Brown Bag Seminar “Sustainable Development: Is WTO Part of the Problem?”
Christian Häberli, WTI Fellow and MATS legal advisor, will speak at the World Trade Institute: are the WTO and the multilateral trading system sustainable?
A lot of criticism continues to abound even after the self-claimed success of MC13. There are the obvious grievances about the lack of dispute settlement and the lack of real negotiations. Businesses and NGOs point out the shortcomings in their fields of interest. Arthur Appleton and & Patrick Macrory find problems just about everywhere and make suggestions on how to fix them (2022, Kluwer Law International BV). Other scholars (Aaronson, Baldwin, Evenett, Howse, Mavroidis, Orden et al) argue that WTO has become part of the problem. Not only because of the stalled agriculture and other negotiations, or the incompatibility of the present WTO non-discrimination rules with the Climate Agreement “differentiation” obligation. The pandemic, the energy crisis, and other wars failed to move the debate in Geneva forward for even one inch.
Basically, there seems to be a consensus – outside of WTO – that the multilateral trading system is not sustainable. This raises the question whether Trade Ministry representatives masterminding all WTO proceedings are unable or unwilling to review the present rules? Could scholars or adjudicators find compelling reasons to consider non-international economic law in their assessment of a claim of non-sustainability?
My article will focus on agricultural trade (Working Title: “Agricultural Trade Rules – Where are you?”), but this lecture starts with a lot of context outside agriculture. Yet it will not join the blame game. I only propose to accept the present shortcomings in international trade and investment governance as a leverage for reforms negotiated by those who matter: WTO Member governments, and parliaments.
CSD on EU-Africa trade and investment relations – 17th of March 2023
The aim of this meeting is to discuss with EU civil society the latest developments in EU-Africa trade and investment relations and exchange views on EU trade and investment policy in Africa. The Trade Policy Review Communication published by the European Commission in February 2021 confirmed the importance of Africa in the EU’s trade policy. It proposed to enhance further sustainable trade and investment links, both between the EU and Africa and in Africa itself, while also strengthening existing regional integration processes. The link to the online event, as well as further details, are available here
African, Caribbean, and Pacific, Overseas Countries and Territories Unit Directorate-General for Trade, European Commission.
Civil Society Coordination – Transparency, Civil society, and Communication Unit, Directorate-General for Trade.
Updates on Economic Partnership Agreements (EPAs)/Associations Agreements (AAs) (trade pillar)
Latest developments in EU-Africa trade and investment relations
Green Deal and F2F strategy are clear about the EU’s willingness to promote sustainable agri-food sector globally through its external policies, including international cooperation and trade policy. The work is ambiguously based on cooperation with partners and in different international foras, but it has a strong autonomous perspective – better known as open strategic autonomy, also visible in the EU’s trade policy strategy. Both Green Deal and F2F make strong references to restricting market access for goods that are not produced according to EU’s environmental (or other) standards. It also points out a need to avoid outsourcing of unsustainable practices to third countries and to restrict importing such products into the EU market. Despite this is nothing new that the EU is requiring countries to comply with some of its relevant agri-food standards, this time the tone is more severe.
The first concrete autonomous measure linked to environmental sustainability in agri-food trade was the mandatory due diligence on deforestation free supply chains, which I wrote here last time. Since environmental sustainability is only one side of the coin, you should also check the one on social sustainability, hence forced labour. It is no wonder why some of the EU’s trading partners are a bit concerned. Such new measures are intending to regulate the way products are produced meaning that to gain access to the EU market, products must be produced according to the EU regulation. This is not an easy task particularly for developing country trade partners. It also certainly raises questions what is yet to come? Maybe an obligatory environmental footprint scheme? A carbon border adjustment measure on selected agri-food products?
If you try to make sense of what Green Deal says about sustainable agri-food trade, you will end up reading the Farm-to-Fork Strategy. While reading that, you realize that you need to consider a myriad of other strategies and sectoral policies from the Common Agricultural Policy to biodiversity, climate law, circular economy, forestry, carbon markets, transportation, competition rules, trade policy, and a comprehensive list of others. These will all be affected by the Green Deal, and they will, in one way or another influence EU’s international agri-food trade. However, it is impossible to say in just a few sentences what environmentally sustainable agri-food trade is, according to the EU. It includes all the stages in the value chain, not just farming and processing, which explains the necessary interdisciplinary view needed to understand ‘environmentally sustainable agri-food trade’. Another thing is to make agricultural production itself environmentally sustainable, so how much trade policy can do? At least agri-food value chains have typically become more global, which increases the role of trade policies in regulating traded goods and increases the need for government policies that focus on facilitating participation in global value chains, so as to facilitate added value creation.
