Food Security: WTO Warns against Trade Restriction, Slashed Global Growth Forecast to 2.5%

Dike Onwuamaeze

The Director General of the World Trade Organisation (WTO), Dr. Ngozi Okonjo-Iweala, has emphasised the important role trade could play to help member countries head off what appeared to be emerging food crises due to the conflict between Russia and Ukraine.

Also a Geneva trade official told journalists yesterday, that global economic growth original projected by IMF of 4.2 per cent would now see slower growth somewhere between 3.1 and 3.7 per cent and trade growth could be cut by half from 4.7 per cent projected in October to 2.5 per cent.

Okonjo-Iweala made this statement yesterday during an informal meeting of the general council of the WTO, and also called for coordinated action to address the recent sharp rise in commodity prices that threatens food security in many countries, especially in Africa and the Middle East. 

She said: “Trade can help WTO members adjust to, and overcome, the shocks of events such as the COVID-19 pandemic and the crisis in Ukraine. 

“Trade has been and will remain a critical means of adaptation to the mounting global shocks that the world is currently experiencing.”

She added: “This is not the time to retreat inward … This is the time to stress the importance of multilateralism, global solidarity and cooperation.”

The director general of WTO observed that COVID-19 crisis and the war between Ukraine and Russia have raised concerns about the vulnerability of global supply chains and led to calls in some quarters to re-locate production and sourcing locally in order to ensure stable supplies of critical goods and staples.

She, however, underlined that supply resilience “will ultimately be best served by deeper and more diverse international markets.

“Concentrating sourcing and production at home, while understandable, could also create new vulnerabilities and may not be the best risk management strategy.

“A region’s wheat crop could be destroyed by drought, flooding, or other weather-based phenomena. A harsh winter and an earthquake could knock out electricity and factory production,” she argued.

Okonjo-Iweala said that the ongoing Ukraine-Russia war had caused immense human suffering and loss of life and unleashed an ongoing humanitarian crisis.

“It has also dealt a severe blow to the global economy still recovering from the impacts of the pandemic and has raised the spectre of food shortages in countries dependent on Ukraine and Russia for imports of key staples like wheat. Already in Africa, prices of key commodities have risen by 20-50 per cent between January and March.

“For dozens of poor countries and tens of millions of people, basic food security is in danger. These countries already have been some of the slowest economic recoveries from the pandemic, and international cooperation on trade is necessary to help mitigate risks of poverty, hunger, even famine and social unrest,” she warned.

The Director-General noted that the UN Secretary-General has set up a three-tiered steering committee involving heads of government, heads of international organisations and technical experts to deal with the issue of surging energy and food prices.

The WTO was also expected to play a key role in finding solutions to the food crisis, the Director-General noted.

In addition, the chair of the WTO’s agriculture negotiations, Ambassador Gloria Abraham Peralta of Costa Rica, was planning a food security conference that would take place at the end of April while WTO’s secretariat staff have also been carrying out analysis on food security issues which would be shared with members shortly.

“We at the WTO have a solid basis on which to consider workable solutions to the present crisis,” the director general declared.

She highlighted that on the near-term, international cooperation on trade would be needed to minimise the impact of supply crunches for key commodities where prices are already high by historical standards and to keep markets functioning smoothly.

While only 12 members have imposed export restrictions on food to date, coordinated government action is needed to avoid a repeat of the cascading export restrictions that exacerbated the rise of food prices in the crisis of 2008-2010.

The WTO also urged countries with buffer stocks that could afford to share could coordinate the release of wheat, barley, other cereals and grains and oils into international markets, thereby alleviating the supply squeeze.

The organisation noted that countries such as the United States, Canada, Australia, Argentina, and France could increase wheat cultivation while others such as China, Germany, Morocco, Saudi Arabia, Egypt, and Nigeria could increase global supply of fertilizer.

Africa, with plentiful land and other resources, could also take steps to produce more food itself by using more adaptable varieties of wheat, maize and other crops, the WTO stated.

The DG further noted that trade facilitation measures could also be brought into play to ease the free flow of goods, while efforts should be made to allow the UN’s World Food Programme full access to humanitarian purchases.

“Prompt notification and information sharing regarding food supplies and stockpiles can help the international community better manage the situation and keep markets functioning more smoothly,” she added.

Several members took the floor after the director general’s intervention to indicate support for the suggestions outlined by her.

Prior to the director general’s statement, the chair of the General Council, Ambassador Didier Chambovey of Switzerland, provided a readout on his recent consultations with members on substantive and administrative aspects related to the WTO’s 12th Ministerial Conference (MC12).

The consultations took place over the first half of March and involved 42 delegations, including 12 group coordinators and one member group.

On the exact dates for the WTO’s postponed 12th Ministerial Conference (MC12), the chair said the emerging understanding is that the conference would take place from June 12 to 15, 2022, with the meeting taking place entirely at WTO headquarters.

The chair suggested that members should proceed with this working assumption and precise dates in mind. He noted the desire of members that MC12 be a streamlined, business-like conference.

“WTO members agreed on February 23 that MC12 would take place during the week of June 13 in Geneva following the easing of COVID-19 pandemic restrictions in the host country Switzerland.  MC12 was due to take place from 30 November to 3 December 2021 but was postponed due to the outbreak of the Omicron variant of COVID-19,” WTO said.