Agriculture and the WTO

World Trade Organization (WTO) and agriculture

The Uruguay Round of trade negotiations called for the creation of the World Trade Organization (WTO) and with it a better outcome for agriculture.  Under the WTO, the Agreement on Agriculture was negotiated and came into force, with the WTO, on 1 January 1995.

The Agreement on Agriculture recalls WTO Members’ long term objective to establish a fair and market oriented agricultural trading system.  It focuses on three main pillars:

Trade reform and global food security

Australia is committed to global food security yet millions of farmers around the world, both in Australia and in many developing countries, are unfairly disadvantaged by ongoing distortions in world agriculture and food markets which can impede the achievement of long term food security.

Trade and production distorting measures lead to greater price volatility and can create a disincentive for farmers to increase output and productivity, such measures can also encourage wasteful surplus production that in turn weakens commodity prices and returns to farmers.

Further agricultural trade policy reform is important to Australian food and agriculture sectors, and to ensure that global food security objectives are pursued in ways that do not undermine the livelihoods of farmers around the world.

Agriculture in the Doha Round

WTO Members agreed to launch the current “round” of WTO negotiations in November 2001, in Doha, Qatar.  The Doha Round of World Trade Organization trade negotiations have been underway since November 2001. The Doha Ministerial Declaration mandates negotiations on a wide range of issues, including agriculture, and has a strong focus on development. Most recently, at the ninth WTO Ministerial Conference held in Bali 3-7 December 2013, WTO Members agreed to the ‘Bali Package’.  The Bali Package secured outcomes for agriculture, alongside the historic agreement in trade facilitation. 

The WTO Ministerial Conference is the top decision-making body of the WTO. Ministerial Conferences have been held in

The most recent was the Ninth Ministerial Conference (MC9) held in Bali in December 2013.

World Agricultural markets – pursuing better access for Australian exporters

As part of its comprehensive agricultural trade policy agenda, the Australian Government continues to pursue multilateral agricultural trade reform.  Read more on Australian bilateral and regional negotiations; including together with other Cairns Group members.

The Australian Government is actively working to reduce distortions in global agricultural trade and to provide better market access for Australian exporters. An important part of the Cairns Group’s contribution to the WTO’s agriculture agenda has been its technical work in the negotiations. The Cairns Group develops detailed negotiating proposals. Cairns Group officials meet regularly in Geneva to discuss negotiating positions and share information. The Cairns Group website provides further details, including communiqués from ministerial meetings.

Australia has reduced its own tariff levels and other trade distorting protections on agricultural and food products since the early 1970s. Australia’s simple average applied tariff on agriculture is 1.2 per cent. This reinforces a competitive and productive agricultural sector and ensures Australian farmers can provide high quality products to world markets without the high levels of financial support, protection and other trade-distorting practices used by some countries.

This has resulted in Australia being one of the world’s most efficient agricultural producers. This is demonstrated by the Producer Support Estimate (PSE) produced by the Organization for Economic Cooperation and Development (OECD). Australia’s PSE in 2012 was only 2.7 per cent, the second lowest among OECD countries.

Australian agricultural exports

Agriculture is an important part of the Australian economy. Australia is a competitive net agricultural exporter, with around two thirds of total production exported. In 2012-13 agricultural exports accounted for 15.5 per cent of Australian merchandise exports*.

Australia's top 10 agricultural exports (by value) – 2012-13 financial year
Major agriculture export products A$m Total
Total of Australian Agriculture exports 38,268 100%
Wheat 6,749 17.6
Beef 5,051 13.2
Cotton 2,695 7.0
Wool 2,470 6.4
Rape and colza seeds 2,094 5.4
Wine 1,865 4.8
Lamb and mutton 1,637 4.2
Sugar 1,480 3.8
Barley 1,266 3.3
Milk and cream 996 2.6

* * Based on the WTO definition of agriculture, which excludes fisheries, forestry and rubber. The value of Australian fisheries, forestry and rubber exports in 2013 was respectively: $1,024, $1,089 and $234 (million).

Australia's major agriculture export markets (by value) – 2012/2013 financial year
Major agriculture export markets FY2013 A$m Share of Total
Total all countries 38,268 %
China 7,494 19.6
Japan 4,180 10.9
EU27a 2,745 7.1
Indonesia 2,669 7.0
United States 2,465 6.4
Republic of Korea 2,377 6.2
New Zealand 1,478 3.9
Malaysia 1,031 2.7
Singapore 988 2.6
United Arab Emirates 838 2.2

a The 27 members of the European Union in 2012/13 (EU27) were: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom.

Source:  DFAT STARS Database, based on ABS Cat No 5368.0, February 2014 data; ABS Special Data Service.

Quarantine and food safety

WTO Agreements of most relevance to the application of quarantine, food safety, animal and plant health regulations are the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) and the Agreement on Technical Barriers to Trade (TBT Agreement).

The SPS Agreement allows all WTO members (including Australia) to set their own level of sanitary and phytosanitary protection. It also requires quarantine and food safety measures to be based on science and not industry protection. This ensures that Members cannot use unfair and unjustified quarantine or food safety restrictions to block trade.

The Codex Alimentarius Commission, the World Organisation for Animal Health (OIE) and the International Plant Protection Convention (IPPC) are the three international standard setting bodies (ISSBs) that hold special status under the WTO SPS Agreement. For the purposes of the SPS Agreement, ISSB standards are deemed to be necessary to protect human, plant or animal life or health and to comply with the SPS Agreement. 

The TBT Agreement gives countries the right to adopt standards or regulations they consider appropriate to protect life or health, and also for the protection of the environment or to meet other legitimate objectives. For example, food labelling regimes are considered technical regulations and fall within the scope of the TBT Agreement.

Given the importance of international trade rules for Australia’s food and agriculture trade, Australia takes an active role in the WTO and related standard setting bodies in order to ensure that changes to the rules do not result in unwarranted restrictions on Australia’s exports and to continually improve the conditions faced by Australian exporters in overseas markets.