Yet unlikely implemented any time soon, discussion exists about extending carbon pricing to agricultural sector (e.g. here, and here), mostly concluding its infeasibility, inefficiency, and a high risk of carbon leakage without carbon border measures. Note also that agricultural emissions are not only carbon emissions; 31 per cent of human-caused GHG emissions, originate from the world’s agri-food systems, and the FAO calculated that cattle generate up to two-thirds of the greenhouse gases from livestock, and are the world’s fifth largest source of methane. However, New Zealand has recently published a plan for pricing its emissions on agricultural sector which will showcase other countries how such a mechanism would work. It is to be seen, how New Zealand copes with the carbon leakage. And so, why was I raising this issue of carbon border measures before? While F2F makes no references in adopting such measures for agriculture, the Green Deal put forward the Carbon Border Adjustment Measure (CBAM) for some industrial goods. Before its publication and even after, some concerns among the agri-food sector were heard whether the product coverage could be extended to agri-food products. In its current form this is not the case, and we only find indirect linkages to agricultural sector through some inputs such as certain fertilizers, which are subject to the mechanism. This of course includes the potential for price increases and in some cases concerns regarding availability of fertilizers in the EU market, but again, it does not directly target agri-food trade. The CBAM is actually linked to the revision of the EU ETS as a mechanism to gradually replace the free allowances system, to prevent ETS induced carbon leakage for those sectors already subject to the EU ETS. There is lots of misunderstanding and misinterpretation available on the CBAM but building the link through the ETS free allowances hopefully makes its purpose clearer.
Lastly, I would like to consider one more initiative meaningful for making agri-food trade more environmentally sustainable, which is perhaps not talked about enough. Probably one of the largest packages in the Green Deal is the revision of the EU’s Emissions Trading System. This reform will have far-reaching impacts on many value chains and their trade through transportation. This is because the ETS 1) is strengthened in the aviation sector, 2) will be extended to shipping sector, and 3) an own ETS is to be established to cover emissions from fuels used in buildings and road transport. This will inevitably increase transportation costs within, into and from the EU market. We hope for a quick green transition in the transportation sector – otherwise we might end up having unsustainable agri-food trade at least in economic terms. But is hope enough in the face of increasing trade-relevant policy-fog?
Mari Carlson is the co-coordinator for the MATS project. She is also a doctoral researcher in the doctoral programme in Sustainable Use of Renewable Natural Resources at the University of Helsinki. Her research combines trade policy, environmental sustainability, and agriculture.
Bodo Steiner is the coordinator for the MATS project. He is professor of Food Economics & Business Management, head of the research group Management & Organizations For Sustainable Food Systems, deputy director at the Department of Economics and Management, University of Helsinki. See his comprehensive list of publications, projects, activities, and much more here.
The first report to read in 2023 is perhaps the United Nations Global Land Use Outlook. It provides a comprehensive picture of the state of land – soil, water, and biodiversity. It has many important messages that we typically neglect from one year to another. One of them is that modern farming with intensive monoculture, deforestation, and other ecosystems uses for agricultural purposes generate the most of carbon emissions associated with land use change. The IPCC estimates that food systems in their entirety (including agriculture and land use, storage, transport, packaging, processing, retail, and consumption) are responsible for 21-37 percent of annual greenhouse gas emissions globally. Thus, sustainable food systems are important to the success of the global climate agenda. This is exactly what our MATS project is interested in: searching for ways to enhance sustainable food systems as part of policy solutions that make agricultural trade more sustainable.
So, how do forests have anything to do with sustainable global food systems? One of the most pressing issues regarding food systems is deforestation, which means conversion of forest to other land uses, such as agriculture and infrastructure. FAO’s recent Remote Sensing Survey reveals that agricultural expansion is driving almost 90 percent of global deforestation of which around 50 percent is due to conversion of forests into cropland. Livestock grazing accounts for around 40 percent whereas urban infrastructure and other uses around 10 percent. Although the FAO survey confirms a slowdown in deforestation, tropical forests remain under pressure, particularly in Africa and in Latin-America. There is no need to be an expert to understand that these areas will be impacted most when deforestation “becomes a problem”.
Yet although the majority of deforestation-associated goods (e.g. palm oil, wood, cocoa, coffee, soy, beef) are consumed at a local or regional level, there is evidence that international trade in these goods accelerates deforestation. According to WWF’s report, the biggest importers of deforestation were China (24%), EU (16%), India (9%), the United States (7%) and Japan (5%). The European Commission has estimated that its consumption is responsible for 10 percent of global deforestation. If we then look at the portion of deforestation-linked goods traded internationally, the EU’s share is 36%, being considerably higher than the WWF’s estimate.
