In a new paper for EuroChoices, Yeutter Institute authors John Beghin and Jill O’Donnell review major developments in trade in the last 20 years, paying particular attention to agriculture and how the World Trade Organization can adjust to new circumstances.
KEY TAKEAWAYS
- Early negotiations at the WTO helped open agricultural markets, but the body has been unable to reach any major new resolutions to liberalize agricultural trade, prompting countries to turn to Regional Trade Agreements (RTAs) to work out challenges and further lower trade barriers.
- A total of 261 RTAs were concluded over the last 20 years. They have largely offset the lack of progress in further liberalizing agricultural trade at the WTO, lowering the average agricultural preferential tariff rate for RTA participants to 4.8% with nearly three quarters of listed tariffs set to zero–compared to an average applied Most Favored Nation (MFN) agricultural tariff in the WTO of 15.8%.
- Despite falling tariffs, other pressures continue to distort agricultural trade. Certain industries remain highly protected (e.g. dairy), tariff-rate-quotas (TRQs) inhibit trade, and differences over biotechnology, SPS regulations such as hormone-treated beef, and geographic indications remain limiting. Resolution on these issues will likely only be settled through smaller, regional and bilateral agreements—which are often better at addressing such “beyond the border” issues than the WTO.
- The days of the WTO as a platform for reaching “grand bargains” through massive negotiations are gone, but enforcement of past commitments is essential to the trading system.
- The WTO will have to adjust to a world of RTAs and should use its tools and procedures to promote the increased transparency of RTAs and report on their conformity with existing WTO agreements. The WTO can also extend its special trade concern mechanism beyond the SPS and TBT committees to other WTO committees to discuss and resolve trade concerns before they proliferate and evolve into full-blown disputes.
For an expanded version of this paper, including sources and supplementary data, read Beghin's and O'Donnell's working paper, "Trade Agreements in the Last 20 Years: Retrospect and Prospect."
John Beghin is the Mike Yanney Chair at the Yeutter Institute and an agricultural economics professor in the College of Agricultural Sciences and Natural Resources at the University of Nebraska-Lincoln. View biography.
Jill O’Donnell is the director of the Yeutter Institute and a professor of practice at the University of Nebraska-Lincoln. View biography.