WTO: Agricultural and modernization challenges


Reduction in international trade flows, rising protectionism, the Covid-19 pandemic, the Russia–Ukraine war, rising world inflation, and logistical difficulties impacting all countries. It was in this setting that the 12th Ministerial Conference of the World Trade Organization (WTO), the main decision-making body of the WTO, took place.

This complex scenario, the most challenging since the creation of the WTO, made the already delicate task of reaching consensus on trade issues among the Organization’s 164 member States even more difficult. Initially scheduled to last four days, the meeting—known as MC12—was extended for another day, in an attempt to achieve relevant results.

Although the expectation is low that the Conference will show concrete advances on issues that are dear to the Brazilian agricultural sector, the WTO remains the cornerstone of the whole multilateral trading system and for Brazilian agribusiness. Even if the Organization is imperfect, in case it ceased to exist, the impacts would be much more negative than positive for Brazil.

The WTO is responsible for operating a global system of international trade rules that includes negotiating agreements and settling trade disputes among its members. In addition to benefiting from the Organization’s multilateral decisions, Brazil has already reaped concrete and extremely positive results in trade disputes with other countries, such as the contentious gains against the United States in the case of cotton subsidies and against the European Union in the issue of sugar subsidies. These achievements were only possible due to the Organization’s robust rules and dispute resolution system.

More recently, Brazil has won disputes against India (concerning sugar subsidies) and Indonesia (concerning chicken meat). However, in these cases, unlike in previous ones, Brazil “won but did not take it,” as the countries “appealed to the void,” taking advantage of the Dispute Settlement Body (DSB)’s paralysis to file an appeal that cannot be judged until the recomposition of the Body’s members.

These two cases are examples of the WTO’s importance to an international trading system based on rules and an agency with the police power to apply sanctions. The resumption and full functioning of the DSB must be among the priorities of all members in the short term in an agenda to reform and revitalize the WTO.

The relevance of WTO’s dispute system is such that it entailed the enactment of Provisional Measure no. 1098/2022, which turned into Law no. 14353/2022, which authorizes Brazil to impose sanctions in retaliation on WTO members that fail to comply with multilateral obligations, such as those established in trade disputes.

This fact reinforces that, in addition to its role as sheriff of international trade, the WTO also remains the most appropriate forum for multilateral agricultural trade negotiations, which should aim to reduce import tariffs for agricultural products, overcome non-tariff barriers and measures that are not based on scientific knowledge—even if it is necessary to reform the organization’s agricultural rules, which have been untouched since the 1990s.

The combination of the dispute settlement system with the WTO’s negotiation forum offers unique conditions to follow the debates and advances to lessen agricultural subsidies, especially those that distort the market and create artificial conditions for competitiveness.

The agricultural sector has a significant weight on the WTO agenda. Between 2010 and 2020, the food trade grew by 47%, from US$ 912 billion to US$ 1.34 trillion. In 2021, that amount reached US$ 1.5 trillion.
Food security is at the heart of discussions at this year’s Ministerial Conference, and the WTO advocates for the importance of international agricultural trade as part of the solution to the world’s food issues.
Within MC12’s scope, Brazil took at least two important stances about agricultural issues.

Together with 15 other Latin American countries, Brazil endorsed a declaration on the reform of multilateral rules for agricultural trade, highlighting the concern about world hunger, rising input prices, and adopting distorting measures to global food trade. These are measures related to the stock policy and others that prevent or unjustifiably restrict exchange flows. The document also states support for the international trade multilateral system, the commitment to increasing agricultural productivity, and the reform of WTO’s agriculture agreement.

Another stance that obtained support from Brazil reinforces the relevance of the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), the main set of rules against unjustified barriers to agricultural trade. The stance also brings suggestions for its better implementation in order to facilitate international agricultural trade, observe and acknowledge different regional conditions, and increase cooperation with international organizations.

All these challenges must be faced without losing sight of the need to increase world agricultural production and feed a world that is expected to have more than 9 billion inhabitants by 2050.

The WTO will be the forum that should, in the very near future, assess and seek international convergence at the intersection of agricultural production, international trade, and environmental sustainability. This should be done to avoid the adoption of more restrictive measures than needed and without a scientific basis, which may negatively impact food producers, food security, and international trade.

During the visit of WTO’s director-general to Brazil in April this year, she requested the Brazilian government and the private sector to support the multilateral trading system and the WTO, which has been facing questioning about its relevance and its role.

There is no doubt that the world needs a fully functioning WTO. It is necessary to proceed with negotiations so that the next Ministerial Conference may finally deliver the results and the much-needed modernization for international trade.

*Sueme Mori is Director of International Relations at the Brazilian Confederation of Agriculture and Livestock (CNA)

*Matheus Dias de Andrade is Technical Advisor at CNA

Source: Agência Estado – Broadcast