World Trade Organization (WTO)
The WTO is vital to the Australian Government’s international efforts to push for substantial reductions in the trade distorting subsidies, tariffs and tariff quotas and export subsidies and protection used by other countries. A key objective of the Department of Agriculture and Water Resources is to contribute to these efforts and secure improved export opportunities for Australia’s primary producers.
What is the WTO and why is it important?
The WTO was established in 1995 as a successor to the General Agreement on Tariffs and Trade. There are 160 members of the WTO (as at 1 June 2014), with developing countries accounting for more than two-thirds of the membership. The WTO sets global rules for trade and provides a forum for trade negotiations and resolving trade disputes between member countries. WTO members as a whole make all major decisions, usually by consensus.
The WTO sets global rules for trade and provides a forum for trade negotiations and resolving trade disputes between member countries. WTO members as a whole make all major decisions, usually by consensus.
WTO rules cover trade in all goods and many services as well as a very broad range of trade issues, from quarantine and technical trade barriers to taxation, subsidies and intellectual property.
These rules help international trade flow as smoothly, predictably and freely as possible. WTO rules can provide secure trading conditions and reduce some of the risks associated with doing business overseas. Australia, like all other members, is required to abide by the rules.
Agricultural trade and the WTO
Agricultural trade is the most distorted sector in the world. It is characterised by very high trade barriers, high levels of domestic support and export subsidies. For example, in 2010 government support payments accounted for an average of 20 per cent of the gross income of farmers in the European Union, 7 per cent for farmers in the United States and 50 per cent for farmers in Japan and 45 per cent for farmers in the Republic of Korea.
The WTO Agreement on Agriculture — developed as part of the Uruguay Round of multilateral trade negotiations (1986-1994) — was a major milestone for the global trading system. For the first time, international rules were established to address some of the major distortions in agricultural trade. The Agreement on Agriculture eliminated import quotas, bound all agricultural tariffs and imposed disciplines on domestic support measures (such as production subsidies) and export subsidies.
While the Uruguay Round outcomes on agriculture were an important first step, more far-reaching trade liberalisation is needed. In November 2001 WTO members commenced the Doha Round of trade negotiations to continue the reform process and build on the commitments made in the Uruguay Round.
A paper by ABARES outlines opportunities for Australian farmers under global trade liberalisation (published in Australian Commodities March Quarter 07.1).
Doha Round negotiations on agriculture
The Doha Round of trade negotiations is Australia’s highest trade priority and an opportunity to:
- strengthen existing WTO rules
- impose new and more rigorous disciplines on the policies and programs of other countries
- eliminate agricultural export subsidies
- substantially reduce subsidised agricultural production, and
- deliver improved market access for exporters by cutting tariffs.
Australia and its Cairns Group partners are committed to achieving an ambitious outcome from the Doha Round in the form of an open and fair international market for agricultural goods.
The Cairns Group is a coalition of 19 agricultural exporting countries bringing together developed and developing countries from Latin America, Africa and the Asia-Pacific region. The Cairns Group has been an influential voice in the agricultural reform debate since its formation in 1986 and continues to play a key role in facilitating efforts to progress WTO negotiations in the Doha Round.
In a report entitled ‘The Cairns Group: Catalyst for agricultural trade reform’, the prospects for increased Cairns Group trade are analysed to highlight the benefits of more market oriented multilateral agricultural trade reform.
Information about the state of play in the Doha Round negotiations is available from the Department of Foreign Affairs and Trade (DFAT) website.
The WTO and the department
The department contributes to international negotiations to improve market access for Australian agricultural commodities and processed foods through the WTO Doha Round of negotiations.
The department's aim is to ensure that these negotiations address portfolio interests and maximise opportunities to improve the international competitiveness of Australia's agricultural, food, fisheries and forest industries. The department works closely with DFAT to develop Australian negotiating positions on:
- non-agricultural market access (including fisheries and forestry)
- rules negotiations (including anti-dumping, forestry and fisheries subsidies)
- trade and environment
- trade facilitation and
- geographical indications.
The department also plays a key role in the WTO Committee on Agriculture and the WTO Committee on Sanitary and Phytosanitary Measures. The department’s aim is to ensure that these committees take Australian interests into account and, where appropriate, use them to address trade barriers and other trade problems with other WTO members.
The department monitors the impact of developments in the WTO (for example, in trade disputes) on Australia’s agricultural, food, fisheries and forest industries and advises ministers and other government agencies.
It also provides advice to domestic industry on these issues, and takes a role in ensuring that Australia meets its obligations in areas directly related to the department's portfolio.
The department provides input to DFAT for bilateral negotiations with countries that are in the process of joining the WTO. Specifically, the department identifies agricultural, forestry and fishery products of importance to Australia and for which we wish to gain market access concessions during these negotiations.
The WTO Committee on Agriculture
The WTO Committee on Agriculture oversees the implementation of the Agreement on Agriculture. It normally meets four times a year and is an important tool for Australia to ensure other WTO members are complying with their obligations on subsidies and market access.
In conjunction with the WTO Trade Policy Review Mechanism, the Committee on Agriculture helps to promote transparency in the global trading system and allows countries to scrutinise the trade policies and rural programs of their trading partners.
The WTO conducted its sixth Trade Policy Review of Australia in Geneva in April 2011. The review was positive with WTO Members congratulating Australia on being one of the most open economies in the world and applauding the transparency of our trade policy regime. During the review there was criticism of Australia’s strict biosecurity measures.
Australia’s next Trade Policy Review will be conducted in April 2015.
Biosecurity and the WTO
The WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) covers food safety and animal and plant health regulations such as biosecurity and quarantine.
The SPS Agreement recognises the right of WTO members to enforce animal and plant health measures provided they are scientifically justifiable or based on international standards.
The measures should also be applied only to the extent necessary to protect human, animal or plant life, health or safety.
The SPS Agreement established the Committee on Sanitary and Phytosanitary Measures, in which the department plays a key role, both in questioning the biosecurity measures of Australia’s trading partners and in defending criticisms of Australia’s biosecurity and quarantine arrangements.
More information about Australia's quarantine arrangements and compliance with WTO rules.
Dispute settlement and the WTO
WTO rules apply equally to all members and are backed by an effective dispute settlement process.
Where government support to industry is inconsistent with WTO obligations, or if a member is not complying with the rules, Australia has the right to challenge such actions through the WTO dispute system. Australia can also be subject to the same dispute processes.
The department plays a key role, in conjunction with other Australian Government agencies, in relevant disputes involving agricultural, food, fisheries or forest products.
Technical Working Group
The National farmers federation (NFF) maintain and coordinate a technical working group of agricultural commodity trade representatives that liaise closely with the government on issues relating to trade. The Department of Agriculture and Water Resources, in conjunction with DFAT, work closely with the TWG in informing the government’s position on both multilateral trade negotiations and the various bilateral negotiations. In conjunction with the advice the department receives from frequent contact with the agricultural sector, the TWG provide an opportunity for industry to provide direct input to the trade negotiations. The department’s presence ensures these views are considered in the negotiations. The TWG communicates regularly, and has a presence during all key negotiation meetings.