WTO DG Pascal Lamy on World Trade in Food

Excerpts from Speech to Agro Economist at Zurich on 30 August 2011

“In my opinion, the world still has a long way to go in designing a coherent international agricultural trade policy framework.”

“At the end of the day, trade is no more than a simple transmission belt between supply and demand. It allows food-surplus countries to complement the countries in food-deficit. “

“All agricultural policy-makers would want agricultural systems that deliver sufficient food, feed and fibre.

“Global integration allows us to think of efficiency beyond national boundaries. It allows us to score efficiency gains on a global scale by shifting agricultural production to where it can best take place. It can also allow for a more efficient sourcing of the inputs to agricultural production.”

“National boundaries were defined by none other than a long historical game of musical chairs. While some sit on fertile lands, blessed with sunshine and freshwater, others are condemned to arid and inhospitable terrains. Trade imposed itself because of differences across countries, in these natural endowments or in the productivity of labour.”

“If a country such as Egypt were to aim for self-sufficiency in agriculture, it would soon need more than one River Nile. International trade in food is water-saving.”

“International trade is not the source of the food crises. If anything, international trade has reduced the price of food over the years through greater competition.”

“International trade in agriculture is less than 10% of world trade. While 50% of the world's production of industrial goods enters international trade, it is important that you know that only 25% of the world's agricultural production is traded globally. Rice, production in world trade is only 5-7%, making for a particularly thin international rice market, of the world's 25% of food production that enters international trade, the vast majority (two-thirds) is processed food, and not rice, wheat, or soya.”

“The 2008 food crisis is termed as, the “rice price crisis.” It is because of how little international trade there is in rice, that rice prices reacted so dramatically to export restrictions. The limited international trade in rice made rice prices more, and not less, volatile. Deeper international commodity markets are less prone to crises.”

“I shall never forget a meeting with Yemen's Minister of Trade a few years back in which he complained of the “starve-thy-neighbour” policies that followed from the food crisis of 2008, as Yemen was being starved of its staple rice supply in the wake of numerous export restrictions by others. Saudi Arabia went through in growing its own wheat, and which it has called-off just this year because of its heavy toll on water.”

“The key mandate guiding agriculture negotiators is to achieve substantial improvements in the area of market access (i.e. tariff reduction), substantial reductions in trade-distorting subsidies, and the eventual elimination of all forms of export subsidies; something which had occurred in manufacturing over 50 years ago.”

“Export subsidies which are completely prohibited for industrial goods, are yet to be phased-out through the Doha Round in the area of agriculture!”

“Many trade-distorting agricultural subsidies have found shelter in Amber and Blue Boxes, and a Peace Clause. Whereas the world's trade-weighted average industrial goods tariff is about 8%, in agriculture it is 25%. Not to mention tariff peaks, which in agriculture still rise up to 1000%!”

“Export restrictions have a domino, market-closing, effect, with one restriction bringing about another, as the world started to anticipate a global food shortage.”

“Phenomenon of the purchase of agricultural land abroad — dubbed “land grabs” by some, overcoming the problem of export restrictions by buying land abroad and cultivating it for the importing country's use.”