hoping.
