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Elliott was with the Peterson Institute for many years before joining the Center full-time. Her books published there include Can International Labor Standards Improve under Globalization? (with Richard B. Freeman, 2003), Corruption and the Global Economy (1997), Reciprocity and Retaliation in US Trade Policy (with Thomas O. Bayard, 1994), Measuring the Costs of Protection in the United States (with Gary Hufbauer, 1994), and Economic Sanctions Reconsidered (with Gary Hufbauer and Jeffrey Schott, 3rd. ed., 2007). She served on a National Research Council committee on Monitoring International Labor Standards and on the USDA Consultative Group on the Elimination of Child Labor in US Agricultural Imports, and is currently a member of the National Advisory Committee for Labor Provisions in US Free Trade Agreements. Elliott received a Master of Arts degree, with distinction, in security studies and international economics from the Johns Hopkins University, School of Advanced International Studies (1984) and a Bachelor of Arts degree, with honors in political science, from Austin College (1982). In 2004, Austin College named her a Distinguished Alumna.
The recently agreed upon but not yet signed Trans-Pacific Partnership (TPP), which will cover 12 countries and 40 percent of global GDP, is certain to loom large as the World Trade Organization (WTO) celebrates its 20th anniversary in Nairobi next week. For US trade negotiators, conclusion of the TPP deal means they can turn their attention to talks with the European Union on the Transatlantic Trade and Investment Partnership. Optimists hope pressure from these “mega-regional” trade agreements will spur renewed commitment from WTO members to making multilateral negotiations more productive. The pessimistic scenario is that the mega-regionals will lead to a further scramble among non-parties to either join or create their own regional arrangements. In the latter case, the losers will be the poorest and most vulnerable countries that are frequently left behind.
So far, the omens from Geneva don’t bode well for the optimists. There are two main objectives for next week’s meeting. The first is to reach agreement on a a set of “deliverables” that members can announce, which could include disciplines on unfair export competition in agriculture and possibly a package of measures to give a boost to the least developed countries (LDCs). The second objective is to achieve consensus on a path forward for the organization’s negotiating agenda. Narrow US protectionist interests are the major obstacle to achieving the first set of goals; developing countries’ refusal to recognize that the Doha Round has failed threatens the second.
Since the United States led the way in concluding the TPP, it bears a particularly large responsibility to deliver a successful outcome in Nairobi that will bolster the multilateral trade system. At the same time, China, India, and the other developing countries not party to these mega-regional deals should get on board too, recognizing that the world has changed and the multilateral trade system is at risk.
Making the Nairobi Ministerial a Success
In terms of concrete outcomes in Nairobi, I’ll be particularly interested to see if WTO members can agree to new disciplines on export competition in agriculture (export subsidies, subsidized export credits, and in-kind food aid) and duty-free, quota-free market access for LDCs. In both cases, US negotiators are nearly alone in their opposition. The European Union, once notorious for hugely trade-distorting export subsidies, has agreed to eliminate them in a legally binding commitment. In return, the EU would like to see the United States reform its food aid practices, which by relying heavily on in-kind donations can disrupt local markets. Other developed countries have recognized the extreme inefficiency of this method and mostly eliminated in-kind food aid long ago. The
Cmd+Click or tap to follow the link">Obama administration supports food aid reform, but can do little without congressional support. While a number of key members of Congress on both sides of the aisle have championed reform, they have not been able to win the support of the House and Senate Agriculture Committees, and continue to face strong opposition from a subset of members concerned about US shipping interests. The Agriculture Committees in both chambers have also historically opposed further reform of US export credit guarantees. The real question is whether the administration can find ways to tweak these programs enough to get an agreement in Geneva, without having to go to Congress for approval that it is unlikely to get.
Similarly when it comes to measures to promote market access for LDCs, US negotiators find themselves in the hot seat. All other high-income countries provide duty-free, quota-free market access for at least 98 percent of products from LDCs. Since a CGD working group called for trade preference reform in 2010, South Korea and some of the large emerging markets, notably China and India, have taken steps to improve market access for LDCs. But the United States has yet to address the gaps in its trade preferences for the poorest countries, which generally assist Africa but discriminate against Asia. The unwillingness to implement the duty-free, quota-free initiative is even more troubling with the conclusion of the TPP, which will put Bangladesh, Cambodia, Nepal, and other Asian LDCs at a disadvantage once Vietnam attains duty-free access for clothing in the US market. I discuss this problem and propose a pragmatic solution here and here. Bernard Hoekman and Joakim Reiter discuss the importance of a WTO agreement on measures to help LDCs “leverage trade for development,” and how to get one here.
