WTO Crisis: What Consequences for Agriculture in Africa?
The World Trade Organization (WTO), the bête noire of anti-globalization activists since its creation in 1994, is in crisis. For many observers, the United States' blockade of the normal replacement of judges at the appeals tribunal (formally called the "Appellate Body") of its Dispute Settlement Body (DSB) is paralyzing the institution and perhaps signaling its death warrant, or at least rendering it completely inoperative since the mandates of two of the last three judges expired on December 10. It is surprising that this event has not aroused much emotion in the mainstream press: there is no triumphalism among anti-globalization activists, in particular. Yet the implications for agriculture, particularly in Africa, could be very significant. Are we on the eve of a reversal in the direction of public policies affecting agriculture, a direction closely linked to the international consensus in favor of trade liberalization that has prevailed since the end of the Second World War? The aim of this paper is to attempt to answer this question. We will first characterize the nature of the WTO crisis and then we will speculate on what consequences this crisis may have for agriculture in Africa.
The WTO Crisis
The failure of the Doha Round is the first manifestation of the WTO crisis. Launched in 2001, the negotiations were scheduled to conclude four years later at the Hong Kong ministerial meeting. Today, fifteen years later, no one believes in the possibility of reaching a comprehensive agreement. Attention is focused on bilateral relations, particularly the "trade war" between China and the United States, and more generally on the attitude of the United States government since the election of President Trump.
The paralysis of the dispute settlement system is even more serious for the WTO. It is, in fact, the only international legal mechanism that is binding on states due to the sanctions they incur in the event of "conviction," these sanctions taking the form of trade retaliation. It can be said that the role of "international trade policeman" is seriously threatened after that of facilitator of negotiations. This blockage by the United States is not primarily the result of a new whim by President Trump. American criticism of the DSB is long-standing, even though the United States has made extensive use of this mechanism. According to estimates by Glauber and Laborde of IFPRI, the United States has initiated 123 disputes since 1995 (or 21 of all disputes) and has won more than two-thirds of them. But they accuse the appellate body's judges of overstepping their authority, helping to create precedent, and in doing so, encroaching on the prerogatives of member state representatives, who should have the final say in resolving disputes arising from ambiguities in previously negotiated texts. Ultimately, this is a counter to the emergence of an independent international judiciary.
The United States' trade war with China, suspended by an agreement on January 15 that resembles a very temporary armistice, can only reinforce their distrust of the WTO. It is true that Chinese subsidies to their numerous state-owned companies and the onerous conditions they impose on foreign investors regarding technology transfer constitute serious breaches of the "normal" functioning of the market economy, which is implicitly the very basis of WTO rules. These criticisms of China are widely shared among developed countries. But to remedy this, a profound reform of the WTO would be required, in particular of the procedure for self-designation as a developing country benefiting from significant exemptions, a procedure from which China takes advantage. And there can be no WTO reform without consensus. We are far from that!
Have we therefore reached the end of a period of intergovernmental, multilateral regulation of trade? In other words, the end of the WTO? It is too early to say, because many fear a return to the law of the jungle, to power relations alone, to unilateral decisions—in short, to the situation of the 1930s, which largely contributed to the outbreak of the Second World War with all its horrors.
The consequences for agriculture in Africa
Estimating the consequences for Africa of this WTO crisis is not trivial, given the great uncertainties. Moreover, the literature on the subject is sparse. Yet the consequences for agriculture could be very significant. Indeed, most public policies affecting agriculture implemented over the past several decades on this continent were inspired by the general consensus in favor of trade liberalization that emerged since 1945 and which inspired the creation of the GATT and the rounds of multilateral trade negotiations conducted within the GATT and then the WTO.
The creation of the African Continental Free Trade Area (AfCFTA) is the most recent, and also the most ambitious, manifestation of the political will to achieve strong economic integration through trade liberalization between all countries on the continent. While the process is still ongoing, it is already well advanced, with 54 countries having already signed their commitments. This creation follows and, in a way, extends the establishment of regional economic communities such as ECOWAS (Economic Community of West African States) and COMESA (Common Market for Eastern and Southern Africa). Admittedly, the history of these regional economic groupings since the first attempts in the 1960s has not been a bed of roses. But the general trend toward increasingly strong regional economic integration, despite the many obstacles to trade between African countries, is clear. Similarly, the creation of the eco, a single currency project for ECOWAS member states, a currency which is intended to replace the CFA franc for the countries of UEMOA (West African Economic and Monetary Union), clearly illustrates the strength of the political project which consists of deepening regional economic integration despite the difficulties to be overcome and the controversies to be overcome.
Not all of these developments are directly related to the WTO and should therefore not be affected by the crisis in the international organization. However, this crisis does reflect a general erosion of the consensus in favor of trade liberalization, mentioned above. In this perspective, it is the level of protection for products outside Africa that has been the subject of the most heated controversy in the past; this is the common external tariff (CET) in the case of regional economic communities. This has generally been set at a relatively low level not to meet WTO commitments but because of pressure from international financial institutions reflecting the general consensus in favor of liberalization. With the erosion of this consensus, it is possible that African states will raise this rate of external protection. This is, in any case, a major issue for the AfCFTA.[1].
We can also imagine a relaxation of the external pressures that led the European Union in 2003 to abandon the Lomé Agreements, because they created, in the eyes of the WTO, too strong trade distortions with non-ACP countries (i.e. outside the Africa-Caribbean-Pacific region), and to propose Economic Partnership Agreements (EPAs) obliging ACP countries to open their markets to European exports (even if exemptions exist for agricultural products considered "sensitive"). However, I do not think we should expect a change in the European position on this matter, as the European Union remains very attached to a system of international regulation based on rules negotiated multilaterally at the WTO. It is hard to see it going back and provoking the anger of Latin American and Asian countries that are not ACP countries.
Ultimately, the WTO crisis is unlikely to have direct and rapid consequences for agriculture in Africa. But the erosion of the consensus in favor of trade liberalization that this crisis reveals may represent a significant shift in the intellectual and ideological context in which public policies affecting agriculture are developed.
[1] See FARM, “Import protection on agricultural products. Status and challenges for sub-Saharan Africa”, Note no. 12, October 2019, https://fondation-farm.org/les-protections-a-limportation-sur-les-produits-agricoles-etat-des-lieux-et-enjeux-pour-lafrique-subsaharienne/
