DDG Wolff highlights role of WTO in facilitating agri-food chains
The World Trade Organisation (WTO’s) rules-based framework benefits farmers and other participants in nascent and developing agri-food value chains by facilitating their daily operations and encouraging regulatory cooperation among governments, WTO Deputy Director-General Alan Wolff told the G-20 Agricultural Summit in Niigata, Japan on 11 May.
“All stakeholders in agri-food value chains, and all countries at every stage of economic development, stand to benefit from fully participating in a strengthened and dynamic multilateral trading system,” he said. This is what he said:
I would like to thank the Government of Japan for hosting this meeting, and for the excellent facilities and arrangements offered to make our meetings and our stay in Niigata fruitful and enjoyable.
Technological advances have fundamentally transformed the interactions within domestic and international agri-food value chains. Of particular relevance to our discussion today are the main results of a recent report on Global Value Chain Development. Its findings were discussed on 13 April at a special event during the 2019 Spring Meetings of the IMF and World Bank Group.
The Global Value Chain Development Report 2019
Many of the findings of the Report, co-published by the WTO, the World Bank Group, OECD, the Institute of Developing Economies (IDE-JETRO), the Research Center of Global Value Chains of the University of International Business and Economics, and the China Development Research Foundation can apply and should be applied to agriculture trade:
The Report underscores the continued evolution of global value chains (GVCs) in the last two decades and their critical role in opening new markets for countries, sectors and firms, notably by reducing trade barriers and lowering costs. GVCs play a major positive role in the world economy. There are very substantia direct economic benefits.
Empirical research has shown that trade has not been a significant factor in the loss of manufacturing jobs in developed economies and has generated employment and increased incomes in developing economies. As production processes have evolved under global value chains, job gains have been recorded in the services sector. This is crucially important for agri-food value chains (FVCs), demonstrating broad gains in both developed and developing economies.
The Report does recognize that GVCs can cause structural changes which vary considerably across regions, countries and individuals with different skill levels, particularly in developed countries. The Report therefore underscores the need for governments to design and implement adjustment policies to ensure that economic gains, which outweigh the costs, are spread more evenly. The Report concludes that on-going digital transformation provides significant scope to boost global growth, and indeed trade, especially for small and medium enterprises (SMEs).
Innovation, digital connectivity, Information Communications and Technology (ICT)
The WTO has underscored the importance of ICT in helping developing countries to enhance digital connectivity. In December 2015, at the WTO Ministerial Conference in Nairobi, the scope of the Information Technology Agreement (ITA) was expanded to include a further 201 high-tech products. ITA benefits are extended to the entire WTO membership.
With the benefits of greater availability of ITC products and services, FVC (food value chain)/GVC stakeholders are increasingly able to rely on real time access to data to inform their planting, processing, marketing, distribution and investment decisions. Enhancing investments in digital connectivity, electronic logistical support mechanisms and ICT-powered information systems can generate new efficiencies within FVCs/GVCs, particularly in agri-food industries, which are data-intensive, exposed to risks (e.g., weather vagaries, price volatility, food safety, etc.) and highly dependent on the services sector.
Examples of benefits to stakeholders in the value chains include the following:
Traceability enhances food safety. Finding a problem earlier can reduce health risks, reduce supply disruptions, reduce costs (sometimes very dramatically) to producers and distributors, and reduce waste;
Producers, including small holders, can become closer to consumers, delivering fresher products more quickly, with improved consumer choice and experience as well as enhanced economic returns to producers. This is particularly important to those with relatively limited incomes;
Greater access to real time market and policy information on prices will promote enhanced regulatory compliance at every stage of the supply chain (safety and quality standards, financial requirements, customs procedures, etc.), encouraging the inclusion of smaller players, bridging distances and reducing trade costs;
Closer collaboration and coordination among local, regional and international public and private partners and institutions lead to faster integration. Each stakeholder’s capacity to anticipate and manage risks builds stronger resilience in the entire agri-food chain;
The adoption of sustainable and “climate-smart” production practices using satellite and earth observation technology, drone-powered crop treatment and monitoring systems as well as modern traceability solutions and risk-management techniques such as blockchain technology and e-certification can generate productivity increases, input cost reductions (fertilizers, pesticides, water), and thus contribute to better farm incomes and positive food security and nutrition outcomes, while being more sustainable and lessening adverse impact on the environment.
To maximize efficiency gains, the GVC Development Report 2019 calls for governments to develop comprehensive digital strategies that encompass investments in ICT; provide for training and capacity-building; and improve trade openness, the business environment and innovation. Indeed, institutional research and educational frameworks at local, regional and international level must be designed and implemented in a way that is supportive of GVC stakeholders.