Bury Doha, Not the Development Agenda
WTO members launched the round of trade negotiations dubbed the Doha Development Agenda (DDA) way back in 2001 and it has been mostly dormant since 2008. In the years since, the global economy has changed enormously, with the WTO accessions of China and Russia, the growth in global value chains, and the biofuel-related volatility in commodity markets. Yet world leaders continued to pledge their fealty to the Doha Round and regularly promise to tackle it with renewed vigor.
This year, however, the United States and other high-income countries want to officially bury the Doha Round and find a new path forward for multilateral negotiations. Developing countries, led by China and India, want to stick with the DDA framework because they fear the development focus will be lost if the WTO formally abandons it. But even without the Doha label, the agricultural trade and other issues on the table in the Doha Round are not going away, and developing countries will still have influence because they comprise the majority at the WTO. So while the concerns about the risks of moving on from the Doha Round framework seem overblown, the depths of its failure are abundantly clear.
If the WTO is going to survive to see its 30th anniversary, it has to have the flexibility to address new and old issues in new ways. And the United States as well as the large emerging markets are going to have to overcome resistance to compromise. Failing that, it is not just the institution that will suffer. The majority of developing countries that are not participating in the mega-regionals risk finding themselves on the sidelines while the United States, Europe, and other advanced countries go their own way on trade.
Now that it has been released, it will take a while to dig through all 30 chapters, plus annexes, and side letters that constitute the Trans-Pacific Partnership (TPP). I’ve only taken a quick look at a few chapters and, so far, my take is not much different from what it was when the summary of the deal was released back in October. In this blog post at the time, I highlighted four areas of potential improvement:
an option to exclude tobacco control measures from the investor-state dispute settlement mechanism
the elimination of export subsidies, and
the environmental chapter, especially provisions to prohibit some fisheries subsidies
I’m still not convinced that the investor-state dispute settlement is really necessary or helpful for lots of reasons (more on that another time), but there do seem to be improvements in transparency, access to the process for civil society, and discouraging frivolous lawsuits. And maybe I missed something on the tobacco exception, but I didn’t detect any loopholes. I assume that agricultural export subsidies were eliminated as promised, but I haven’t checked yet
The environment chapter covers a lot of territory so that will definitely take some time to wade through, but it may not be as far-reaching as I had hoped. The language on prohibited fishery subsidies is pretty narrowly drawn:
“subsidies for fishing that negatively affect fish stocks that are in an overfished condition”
And I’ve left out three footnotes in that one phrase that define specific terms. As with everything, the ultimate impact of the provisions on fishery subsidies depend on how they are implemented and enforced. But just the precedent could be important if it contributes to this issue being addressed globally.
I asked my colleague Jonah Busch if he had a quick take on the language relating to forests, and he was not overwhelmed:
On forests, there’s nothing new. The references below are pretty generic and weak. “Addressing” deforestation and forest degradation sounds squishier than “reducing emissions from” which is what’s been long agreed in the UNFCCC.
If there is no side letter on forests with Malaysia, as there was in the earlier bilateral FTA with Peru, that would be disappointing. This will also be something to watch if Indonesia signs up in the future, as President Jokowi pledged during his recent visit to Washington.
On the development chapter, my take hasn’t changed from last month: “sounds like jobs for bureaucrats and lots of talk with little action.”
On intellectual property, my concerns have not been mollified at all. The effective period of market exclusivity for newer, biologic drugs appear to be 8 years instead of 5. Australia may not have to change its domestic law granting 5 years, because it got some face-saving language. But the 5+3 alternative is still expected to provide the minimum 8 years through “other measures.” Vietnam and Peru were able to get a 10 years transition period before they have to implement that provision, Malaysia and Mexico got five. The agreement also appears to include WTO+ provisions on patent linkage, patent protection, and test data protection. Vietnam has to eventually implement the same intellectual property protections as all the other parties, but has an extra 10 years to do so for key provisions.
When I asked my colleague Amanda Glassman for her quick take, she sent a link to this article on the drug patents and access issues that is well worth reading. She also noted the role that limited budgets and high prices play in access to medicines for the poor even in middle income countries:
Of course, there are many ways to deal with monopoly [drug] prices from a public policy and purchasing point of view, but longer periods of exclusivity do not help. The evidence is clear that generics are much cheaper and the flip to generics is the main determinant of access and adoption of new medicines in many middle-income countries.
Of the other concerns I raised a month ago, it’s going to take a deeper analysis to figure out whether Vietnam got much in the way of new market access, and what that in turn might mean for other poor countries in the region. But on my key concern, seeing the full text of the agreement has no impact on the potential for the TPP to seriously undermine the multilateral trade system.
