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A Word about the World Trade Organisation

A word about the World Trade Organisation

It is possible that the World Trade Organisation (WTO) will loom much larger in matters to do with food and farming after Brexit, but in all the debates there seems to be little understanding of its role. Most of the worlds governments belong to this organisation, which in the 1990s was established both as the forum for deciding international trade rules in agricultural products and the agency for enforcing them.

During the period when the WTO was establishing itself, I was the Chairman of a European network of organisations seeking to improve the conditions of people and environment in the world banana trade. At that time, for historical reasons, the EU favoured banana imports from the ex-colonies of member counties over those from Central American countries. As it happened, those from the ex-colonies in the Caribbean were grown together with other crops by independent smallholders. The prices they received were tolerable and the labour conditions in the docks were reasonable. On the other hand, in many instances, the environmental and human conditions in Central American production were appalling. Companies based in the United States controlled this and made handsome contributions to the electoral expenses of both US political parties. In due course the US launched a trade dispute with the EU at the World Trade Organisation on the grounds of discriminatory treatment of banana imports. A dispute panel of trade lawyers meeting behind closed doors declared in favour of the US, and empowered it to impose penalties on European products in the US until the ‘discrimination’ stopped. Fairly rapidly after that the numbers of farmers growing bananas in the Caribbean greatly reduced until the only survivors were those who embraced fair trade. This of course did nothing to improve human or environmental conditions in Central America. I remember a meeting with WTO officials at the time where one of them admitted that it might have been wise, during the formulation of the WTO, to insist that parties bringing disputes had to be in conformity with other international standards, such as the convention of the International Labour Organisation. However, this was not the case and WTO rules disallowed discrimination based on how things were produced. I subsequently visited the WTO three times meeting various government delegations together with a colleague from Wurtemburg (Germany) and the US. On the last occasion we had with us a party of about 30 German and English farmers asking questions of succeeding pairs of Government delegates. The sessions had been chaired by a retired Director General of the WTO. Afterwards he commented to the two of us that “the farmers were quite right to keep asking questions about the role of big international companies. The great unmentionable reality of this place is the way that these haunt its corridors”. In 1998 there was much discussion about all of this in the UK Food Group and a big WTO international meeting in Seattle (north west US), to which I went with others. As an important seaport, timber exporter and headquarters of Boeing, I expected Seattle to be well disposed to the whole WTO ethos. However, I discovered that in the run-up to the meeting, many of the churches had made opportunity to learn what it was all about and had come to the conclusion that they did not welcome it.

The underlying problem is that the WTO rulebook sees the primary reality of food is that it is a tradeable commodity, whereas both common sense and Christian perception would see the primary reality to be its role in sustaining life, together with its part in family, community and local culture. The attempt to force food and agriculture into conformity with the practice and ideology of the global free market is not helpful. In terms of trade, the question should be how can trade help to ensure food supply and long-term sustainability, rather than how can agriculture serve trade. A further result of this attempt is that smaller and poorer countries are forced into total conformity, so that their farming is completely unprotected and unsupported

The WTO requires ‘open, fair and undistorted competition’ in line with two basic principles:

1. The Most Favoured Nation (MFN) Clause, which says that any advantage granted by a member country to another (e.g. the level of custom duties or domestic fiscal policy) must be automatically applied to all other members;

2. The National Treatment Clause, which implies that products imported from a member country into the territory of another member country shall not be subject to a less favourable treatment than that accorded to like domestic products, regardless of the methods and process of production used.

WTO obligations are enforced by the Dispute Settlement Mechanism, which acts like a small private court. The dispute panel decides if countries’ importing arrangements are WTO legal. Wider concerns governments may have (e.g. environmental sustainability, food security, worker’s rights, etc) are not admissible. If a country is condemned, the panel allows the claimant to impose trade sanctions, such as rising tariffs, up to a level which it sets. If the UK finds itself trading alone “under WTO rules” the implications for the UK’s food and farming could be profound.

Christopher Jones

December 2018

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