The EU has taken these numbers seriously. In line with the EU’s Communication on World Forests and Green Deal, at the end of 2021, the European Commission proposed a Regulation on deforestation free supply chains. Already at the end of 2022 a provisional political agreement was reached between the EU institutions. Once the Regulation is formally adopted and in force, operators and traders will have 18 months transition period to implement the new rules.
The end of the 2022 was a wake-up call for all those who considered the Regulation to be only about forests. It is very little about forests and mostly about agriculture, because in a nutshell, the EU’s deforestation regulation means that companies placing palm oil, cattle, soy, coffee, cocoa, timber, and rubber, as well as derived products (such as beef, furniture, or chocolate) on or exporting from the EU market, must comply with strict due diligence obligations. For example, operators and traders must prove that the products are produced on land that was not subject to deforestation after 31 December 2020. This includes an obligation to collect precise geographical information on the farmland where the commodities were grown. Goods must also be legally produced meaning that they comply with all relevant applicable laws in force in the country of production.
Regarding international trade rules (particularly WTO rules) and reaction from third countries, the Commission has assured that this measure will comply with all international obligations, and that the EU will cooperate with the affected countries. It will be interesting to follow how the EU’s benchmarking system that assess countries and their level of risk of deforestationand forest degradation (a high, standard, or low risk) will be evaluated by trading partners, and eventually in the light of the WTO legal framework. Already now, some countries deem the EU’s actions with a critical tone. Either way, the Commission’s Regulation on deforestation-free supply chains will shape the agenda of businesses and policymakers alike in their quest to make sustainable global food systems more sustainable in 2023.
The corresponding writer is the co-coordinator for the Making Agricultural Trade Sustainable project. She is also a doctoral researcher in the doctoral programme in Sustainable Use of Renewable Natural Resources at the University of Helsinki. Her research combines trade policy, environmental sustainability, and agriculture. Before joining the MATS team, she worked as a commercial secretary on trade and environment in the Ministry for Foreign Affairs of Finland.
DISCUSSION BRIEFS 6/2022 – Synthesis of model-based studies: A discussion on computational models applied in agricultural trade-related work
The discussion brief (available here) presents computational models used in previously published agricultural trade-related academic journal articles. The study analyses the results of models that were used to assess the relation between trade and sustainability (environmental, social, and economic dimensions). A detailed description of the models and information about their characteristics, goal, type, regional coverage, time frame, and applications can be found in MATS project DEL2.2.
World Circular Economy Forum 2022 with focus on Africa
This year’s World Circular Economy Forum will be hosted in Kigali, Rwanda and online on 6–8 December, putting the whole African continent into spotlight. African Studios will bring the Forum to five big cities across the continent and Global Studios will gather local audiences to watch the live stream together. Days 1 and 2 offer seven sessions packed with information and inspiring solutions, and day 3 is reserved for partner-led Accelerator Sessions. For more information and to register, please follow this link
Event – Capacity development for agricultural innovation systems (AIS) mainstreaming and investments through the Tropical Agriculture Platform – 13th of October
This event aims to share the country and regional experiences in Africa, Latin America and Asia on CD for AIS, as well as insights on evidence-based policy dialogue and investments on agricultural innovation, based on regional and country level assessments. To participate in this event, please register using the following link
Tralac Annual Conference 2022, 13-14 October 2022: Africa’s trade and governance agenda in a changing world
The 2022 tralac Annual Conference takes place against the backdrop of global crises of which the medium and long-term consequences are not yet clear. At this conference, we will discuss some of the features of the crises now to be faced, but the real challenge is to understand their interconnectedness and broader implications.
At this Annual Conference, we discussed developments involving continent-wide trade under AfCFTA preferences, alongside the Regional Economic Community (REC) Free Trade Areas (FTAs). We recognise that Africa’s economic development and integration is, in the first instance, its own responsibility. That is one reason why tralac’s mantra is good governance. We are of the view that the AfCFTA design has introduced new elements into the debate about regional integration in Africa, through the inclusion of the REC FTA acquis as a founding principle of continental integration. For more info click here
A recent WFP report investigated food distribution in Tanzania through System Dynamics modelling. The main findings of the study suggest integrated approach to food systems leads to the greatest gains, in terms of profitability for farmers, nutritional outcomes and efficiency in the use of production input. Find out more here