During a recent House Foreign Affairs Subcommittee hearing on food security and nutrition in Africa, Ranking Member Karen Bass (D-CA) posed two fundamental questions about Feed the Future to a panel of expert witnesses. “How should we reform Feed the Future? Do you think we should expand the initiative?” President Obama’s flagship food security initiative aims to raise the incomes of smallholder farmers while also tackling undernutrition. Along with our colleague Casey Dunning, we have been exploring the very questions asked by Congresswoman Bass. While we’re not ready to answer in full, based on our review of available data we do have some initial thoughts.
Feed the Future has succeeded in bringing much needed attention to the pressing challenge of food security. We find the initiative has spurred an increase in the share of overall US aid for agriculture and nutrition. And this aid is increasingly concentrated in the 19 Feed the Future focus countries. We also find that the administration has done well in selecting focus countries with significant needs and opportunities for partnership. The chosen countries have higher levels of hunger and poverty than their low and lower middle income peers. But they also have relatively better institutions, given their income levels. This is important because it suggests that while targeting need, there has also been concerted effort to ensure that the results will be sustainable.
There is still plenty of room for improvement, particularly when it comes to encouraging country ownership and increasing transparency. First, the initiative could do better to promote country ownership in both the design and delivery of its programs. Very little of the money goes through country systems and about a third of it is still tied, undermining efficiency, effectiveness, and capacity-building in recipient countries. Second, while Feed the Future’s commitment to transparent reporting and rigorous evaluation is commendable, there are several gaps. We have found it difficult to track Feed the Future spending in any detail. And, five years after its launch, the initiative is only just beginning to report on impacts. As one of us argued previously in more detail here, the “results” reported so far are not really results at all. It is difficult to directly link Feed the Future investments to progress on reducing poverty and undernutrition in targeted areas. With limited data on impacts, it’s too early for a clear assessment of where and how (or if) to expand. Instead, this is the time to take stock and learn what is and isn’t working in the current focus countries.
Legislation in the House and Senate would help ensure the initiative’s continuation beyond the current administration. While it’s premature to step on the gas and expand Feed the Future, we nonetheless applaud the bipartisan support for a food security strategy, one that gives agriculture and food security the prominent role it deserves in US development policy. And we are pleased to hear members of Congress asking smart questions about the future of these efforts.
After five years, capped by five days of intense, around-the-clock negotiation, trade ministers from the 12 Tran-Pacific Partnership (TPP) countries announced they had reached a deal in Atlanta Sunday night. From information available so far, it looks like there were improvements in some areas of interest for developing countries. But I still have concerns in the three areas I wrote about in July. I’ll need to see the details before I can assess the outcomes there. And my biggest concern about the TPP, TTIP, and other regional agreements remains how they affect the World Trade Organization (WTO). Most developing countries are outside these big trade deals and will have no way to protect themselves in trade if the multilateral system fades into irrelevance.
On the deal itself, here are my initial impressions, based on the summary circulated by the US Trade Representative’s office.
Potentially Positive Steps
The investment chapter appears to expand the space for countries to use capital controls if necessary to manage economic crises; the summary also says that it includes “strong safeguards” to prevent abusive or frivolous claims under the investor-state dispute settlement mechanism and mentions the “possible award of attorneys’ fees.” That could help poorer, smaller countries with limited resources to fight back against challenges from large multinationals with large legal teams and deep pockets.
The exceptions to the agreement allow parties to deny access to the investor state dispute settlement mechanism for claims relating to tobacco control measures. This would shield policies such as Australia’s plain packaging law for cigarettes, which was challenged by Philip Morris as a violation of an investment agreement between Australia and Hong Kong.
The parties agreed to eliminate some agricultural subsidies, albeit only those that promote exports rather than the more ubiquitous subsidies that support domestic production. That is a symbolic step, since none of the parties directly subsidize exports, but it is the first time US negotiators have been willing to address agricultural subsidies at all in a regional trade agreement. (The summary also indicates the TPP partners agreed to work together at the World Trade Organization to develop disciplines on export competition more broadly.)
There is potentially far more important language on subsidies in the environmental chapter, where the summary says the parties will “prohibit some of the most harmful fisheries subsidies … and make best efforts to refrain from introducing new subsidies that contribute to overfishing.” That could have significant impact in the region, given that Japan is a party, and will hopefully spur the discussion on fishery subsidies at the WTO. The summary also says that the parties will promote sustainable forest management, though it doesn’t say how, and that they will combat wildlife trafficking. The environmental chapter seems to go far beyond what has been in previous US trade agreements.
Rhetoric or Reality?
