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WTO Trade Ministers Must Seize Agricultural Subsidy Reform Opportunity

Ahead of the WTO’s 12th Ministerial Conference from 30 November - 3 December, the Dairy Companies Association of New Zealand (DCANZ) is strongly supporting calls for a meaningful outcome on agricultural subsidies reform.

"Agricultural domestic support reform is the most urgent agricultural trade policy issue needing to be progressed multilateral," says DCANZ Executive Director Kimberly Crewther. "An ambitious outcome would unlock major benefits for global agricultural trade."

Domestic support subsidies are a major source of distortion and price volatility in agricultural markets. They lock in unsustainable food production systems, create significant disadvantages and inequities for unsubsidised producers, and cause a raft of negative environmental impacts through inefficient use of natural resources.

Crewther says domestic support has fallen behind the other key areas of the WTO’s agricultural negotiations and an outcome is long overdue.

"Meaningful domestic support reform would deliver greater global security of food supply, more stable rural livelihoods, fairer competition in agriculture markets, and more sustainable and lower greenhouse gas emissions from food production. These are all critical as the world continues to respond to the challenges created by both the COVID-19 pandemic and climate change."

USD 500 billion is already paid in trade- and production-distorting agricultural subsidies, with much of this amount concentrated in a small number of individual economies. Left unchecked, the current rules for calculating ‘entitlements’ to deploy these distorting and potentially harmful payments will see their potential for permitted use reach USD 2 trillion by 2030. The consequences of allowing agricultural subsidies to potentially quadruple over the next decade would fly in the face of the UN Sustainable Development Goals.

DCANZ is urging Trade Ministers to lend their support to a swift and comprehensive reform of existing WTO rules on agricultural domestic support subsidies. This includes the progressive elimination of all trade- and production-distorting subsidies in the shortest timeframes possible, both in their totality and at an individual sector level.

"It is important that MC12 delivers the highest ambition possible on domestic support reform, as every WTO member stands to benefit," says Crewther. "The key goal put forward by members of the Cairns Group early in 2020 - to cap and reduce by at least half the current trade- and production-distorting domestic support entitlements by 2030 - would be a sound foundation to build from."

It is important that WTO Trade Ministers seize the opportunity MC12 offers, to give much-needed momentum to the WTO’s agricultural negotiations.

"Achieving an outcome on domestic support would help strengthen the WTO’s legitimacy and demonstrate its ability to respond to current challenges facing the multilateral trading system," says Crewther.

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