Agricultural trade negotiations
Trade in agricultural products is critical to New Zealand’s economy. However the WTO rules on agricultural trade are not as well developed or effective as the rules for trade in industrial goods.
Many countries retain a range of barriers to agricultural imports, such as high tariffs and tariff quotas, so there are still significant distortions to trade in this sector. New Zealand's agricultural exports frequently come up against these barriers and also have to compete against products that enjoy subsidies. This can put New Zealand farmers at a significant disadvantage. We’re not alone in calling for ambitious and urgent reform of agricultural trade.
- WTO Agreement on Agriculture (AoA)
- The Cairns Group
- Fishing subsidies negotiations - Friends of Fish
The WTO Agreement on Agriculture (AoA) was a good first step in liberalising agricultural trade. This was agreed as part of the Uruguay Round of trade negotiations and came into force with the creation of the WTO in 1995. Our agricultural sector has benefitted significantly from these reforms – but through the Doha Round we are working to achieve further improvements to the rules.
Negotiations on agriculture are geared toward creating a more fair and market oriented agricultural trading system. The negotiations are divided into ‘three pillars’:
- Market access – substantial improvements by reducing barriers to trade and improving rules
- Export competition – including reducing and eventually phasing out subsidies paid to exporters
- Domestic support – reducing the trade-distorting subsidies that are paid to farmers and limiting government price guarantees
The export subsidy component of the export competition pillar was effectively addressed through the agreement at the 2015 WTO Ministerial meeting in Nairobi to eliminate export subsidies.
New Zealand stands to gain considerably from further reforms in the two remaining pillars. In essence, we want agricultural exporters to be able to benefit from the same opportunities in world markets that have been created progressively for industrial goods since the 1947 GATT.
We have these two specific aims for the ongoing agriculture negotiations:
- Tariffs - increase market access for our products through substantial cuts to all tariffs; raise the quantity and quality of market access provided through tariff quotas; remove a range of non-tariff barriers. These would benefit both New Zealand farmers and consumers in other member countries.
- Domestic subsidies - secure major reductions in domestic subsidies which distort trade by artificially encouraging production where it would not otherwise have taken place, and which create an uneven playing field for our agricultural exporters.
New Zealand believes that achieving these objectives would also make a significant contribution to fostering global development, providing considerable benefits for most developing country members in terms of rural development, food security and export earnings.
New Zealand is a member of the Cairns Group - 19 like-minded agricultural exporting countries pushing for ambitious agricultural trade reform. Cairns Group countries span five continents and make up a third of the world's agricultural exports. The group was set up in Cairns in 1986 at the outset of the GATT Uruguay Round and Australia is the permanent chair.
The members are Argentina, Australia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, Peru, the Philippines, South Africa, Thailand, Uruguay, and Viet Nam. Most Cairns Group members are developing countries.
New Zealand is the coordinator of the ‘Friends of Fish’, a group of likeminded WTO member countries pushing for new rules on fisheries subsidies. Subsidies contribute to overfishing by artificially reducing costs for the fishing industry, and artificially inflating earnings. The World Bank’s 2008 ‘Sunken Billions’ report estimates that, as a result of overcapacity, inefficiency and subsidisation, the world’s fishing industry creates a net drain on the global fishing resource of around $50 billion per year. Since the Doha round was launched in 2001, fishing subsidies have increased and fish stocks have declined around the world.
Prohibiting harmful fisheries subsidies will be of significant benefit to New Zealand and Pacific nations.