For what I believe is the first time in a US preferential trade agreement, there is a separate development chapter. The summary says there will be a development committee but only specifies that the committee will “meet regularly to promote voluntary cooperative work” in the areas identified (economic growth, women and growth, and science, technology, and innovation). There is also a chapter on cooperation and capacity building, with yet another committee to review areas where these activities could be helpful, “subject to the availability of resources.” Maybe I’m being too cynical, but it sounds like jobs for bureaucrats and lots of talk with little action.
Australia, Chile, and Peru seem to have hung tough on just five years of market exclusivity for new biologic drugs, but there is not much information on what the reported 5+3 compromise really means. We also don’t know the specifics of any other WTO+ rules on intellectual property, or how much and what kind of flexibility developing-country partners will have to implement them.
The summary reports the parties agreed to “eliminate tariffs on textiles and apparel.” But, as expected, there is a restrictive rule of origin that limits the use of fabric and other inputs from outside the region, thereby raising production costs for Vietnam and other exporters. Depending on the details, the rule could make compliance so expensive that exporters are unable to take advantage of the reduction in import tariffs.
To the degree that Vietnam and other apparel exporters do get improved access, it could be at the expense of Bangladesh, Cambodia, and Nepal unless the United States moves to provide duty-free, quota-free market access for all least developed countries, as the other high-income parties to the TPP have done.
Finally, how will the deal impact the multilateral system? Will a successful TPP negotiation spur countries on the outside to increase their efforts to bring things back to the WTO? Or will it encourage US negotiators to turn away from the WTO and focus on the Transatlantic Trade and Investment Partnership? We should get an indication of that when WTO ministers meet in Nairobi in December and, unfortuately, I’m not optimistic.
With the situation in Syria deteriorating every day, and conflict elsewhere displacing millions more from their homes and livelihoods, desperately needed food aid is falling short. The World Food Program announced last month it would be forced to cut the number of Syrian refugees it will be able to help from 2.1 million to 1.4 million and to significantly reduce the size of the benefit due to insufficient funding. As a result, refugees in Jordan will have to survive on just $14 per person per month. Yet even with needs rising so sharply, US food aid programs remain stuck in a time warp that constrains the country’s ability to respond. Perhaps that will finally change. The House Foreign Affairs Committee will hold a hearing this week on the “desperate need to do better” with food aid. And the chairman of the Senate Foreign Relations Committee continues to voice his commitment to advancing strong food aid reform legislation.
Donor fatigue and budget constraints are a problem worldwide, but reform would allow the United States to help millions more people with the same food aid budget. More than half a century after the US government began moving away from supply controls to prop up agricultural prices, the agencies in charge of food aid are still required to procure most food from US farmers and ship at least half on US-flagged ships. In an August report, the Government Accountability Office estimated the cargo preference requirement added more than $100 million to the cost of shipping food aid over three-plus years between 2011 and 2014. In practice that means the US helps fewer people.
According to the most recent International Food Assistance Report, rising commodity prices and transportation costs have reduced the volume of commodities the US Agency for International Development and the US Department of Agriculture have been able to deliver by more than half since 2006 (see the chart on p. 20 of the report here). If USAID and USDA had the flexibility to provide cash or vouchers, or to purchase food locally, the agencies could provide more assistance and ensure it reaches people in need a whole lot faster. That change would be indiscernible to the vast majority of US farmers since the 1.4 million tons of food aid delivered in 2013 was just 0.3 percent of US production of corn, wheat, and soybeans.
Humanitarian needs are rising while most donor budgets are not, raising the stakes for food aid reform. Beyond just food aid, a high-level panel chaired by my colleague Owen Barder released a report on how and why donors should increase their use of cash transfers for humanitarian relief programs in general. Owen explains the benefits, which go well beyond increased efficiency, here. President Obama, like President Bush before him, and congressional leaders, including Representatives Royce (R-CA) and Engel (D-NY) and Senators Corker (R-TN) and Coons (D-DE), have been pushing for food aid reform for several years. Now is the time.
I was out of town while trade negotiators were in Maui trying to bring the Trans-Pacific Partnership agreement to a close, but apparently I didn’t miss much. Although the twelve Pacific-rim countries involved are purportedly trying to negotiate a 21st Century trade agreement, the negotiations foundered over old-fashioned concerns about protecting favored industries—autos for Mexico, sugar for the United States, dairy for Canada and Japan, among others. The US demand for 12 years of extra protection for biologic drugs was also unacceptable for many other countries, as it should be.
After initial reports that negotiators might try to meet again in August, Inside U.S. Trade (gated) reports that Assistant US Trade Representative Barbara Weisel told a Hill briefing that was unrealistic. Given the procedural rules for approving trade agreements in the United States, along with electoral politics next year, that likely means that it will be up to the next president to close the deal and get Congress to approve it. Deborah Elms of the Asian Trade Centre has a good analysis here.
