Trade Policy at Work

The Impact of COVID-19 on Agricultural Trade and Employment

The third informal South and South-East Asia Forum meeting of the project “Business & Trade Connexion” – being undertaken with funding support from AustralianAid – took place virtually on a Zoom platform (due to related-COVID19 restrictions) on Wednesday the 4th of August 2021.

The meeting started with some introductory remarks by Rashid S. Kaukab, CUTS International Geneva, Executive Director who welcomed the delegates, thanked them for their participation despite their busy schedules, and briefly outlined the main objectives of the meeting.

Kyle de Klerk, Intern, CUTS International Geneva presented a summary of the main findings of the note “The Impact of COVID-19 on Agricultural Trade and Employment of Selected South and South-east Asian Countries”. The agricultural sectors of participating countries were surprisingly resilient throughout 2020, having grown an average of 2.2% while manufacturing and services sectors contracted. This resilience extended to agricultural trade, with agri-food exports growing for 4/7 participating countries. However, it was noted that all countries have large agri-food trade deficits. The sector is also an extremely important source of employment and employs an average of 45% of the workforce of participating countries. Overall resilience and employment significance means that the sector is crucial to post-COVID sustainable recovery efforts. Three common challenges encountered by the agricultural sector were then presented:

Supply Chain Disruptions

Lockdown measures prevented farmers from acquiring inputs such as seeds and fertilizer, as well as accessing markets to sell their products. The role of digital coordination in alleviating this problem was highlighted.

Labour Deficits

Lockdowns prevented seasonal migrant workers in cities from travelling to farms for harvest. This led to loss of employment for the workers, as well as losses of income for farmers who could not harvest. An identified best-practice for overcoming this challenge was the government provision of transport and harvesting equipment.

Trade Imbalances and Dependency

Participating countries (except Vietnam) export low value agro-commodities and import value-added processed foods to ensure food security. The need to prioritise the development of agro-processing industry was suggested, which would undermine this dependency.

Finally, the presentation suggested several ways for delegates to the WTO to facilitate the growth of their respective agricultural sectors. These included: (i) Discussions on food export restrictions; (ii) Addressing agricultural export subsidies; (iii) Push for the recognition of equivalence of sanitary and phytosanitary measures; (iv) Enhance transparency on existing obligations; and (v) Renew discussions on domestic support reform.

The floor was then opened for discussion and feedback from participating delegates. Delegates thanked CUTS for organizing the meeting and expressed their appreciation for the note, which they found comprehensive and informative. Delegates highlighted several key challenges faced by their agricultural sectors. First, several delegates highlighted the impact of COVID-19 on agricultural supply chains, particularly relating to the effect of new border restrictions raising the cost of transportation of exports and undermining competitiveness. Second, delegates pointed to the challenge of certifying their organic agricultural products for export to large markets. It was noted that many countries did not have the facilities to carry out this certification, and producers cannot afford to pay for foreign certification. It was recommended that delegates address this issue through the Specific Trade Concern (STC) mechanism within the SPS committee as well as by exploring bilateral assistance from interested donors. Last, delegates noted that lack of financing was a hinderance to the agriculture sector, as farmers often cannot access formal finance or do not have required collateral.

Delegates also identified several priority areas which they hoped could be addressed at MC12. The most common shared concern was domestic support reform, with delegates noting that agricultural subsidies gave producers in wealthy countries unfair advantages. Delegates also hoped that the growth of e-commerce and the digital divide would be addressed, with some calling for the end of the e-commerce moratorium to allow them to collect much needed revenue. Other issues mentioned included: PSH and SSM in agriculture, S&DT in fisheries subsidies negotiations, and facilitating services in support of e-commerce. Last, delegates agreed that the WTO needed to facilitate the smooth transition of graduating LDCs to ensure the sustainable development of these countries.

In conclusion, Rashid S. Kaukab thanked the delegates for their participation and positive feedback. He informed the delegates that CUTS was working on an upcoming study on LDCs which would also address the smooth transition issue. He also informed delegates that the next meeting would be scheduled for late September. The regional note for that meeting, as suggested by one delegate and endorsed by the rest, would briefly analyse the latest draft text for MC12 by the Chair of the CoA-SS, and outline possible ways forward for the participating countries to assist them in better participation towards MC12, possibly through considering common positions. Meanwhile, CUTS will remain in touch with all participants and looks forward to continuing to work in a collaborative manner. Delegates are also welcome to approach CUTS staff bilaterally as needed.