Stakeholders of any FVC can better anticipate price fluctuations and take necessary actions in their respective fields, whether they are active in futures markets and insurance, or represent the farming community, food manufacturing, trading, distribution, investment. Without transparency, which is the cornerstone of a predictable trading environment, informed and sound decision-making, let alone effective risk management, would be elusive.
The WTO rules-based framework provides practical commercial benefits to participants in nascent and developing FVCs/GVCs and their stakeholders by facilitating their daily operations and encouraging regulatory cooperation among governments. In a GVC environment, when import barriers raise input costs and act as a tax on a Member’s own exports, policies that restrict, or unnecessarily increase, the costs of trade hinder the development of agri-food value chains.
Enhancing the overall competitiveness of agri-food GVCs and allowing industries to exploit underlying comparative advantages require the adoption of open and transparent trade policies. This includes reducing distorting domestic support and market access barriers; ensuring that non-tariff measures are transparent, and, in the case of food safety measures, that they are science-based and applied in a non-discriminatory manner.
In addition to the ITA, the WTO Agreements cover food safety (SPS), technical barriers to trade (TBT), intellectual property rights that are relevant to technology transfer policies and regulations (TRIPS), streamlined and modernized customs procedures (Trade Facilitation) and Services. Each represents an important context for the development of the necessary components of value added in agri-food exports and in final products. They help ensure that GVCs operate efficiently.
Among the new developments in the WTO, Members are currently considering possible reform steps in the fields of E-commerce, investment, and micro, medium and small enterprises (MSMEs), that are designed to strengthen the multilateral trading system.
Positive results in these endeavors will generate new pathways for sustainable agricultural policy reform and inclusive economic growth. All stakeholders in agri-food value chains, and all countries at every stage of economic development, stand to benefit from fully participating in a strengthened and dynamic multilateral trading system.
E-commerce has the potential to generate growth opportunities both within domestic agri-food value chains as well as in cross-border trade. By connecting remote rural communities to markets, e-commerce is increasingly being used to move agricultural produce from surplus to deficit areas. A WTO study found that by 2030, digital technologies could boost trade by up to 34%, lowering costs and increasing productivity.
The availability of the latest technologies should be as widespread as possible. The huge technological gaps that exist among countries in terms of digital connectivity need to be bridged. Technical assistance and capacity building will be required.
At the last WTO Ministerial Conference in Buenos Aires in December 2017, a group of WTO Members took steps to seek common ground. In a transparent and inclusive manner, 76 countries decided to launch a Member-led Initiative on E-commerce. The sponsors and other interested Members have been sharing experiences and insights. Earlier this year, 77 WTO Members announced their intention to launch negotiations and develop new rules to discipline the trade-related aspects of e-commerce, including:
facilitation of e-commerce transactions (e.g. customs facilitation measures, paperless trading, e-signatures and e-payments);
issues related to market access and data flows;
consumer and personal data; and
transparency of e-commerce measures and regulations.
E-commerce discussions and upcoming negotiations at the WTO can build on a large and growing number of bilateral and regional agreements that contain provisions to facilitate cross-border e-commerce. Currently about 30% of the RTAs notified to the WTO contain e-commerce provisions, and this number is expected to increase. The work within the WTO on e-commerce and the digital economy is expected to have an important bearing on agri-food GVCs. Farmers and others in the food value chain should have a recognized right to access to, and free movement, of data relevant to assuring their participation of the benefits of this technological revolution.
In the WTO, such work also proceeds on a second track, with discussions under the Work Programme on Electronic Commerce taking place in regular WTO bodies, and under the auspices of the WTO General Council. Close attention should be paid to any decision that repeals or limits the decision taken by Members not to impose customs duties on electronic transmissions (the Moratorium on customs duties on electronic transmission that has been routinely extended for two-year periods).
While WTO rules already cover trade-related investment measures (the TRIMs Agreement), an initiative on Investment Facilitation for Development was also jointly sponsored by a large group of Members at the last Ministerial Conference.
Structured discussions are currently taking place among over 50 delegations, including many developing and LDC Members as well as non-signatories. As is the case with E-commerce, domestic laws, bilateral as well as RTAs have already operationalized some of the elements that are being discussed at multilateral level.
Recently, the discussions have moved to a new phase, with lively exchanges on Members’ standpoints, experiences, as well as the likely scope, functions and components of new disciplines that would streamline administrative processes and requirements; improve the transparency and predictability of investment measures; enhance international cooperation, information sharing and the exchange of best practices; and reflect the development dimension of the multilateral framework.