But if you’re a small country, and particularly a relatively poor one, trade negotiations are trickier. And if you are a poor country outside the negotiations, you have no say at all on how the negotiations will affect your interests.
Vietnam and Market Access
Of the 12 countries negotiating the TPP, Vietnam is the poorest by far. (Peru, the next poorest, has a per capita income three times as high as Vietnam’s $1,890, according to World Bank data.) And in a recent Pew Research poll, 89 percent of Vietnamese surveyed thought a TPP agreement would be good for the country, more than any other country involved in the talks.
But calling these regional deals “free trade agreements” is a misnomer, and Vietnam is likely to get less new market access in key areas, therefore creating fewer jobs, than it hoped. Clothing accounts for almost one-third of total Vietnamese export to the United States, but previous experience tells us that some of the liberalization gained through tariff cuts will be lost to restrictive provisions known as rules of origin.
These rules are among the technical, nitty-gritty details of trade agreements to which few pay attention, but they are critical in determining real-world market access. Here’s how it works.
When negotiating trade agreements, US negotiators insist on a “yarn forward” rule of origin for clothing items. What that means is that all the components, from the yarn to the fabric to the final item, must be produced in one of the parties to the agreement. But many poorer developing countries participate in the final stage of clothing supply chains, assembling the final item from imported components, often from China.
Since that is also true of Vietnam, the yarn forward rule would means its producers would have to buy their fabric and other components from the United States (or maybe Mexico), ship them across the Pacific to their clothing factories, and then ship them back across the Pacific to their American buyers. The higher input and transportation costs would often more than offset any lower costs for Vietnamese exports arising from tariff reductions.
The likely outcome of the TPP talks on clothing is that Vietnamese producers will (eventually) get duty-free access for their clothing exports, but they will be limited by quotas on how much fabric, and what type, they can use from outside the TPP region. That in turn will effectively cap the increase in clothing exports that Vietnam can expect as a result of the TPP.
Intellectual Property and Access to Drugs
US demands for stronger intellectual property protections in trade agreements is another area of concern in many developing countries — as it should be in the United States. Many in Congress and the executive branch have fallen for industry arguments that the strongest possible IP protection should be the goal. That may be true for IP owners, but it is absolutely not true for society as a whole, in this country or any other. Rather, IP rules should strike a balance between offering incentives for innovation, via the temporary monopoly of patents and copyrights, and ensuring the broadest possible diffusion of beneficial new technologies. And the balance that is appropriate for the United States is highly unlikely to be appropriate for a developing country with little or no innovative activity to protect.
At least in this area Vietnam is not alone. Other TPP parties oppose US demands in this area and the outcome will be less far-reaching than US negotiators wanted, and provide more flexibility for developing country parties than they originally envisioned. Nevertheless, it would have been better if the Obama administration had stuck with the deal that President George W. Bush reached with the Democratic majority in Congress in May 2007, as some in Congress are recommending. That deal essentially preserved the flexibilities contained in the WTO agreement allowing countries to adapt the degree of intellectual property protection they provide to their level of development.
Protecting Other Poor Countries from Harm
While Vietnam’s gains in market access for clothing and other exports will probably be less than they want, it is important to ensure that additional access for Vietnam does not come at the expense of even poorer countries in the region. The United States has agreed on multiple occasions at the World Trade Organization (WTO) that it should provide duty-free, quota-free market access for the world’s poorest and most vulnerable countries, as all other rich countries have done. Yet it has failed to follow through for a number of Asia’s least developed countries, including Bangladesh, Cambodia, and Nepal. Finally, doing so as part of a legislative package to implement the TPP agreement would help to mitigate any negative impact on Vietnam’s poorer neighbors.
Strengthening the multilateral trade system is an even more important step for the majority of developing countries that are outside this and other regional deals. Even if Hawaii turns out not to be the endgame for TPP after all, the time and political capital already spent will keep the negotiators from giving up. I can only hope that the TPP negotiators will be as committed to reaching agreement on a WTO work program in Nairobi later this year.
FOR IMMEDIATE RELEASE
Report: Time for FAO to Shift to a Higher Gear
Focusing the FAO on Global Public Goods
Experts Urge FAO to “Shift to a Higher Gear”
Agriculture and development policy experts recommend a renewed focus on global public goods to meet growing demand for global food security
Washington, D.C. – Experts are urging the Food and Agricultural Organization (FAO) of the United Nations, the leading global institution dedicated to raising agricultural productivity, to shift to a higher gear in the face of trends likely to worsen food scarcity.
A new report from the Center for Global Development says that the FAO, despite its respected status as the premier global food agency, risks squandering its potential at a time when demand for food is rising fast, supplies are under threat, and hundreds of millions of people already don’t have enough to eat.
