Food Security WTO (Negotiations, Regular Work, Leadership)

Towards a WTO Package of Solutions for NFIDCs in Times of Food Crisis

The war in Ukraine is threatening to become the spark that started the fire of an already looming global food crisis. Food and grain prices are soaring, to an extent possibly leading to a rise in global malnutrition by 8 to 13 million people this year. This situation is of particularly high risk for Net Food-Importing Developing Countries (NFIDCs), where cereal grains comprise over half of the per capita dietary energy supply. For them, domestic policy options will not suffice, and the WTO must support an adequate response. This note proposes possible options for a WTO Package of Solutions for NFIDCs, at and beyond its 12th ministerial conference.

Price spikes on world markets for basic foodstuffs, as brought about by the war in Ukraine, are likely to recur in the future, and existing domestic policy options do not suffice to mitigate the effects. Therefore, the WTO, at its 12th Ministerial Conference and beyond, must support an adequate response and adopt concrete decisions in this area, particularly for NFIDCs.

In the area of agriculture negotiations and flexibilities therein, such decisions could for instance be taken with regard to: (i) Article 6.2, which should remain intact or its scope be broadened; (ii) Article 6.4 on de minimis, by updating the reference price used by the AoA and/or adopting a peace clause for NFIDCs breaching their de minimis limit; (iii) Public food stockholding, by exempting NFIDCs’ programmes from Amber Box calculations, if they meet certain conditions; (iv) Export competition, by Extending Article 9.4 flexibilities for LDCs and NFIDCs for a longer period; (iv) Export restrictions, by shielding NFIDCs’ food purchases from export restrictions by other members, agreeing on an operational definition of “critical food shortage, and adopting the Ministerial Decision on “WFP Food Purchases Exemption from Export Prohibitions or Restrictions”.

But more can be done, and it is a momentous time to be ambitious. It is high time that members concretely deliver on the mandate of the WTO’s Marrakesh Ministerial Decision on NFIDCs to improve access to the resources of the international financial institutions. While compensatory financing solutions were explored by WTO members in the past, culminating in the conceptualisation of a possible Food Import Financing Facility (FIFF), discussions have been sidelined for over fifteen years. The cost of inaction has been high, and a renewed effort is necessary to translate the good intentions of the international community into functional instruments.

In fact, FAO at a recent G20 meeting called for a global Food Import Financing Facility (FIFF) to help poorer countries deal with surging prices as a result of the war in Ukraine. This would complement existing UN system mechanisms, be strictly based on urgent needs of NFIDCs, and promote future resilience by prioritising investments in sustainable agri-food systems. Already, the FFIF has been stress-tested by FAO for its impact on the global markets, and would be convenient to administrate and scale up.

It is time for the WTO to fulfil the commitment to NFIDCs and LDCs under the Marrakesh Ministerial Decision of 1994 and join hands with FAO to operationalise the FIFF at the earliest.