The participating WTO Members have underscored the need to encourage participation by additional developing country Members. They plan to explore further technical assistance and capacity-building in this area. Facilitating investments in the agricultural sector and institutional capacities, including digital and physical infrastructure and logistical support services; education; and innovation is vital to establishing domestic enabling environments and sound development strategies, including for agri-food sectors.
Training and capacity-building: within FVCs/GVCs
Capacity-building and skills development are critical determinants of competitiveness within GVCs and essential components for successful developing country participation in GVCs. The GVC Development Report 2019 emphasizes the importance of training and capacity-building to maximize the gains from GVCs.
Commitments to enhance investment in research, education, research and extension are important pieces of the puzzle. At the same time, it is important that solutions to develop both human skills and institutional capacity emanate from national policy makers, taking account of domestic economic and social dimensions.
WTO’s Reviews of the Aid-For-Trade Initiative have also confirmed that skills were a major supply-side constraint for small operators in developing countries. Even as trade and investment flows foster the dissemination of knowledge and promote the transfer technology and know-how, MSMEs in developing countries, particularly the least-developed (LDCs), need to acquire the skills, talent and expertise that are required to reap the benefits of GVC participation in the digital economy.
Training and capacity-building: food safety along FVCs/GVCs
Within the framework of the Standards Trade Development Facility (STDF), which is hosted by the WTO Secretariat, the WTO collaborates with FAO, OIE, WHO and the World Bank, and donor countries, to assist developing countries meet food safety requirements in their export markets and enhance market access to higher-value domestic, regional and global markets.
In making trade work for growth, employment and poverty reduction, the STDF has been working in a dynamic, inclusive and pragmatic way. Ensuring that efforts have a sustained and lasting impact on the ground is vitally important in approaching skills development from an integrated value chain perspective. This translates into strengthened relationships; enhanced awareness of the needs of respective stakeholders; efficient diffusion of technology and best practices; and increased access to technical and market information.
The STDF has reached out to several target groups of stakeholders. These include small-holders, farm associations and cooperatives, extension officers, commodity processors, marketing and distribution services, traders, national institutions and commodity boards, food safety and quality inspection units, as well as technical, vocational, education and research centres, local universities, international commodity organizations, and NGOs that are active in advancing the technical know-how, productive capacities and competitiveness of smaller GVC players.
Farmers were taught how to handle chemicals and equipment efficiently for safer pest and disease control. State-of-the-art on-farm and post-harvest practices and regulations have been rolled out, increasing farmer productivity, enhancing product quality and safety, reducing post-harvest losses, and successfully reducing the number of buyer and importer rejections in export destinations.
To generate multiplier effects, government-accredited vocational training programmes integrated training modules on advanced production technologies; and processing centers were upgraded and obtained Good Manufacturing Practice certification.
Electronic traceability systems were designed and implemented to track the movement of agricultural products along the supply chain. The recipients were trained to create and maintain standardized records and feeding systems that will often be permanently cloud-based to ensure online access.
Ultimately, beneficiary countries in Africa, Asia and Latin America have gained a better understanding of the articulation of supply chains in a range of agricultural and fisheries value chains. In each case, product safety and quality has improved in an integrated manner along the value chain.
Examples of SDTF-supported projects that strengthen GVCs/FVCs for the benefit of developing countries
Partnerships in Senegal boost safe cabbage production and regional exports
Beneficiary: Farmers and other stakeholders along the cabbage value chain in Senegal
Led by: AUMN
Time-frame: February 2012 – July 2014
STDF funding: US$577,142 (total project value US$636,175)
The safe trade gap
The cabbage sector is one of the most important sectors of Senegalese agriculture, and Senegal is one of the main suppliers of cabbage for the region. Yet, the sector in the country was not well organized, and suffered from a lack of awareness and expertise on how to meet sanitary and phytosanitary (SPS) standards. Information gaps resulted in pest attacks, and the excessive use or misuse of pesticides, which led to rejections at borders due to toxic residues that were not in line with export market requirements. At the same time, tackling poverty and driving rural development in cabbage growing areas was a pressing challenge. To boost productivity in the cabbage sector and promote better access to regional markets, there was a need to find solutions to plug gaps in safety and quality across the value chain.
Collaboration and dialogue among the public and private actors in the cabbage sector was key to the success of the project, led by the Association des Unions Maraichères des Niayes (AUMN). Together, small-scale growers, traders and government agencies worked with the industry association to revitalize cabbage production and develop the sector. A draft national strategy was developed and laid the foundation for stakeholder cooperation, helping to promote value chain development and replicate the project’s approach longer-term. The project supplied quality inputs (seeds, fertilizers and pesticides) to growers, rolled out technical training and support for producers on good agricultural practices and ran targeted marketing campaigns on safety and quality production.