The report says that the FAO should stop backing the pet projects of agricultural ministers and instead focus on global public goods—activities like coordinating research to raise agricultural productivity, especially in poor countries with little research capacity of their own, global data gathering and monitoring, and early warning systems for plant diseases and pests. No single country can undertake these activities on its own.
“Now more than ever before, the world needs an effective FAO,” says Vijaya Ramachandran, CGD senior fellow and head of the working group. “The FAO is uniquely placed to help prevent more widespread hunger in the face of adverse global trends. But it won’t succeed if it continues to putter along with business as usual.”
“This report makes a compelling case that the world needs the FAO today as never before. It shows that the FAO can make a huge difference in the world, but only if it does the right things better—and stops doing things that can be done as well or better by national governments, NGOs, and bilateral and multilateral funders,” says CGD president Nancy Birdsall.
The CGD report, Time for FAO to Shift into a Higher Gear, notes that the UN organization itself is the source of data that reports about one-in-nine people routinely go hungry and that as many as one-in-three people currently suffer from micronutrient deficiency—they have enough calories but lack specific vitamins or minerals. These statistics are increasingly built on sound databases and analysis, and reflect the ability of FAO to produce public goods of the highest quality.
“Food deprivation is already unacceptably high and it will get much worse in the years ahead without forceful leadership from FAO,” says Peter Timmer, one of the world’s top experts on agricultural economics and a CGD non-resident fellow who served on the working group.
“Trends such as lower yields due to climate change, rising energy prices, increased demand for meat and protein-rich foods due to income growth in emerging economies, and two billion more people in the world by 2050 will all combine to make it incredibly hard to provide enough safe, nutritious food for everybody,” says Timmer.
Timmer acknowledges that the FAO cannot solve all food security problems on its own. Poor people go hungry not because there is too little food in the world but because they lack the means to buy what they need. Nonetheless, with demand from more affluent people expected to continue to rise quickly, and supplies under threat, poor people who already have too little to eat will suffer the most.
“Increased production will be key. It is impossible to consume food that is not produced,” says Timmer. “Increasing supply should be the first order of business for FAO.”
Jikun Huang, a member of the working group and the director of the Center for Chinese Agricultural Policy at the Chinese Academy of Sciences, says “FAO’s expertise in many areas has been severely eroded. FAO needs to reestablish its world-class expertise in areas where it has a comparative advantage.”
The Center for Global Development working group report is not the first to call for an overhaul of the FAO.
Established after World War II to coordinate relief and agricultural development, the FAO became a trusted source of assistance for poor countries on technical issues ranging from veterinary services to forest management. In recent decades the agency slipped into stagnancy and dysfunction, and has struggled to maintain funding for its core activities.
In 2007, the FAO itself commissioned an independent outside review that recommended sweeping reforms. The report found that the FAO’s governing bodies and leadership failed to make strategic choices about which activities to drop in the face of declining funding in the 1990s, and that it did not form effective partnerships with the many new players in the food security field. As a result, FAO’s expertise in many technical areas was severely eroded. Western donors, in particular, faulted FAO for its reliance on support from agricultural ministers who often represented narrow constituencies even in their own countries.
Six years later, the CGD study finds that the FAO has implemented many of the recommendations of the earlier study, but it needs to do much more. The CGD working group, which is comprised of nearly two-dozen food policy experts from a wide variety of nationalities and technical backgrounds, offers two main suggestions:
For FAO Management: Focus on Global Public Goods
The FAO’s global perspective and cross-border reach, the respect and trust it continues to enjoy in developing countries, and its network of agricultural and economics experts are the FAO’s strongest assets.
To make the most of these, the FAO should focus on global public goods—activities that individual countries do not undertake on their own. Examples include:
increasing agricultural productivity, especially among small holder farmers, since increases in small holder production can lead directly to increased consumption and improved nutritional status;
the collection and dissemination of data on global food production and consumption;
early warning systems related to hunger, disease, and pests;
and providing a neutral forum for international policy dialogues on food and agriculture.
The report recommends that about half of the FAO’s non-emergency spending should focus on global public goods such as these, with an additional quarter of its non-emergency funding going to regional activities.
Currently less than half of the non-emergency spending goes to global and regional public goods, and almost four out of ten dollars is spent in local community projects—a low priority that the report says should attract no more than 5% of the organization’s non-emergency spending.
Within the FAO, these public goods activities are sometimes seen as being limited to the organization’s headquarters in Rome—and at odds with a strong FAO presence in member countries. The report argues that this is not the case. Many of these activities, such as long-run investments to raise productivity of small holder farmers and collecting data for early warning systems, require a strong local field presence.
