The World Trade Organization (WTO) announced earlier this week that trade ministers and negotiators from around the globe will convene the week of June 13 for its 12th Ministerial Conference. In support of these important negotiating efforts, the American Sugar Alliance (ASA) released a new policy statement outlining four recommendations to improve the international trade body’s effectiveness.
WTO reforms will make dismantling unfair trade practices and subsidies an attainable goal, ASA noted, laying the foundation for a less distorted and more predictable global market.
A recent WTO dispute case finding the use of subsidies by mega sugar producer and exporter India to be inconsistent with its WTO commitments has served to starkly underscore the urgent need for reform. Despite the WTO’s findings that India vastly exceeded the allowable level of subsidies for its sugarcane producers and also employed WTO-illegal export subsidies, India has vowed to maintain its market-distorting policies as it pursues the WTO appeal process.
This is a glaring example of the current dysfunction at the WTO that has hindered real reform in the global sugar market. With the Biden Administration’s stated goal of “enforcing global agricultural trade rules” in defense of America’s farmers and food manufacturers, ASA believes now is the time to act. ASA proposes the following reforms:
- Accountability. Impose more rigorous disciplines on the practice of members’ self-designation of “developing country” status and the accompanying application of “special and differential” treatment.
- Modernization. Update the methodology by which countries measure levels of government support. The current methodology is based on commodity prices during an arbitrary three-year period in the 1980s.
- Transparency. Improve the transparency, timeliness, and, importantly, the accuracy of country notifications relating to domestic support and export subsidies.
- Enforcement. Overhaul the dispute settlement mechanism to ensure that, if necessary, a member’s noncompliance with established obligations can be addressed in a timely manner.
“Sugar markets are widely considered to be the most distorted and volatile commodity markets in the world, with billions in foreign subsidies encouraging over production by inefficient producers,” said Dr. Rob Johansson, ASA’s Director of Economics and Policy Analysis. “Unlike other countries, U.S. sugar farmers and workers produce a reliable supply of sugar under some of the world’s highest safety, labor, and environmental standards and at zero cost to taxpayers.”
“Implementing common-sense reforms can create a WTO that reflects 21st century realities,” said Luther Markwart, ASA’s chairman. “Our industry has long advocated for the verified elimination of all global sugar subsidies and a modernized WTO will place us one step closer to achieving that goal.”
These reform proposals are also in alignment with the bipartisan Zero-for-Zero approach to eliminating foreign sugar subsidies, which was introduced in Congress last year and is supported by America’s sugar producers.