Increased farmer productivity – from 15 to 30 tonnes per hectare; improved quality –pesticide residues dropped reassuring customers of non-toxic products, with benefits for public health and the environment; more competitive prices – processing costs fell by 42%.
Introduction of new cabbage species adapted to the seasons; use of innovative production techniques, and monitoring of major pests. A traceability sheet collected real-time information on the production cost of quality cabbage and is now used by producers.
Upgraded transport, packing and conservation along the value chain. The use of crates to transport the produce and cold rooms to store the cabbage helped to preserve cabbage quality. Producers were also able to opt for 2, 10 and 15 kg bags valued by end consumers.
Producers gained new market shares in the region, in particular in Mauritania, Mali, The Gambia and Guinea-Bissau. Exports went from 1,900 tonnes in 2008 to 6,000 tonnes in 2014.
By improving phytosanitary conditions, the project led to improved quality of cabbage and is being used as an example for other cabbage producers in the area and wider region.
An inter-professional cabbage network was set up during the project, which continues to strengthen dialogue between growers and sellers.
The project led to more purchasing and order contracts and more predictability for traders, including demand tailored to customer needs, such as requests for different cabbage sizes.
Thanks to the project, AUMN has become a key partner for the national SPS authorities on topics related to the development of the horticultural sector as a whole.
Improved infrastructure, including better roads to safely transport cabbage and inputs to growers, which came about during the project, is supporting rural development in the area.
“The project’s success was due to genuine collaboration between the private sector and public institutions. We joined our efforts in support of a common objective – helping small-scale producers to improve the quality and safety of cabbage, which increased their access to regional export markets”. Mamadou Ndiaye, Association des Unions Maraîchères des Niayes, Senegal
Stronger phytosanitary controls help Uganda’s flower exports to grow
Beneficiary: Flower producers in Uganda
Led by: CABI and the Department of Crop Protection in Uganda and the Uganda Flower Exporters Association
Time-frame: January 2012 – May 2015
STDF funding: US$348,632 (total project value US$392,154)
The safe trade gap
Flower producers in Uganda faced heavy losses with the growing interception of cut flower exports to the EU. Costs rose with increased inspections, treatment and rejected consignments. In turn, investment in the sector was slowing, which was impacting on trade flows and economic growth. The problem – plant pests. The solution – getting the right tools and knowledge on phytosanitary measures in place to keep the flower supply chain safe. At the same time this would help to safeguard the livelihoods of the country’s 6,000 flower workers, 80% of them women, and their families.
Flower producers and exporters came together with the Department of Crop Protection (DCP) in Uganda to build capacity to meet international phytosanitary standards and EU requirements. A strong public-private partnership between the DCP and the Uganda Flower Exporters Association (UFEA) was created based on joint dialogue and planning. Efforts were made to raise awareness and gain buy-in from national decision-makers. With technical expertise from CABI and other partners, hands-on practical training and study tours were rolled out for the public and private sector. Government teams were deployed to boost efficiency of inspections and certification at exit points and an electronic format for export certification and accessible reference materials were developed.
Numbers of interceptions on roses due to plant pests fell from 34 in 2013 to 18 in 2014 and to less than five in 2015 and continued to fall in 2016. The livelihoods of the majority women workers dependent on the flower industry stand to benefit as exports to the EU continue.
Over 100 scouts across the flower sector and 10 inspectors have been trained by COPE. Inspectors and industry showed high levels of knowledge on international phytosanitary standards and EU legislation to meet EU market demands.
A streamlined inspection and export certification system was set up, together with a surveillance, monitoring and traceability system. A manual with 12 Standard Operating Procedures was developed with operations linked to the Plant Protection and Health Act 2015.
An evaluation in 2015 found that thanks to the project there was “improved compliance with international phytosanitary standards for production and export of flowers for the European market.” “Awareness on the relevant phytosanitary issues in relation to the export to the EU has increased significantly” and, at the same time, “the response of the cut flower sector on the survey and monitoring program reached a very reactive and responsive level.”
Flower farms have also set up a self-regulating system on monitoring and surveillance, with disincentives for non-compliance, managed by a Task Team of government and industry.
The DCP and UFEA have since signed a new public-private partnership to sustain their collaboration and increase flower production and exports.
This statement reflects the work of the WTO’s Agriculture Division, and particularly of Majda Petschen and the Division Director, Edwini Kessie. The STDF material reflects the work of that institution and of the STDF Staff Secretary of the STDF, Melvin Spreij.