For FAO Member States: Improve FAO Governance
The working group report urges that FAO member states—especially large donors such as Europe, Japan, and the United States—should ensure that financing for the FAO is aligned with these priorities.
Rather than funding earmarked, short-term programs, members should provide a reliable stream of funds for the FAO’s core activities – namely, the provision of global and regional public goods. For most of the large donors in the OECD countries, this will require stepping away from domestic self-interest and towards a focus on reducing global hunger.
Developing country FAO members, meanwhile, should stop pushing for highly visible pet projects within their borders and instead seek a greater say in FAO policy formulation , advocacy, and development activities that offer longer-term benefits. Focusing on its strengths instead of the pet projects of national agricultural ministers will enable the FAO to better serve all its members, the report says.
Among FAO staff there is a clear recognition of the importance of global public goods. Regina Birner, a department chair at Germany’s University of Hohenheim and a member of the working group, recalls that when she asked staff at FAO headquarters what they would consider their biggest achievements, most referred to global public goods, such as the eradication of rinderpest, a viral disease of cattle eliminated by a decade-long, worldwide vaccination campaign led by FAO.
Adds working group member Sushil Pandey, an agricultural economist and author of several studies on food security in Asia, “the FAO is an important source of national and regional data on food production, utilization and prices. These data are critically important for monitoring the long-term trends on various aspects of agricultural production and are used by national and international agencies for their planning purposes. This provision of public good by FAO needs further strengthening.”
The CGD working group report identifies several valuable activities that the FAO already performs. Noting that the FAO is well placed to provide these important services, it urges that these be shifted into higher gear given the coming strains on the global food supply. These include:
Support for increasing agricultural productivity, especially among small holder farmers. Donors have often cut back on funding for agricultural research when short-run commodity prices are low. The FAO should focus on longer-run signals of scarcity.
Issuing early warnings on hunger, pests, and diseases in collaboration with other international agencies. Tracking emerging threats and emergencies, and helping countries to mount rapid response programs.
Gathering global data on food and agriculture, including information about production, trade, irrigation, inputs, land and soil, forestry, fisheries, and investment. Continuing to produce reports, policy analysis, and statistical information about these issues and remaining the primary repository for such data.
Providing a neutral forum on food and agricultural policy issues. This would capitalize on the organization’s reputation for neutrality and objectivity and provide a venue to exchange expertise and views on food security. FAO has been active in mobilizing research and policy advice on food price volatility, and should continue to emphasize this role.
Overseeing standard setting agencies including the Codex Alimentarius Commission and the International Plant Protection Convention Secretariat.
Read the full report here.
The Center for Global Development is an independent, non-partisan think tank which works to reduce global poverty and inequality through rigorous research and active engagement with the policy community. CGD combines world-class research with policy analysis and innovative communications to turn ideas into action.
The United States is not using trade as effectively as it might to promote development. The executive and legislative branches of the US government have long recognized that trade can be an important tool to help poorer countries generate resources, create jobs, and reduce poverty. They also recognize that growth in developing countries contributes to global prosperity and growing markets for US exporters as well. Despite that, the few significant US trade barriers that remain often target agricultural and labor-intensive products in which developing countries have a comparative advantage.
Where does all this chocolate come from? Two countries, Ivory Coast and Ghana, account for more than 70 percent of global exports of cocoa beans, but they export less than $50,000 worth of processed chocolate to the United States every year (nearly 70 percent of US chocolate imports come from Canada and Mexico). In other words, Africa is missing out on millions of dollars more in export value and many more potential jobs in value-added processing.
Why Doesn’t West Africa Export (More) Chocolate to the United States?
African producers face a range of domestic challenges when trying to export, including poor infrastructure, inadequate access to finance, and limited capacity to certify compliance with food safety standards. But lingering US trade barriers directly block the export of a number of agricultural products, including sugar, beef, peanuts, tobacco, and dairy products, as well as chocolate and other confectionary that contain sugar and dairy products. The quantitative restrictions on US imports are typically allocated across US trading partners based on historical trade patterns. And, unfortunately for Africa, bilateral trade with the United States was essentially non-existent when these quota allocations were set.
Potential African exporters have only very small quota allocations or none at all, or they are lumped with the rest of the world under “first come, first served” residual allocations. That creates uncertainty about access to the US market, discourages investment, and makes it extremely difficult for new exporters to break into the market.
A Pragmatic Proposal to Make Future Halloweens Sweeter for Africa
The African Growth and Opportunity Act (AGOA) provides duty-free access to US markets for most manufactured goods, but it ignores these potential opportunities in the agriculture sector. The World Bank reports more than 60 percent of sub-Saharan Africa lives in rural areas where agriculture frequently provides the majority of jobs. Growing access for agricultural exports could significantly expand the number of countries and people that benefit from AGOA.
Ideally, Congress should extend duty-free, quota-free market access to all agriculture goods when it extends the AGOA program before it expires in September 2015. Short of that, the Secretary of Agriculture or the US Trade Representative could reduce the uncertainty surrounding access to the US market by providing specific quota allocations for chocolate and other agricultural products to African countries. This CGD note highlights where there are unused quota allocations that could be granted to African exporters with little or no disruption to other US trade partners. By taking this action, the Obama administration could spur growth in African agriculture, and in downstream processing, and make the world a little less scary on future Halloweens.
Even as Congress was mandating large increases in the consumption of biofuels a decade ago, the world was changing. In the early 2000s, replacing fossil
fuels with biofuels made from corn, sugar, or oilseeds seemed like a good idea. Increased crop demand would prop up prices for farmers, and replacing
petroleum with renewable energy would reduce greenhouse gas (GHG) emissions and promote energy independence.
The Quality of Agricultural Official Development Assistance (Ag QuODA) measures how well donors giving agricultural aid score on the dimensions of aid quality that evidence and experience suggest lead to effective aid. Improvements in the data quality and availability are making sector-specific assessments like Ag QuODA more feasible, but further improvements are needed to allow a deeper understanding of aid effectiveness.
After a longer-than expected settling in period, the Obama administration is finally moving on trade policy. What is unclear - and the early signs are troubling - is whether U.S. policy will also encompass the president's promise to use trade as a tool of development.
The Washington Post’sHoward Schneider pithily summed up the World Trade Organization (WTO) agreement reached in Bali over the weekend thusly: “[Ministers] didn’t walk away with much. But at least they didn’t walk away mad.” The Bali package included agreements to facilitate trade by modernizing customs procedures and to ensure that minimum access for agricultural imports subject to quotas is achieved in practice. On food security, there was, at the end, a resolution of the dispute over a “peace clause” that will allow India to shield its food stockholding program from trade challenges for at least four years.
Ministers also agreed to restrain their use of export subsidies and to improve market access for least developed countries (LDCs), but that language is merely hortatory and includes no binding obligations (aside from some monitoring and transparency measures). US negotiators declined to take advantage of the opportunity to lead on trade and development issues in Bali by embracing duty-free, quota-free market access for LDCs and food aid reform. The EU refused to bind the elimination of export subsidies that its own agricultural reforms have rendered nearly obsolete.
The deal, which almost failed due to differences between the United States and India over the terms of the food security agreement and then because of demands from Cuba to address the long-standing US embargo, is thus a far cry from what was envisioned when the Doha Round was launched more than a decade ago. But it was hailed by Director-General Roberto Azevedo as putting the WTO back in business and by European Union Trade Commissioner Karel Degucht as saving the WTO because the implications of yet another failure to agree on something would have been so much worse.
Beginning to restore the WTO’s credibility is certainly a welcome outcome and the trade facilitation agreement could be economically significant if countries implement it effectively. Even as delegations were celebrating the success, however, US Trade Representative Michael Froman and other Pacific-rim ministers were jetting off to Singapore to try and wrap up key pieces of the Trans-Pacific Partnership regional trade agreement. And US and EU negotiators meet the following week for the next round of the Transatlantic Trade and Investment Partnership negotiations. In other words, the WTO still has a long way to go to regain its position at the center of the trade universe.
Back in May, I greeted the new Director-General with a to-do list for reviving the WTO that urged him to salvage whatever he could from the Doha Round in Bali, then declare victory and move on. Against long odds, DG Azevedo managed to pull off a deal in Bali, but in his final statement to the ministers he clung to the hope (delusion?) of completing the broader Doha Round. I’m afraid that I simply disagree that the effort required to get a small package out of Bali signals the commitment of members to conclude the broader Doha Development Agenda.
I argued here that declaring an end to the Doha Round should not mean abandoning efforts to address rich country farm subsidies, discipline fishery subsidies, or liberalize services markets around the world. But the negotiating agenda, which was set more than a decade ago, needs to be updated and repackaged, as does the process for negotiating with such a large and diverse membership. The WTO is supposed to develop a work program for the next year. The outcome of that process will tell us whether the WTO will finally move into the 21st Century, or remain stuck in the past.
Trade has the potential to raise incomes worldwide. But trade creates losers as well as winners. This Rich World, Poor World brief provides an accessible introduction to the impact of global trade on U.S. jobs and suggests policies that the U.S. can pursue to maximize the gains and minimize the losses. Learn more about Rich World, Poor World: A Guide to Global Development