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Book (stand-alone)The State of Agricultural Commodity Markets 2018
Agricultural trade, climate change and food security
2018Global agricultural trade has increased significantly in value terms since 2000. Its pattern has also changed – emerging economies and developing countries play a bigger role in international markets, and South–South agricultural trade has expanded significantly. Climate change is expected to affect agriculture, food security and nutrition unevenly across countries and regions. Changes in comparative advantage in agriculture around the world will also affect international trade. This edition of The State of Agricultural Commodity Markets focuses on the complex and underexplored intersection between agricultural trade, climate change and food security. The report makes an important contribution to the policy debates on climate change adaptation and mitigation under the Paris Agreement and the multilateral agricultural trade rules. The report discusses policies – both domestic support and trade measures – that can promote food security, adaptation and mitigation, and improve the livelihoods of family farmers around the world. Given both the slow- and rapid-onset impacts of climate change, policies that can significantly promote climate change adaptation and mitigation would benefit from deeper discussions in international fora on how to strengthen the mutually supportive role of trade rules and climate interventions. -
Book (stand-alone)Potential conflicts between agricultural trade rules and climate change treaty commitments.
The State of Agricultural Commodity Markets (SOCO) 2018: Background paper
2018Also available in:
No results found.Climate change – among its many other challenges – also affects the conditions of competition along the whole food value chain. This article posits that many mitigation and adaptation policies imply a differentiation between otherwise identical products but with different carbon footprints. Where imports are affected, there is a potential for trade frictions. The main issue appears to be a climate-smart treatment of like products with different (non-product-related) production and processing methods (ppm). Now that national governments start implementing their commitments under the Paris Agreement on Climate Change, they have to closely look at the trade and investment impact of their Nationally Determined Contributions (NDCs). The NDCs presently available remain silent on concrete measures involving product differentiation according to footprint differences, be it by way of border adjustment measures, subsidies, prohibitions, or restrictions. The non-discrimination principle enshrined in the multilateral trading system can be a problem for such differentiations. No climate-smart agricultural measures have yet been notified to the World Trade Organization (WTO). But several renewable energy programmes have been found to violate WTO rules. Potential problems could arise, for instance, from differentiating tariffs, import restrictions or taxes according to carbon footprint. Conditions of competition might even be affected by labels signalling products with a bigger (or a “climate-friendly”) footprint, or through subsidies and incentives compensating domestic producers subject to emissions reductions, prohibitions, and input restrictions. A second major problem lies in the way the Paris Agreement and the WTO address the Development Dimension. In the Paris Agreement, the Development Dimension is addressed by the notion of Common but Differentiated Responsibility (CBDR), leaving Parties free in terms of how they take development into account in their NDCs. On the other side, the Special and Differentiated Treatment (SDT) foreseen in all WTO agreements for developing country products and services appears incapable of dealing with the global impact of all emissions, regardless of their origin, or with the negative impact on developing country exports to climate-smart markets in developed countries. In conclusion, we suggest that a review of the climate-relevant trade and investment rules is necessary at the international level, involving climate, and agriculture and trade regulators, supported by scientific, economic and legal expertise. The purpose of this review is to avoid litigation jeopardising the implementation of the Paris Agreement. At the same time, such a review must be comprehensive, because the objective is to ensure maximum policy space for climate mitigation and adaptation without negatively affecting other countries, or unduly restricting trade and investment, especially in poor developing countries. Last but not least, this intergovernmental and inter-institutional review is urgent, because the results should provide as quickly as possible the legal security necessary for investors and operators, regulators, NDC developments and reviews, and international standard-setting processes. -
Book (stand-alone)Border and related measures in the context of adaptation and mitigation to climate change
The State of Agricultural Commodity Markets (SOCO): Background paper
2018Also available in:
No results found.Although international trade is not specifically mentioned in the Paris Climate Agreement, trade can play a facilitating role in achieving the mitigation and adaptation objectives of signatories to the Agreement. Trade policies can also undermine those objectives. The focus of this paper is on examining how the facilitating role of trade can be achieved. One of the challenges created by the ‘bottom-up’ approach of self-declared national mitigation targets adopted in the Agreement is that if the economic costs of greenhouse gas (GHG) emissions are internalized in production and consumption, the implicit price of carbon will differ across countries. This creates the potential for trade distortions. Domestic mitigation policies in importers will almost inevitably result in some carbon leakage, i.e. offsets to reductions in domestic emissions through additional emissions generated in supplying imports. But an important distinction needs to be made between carbon reallocation and carbon misallocation resulting from changes in trade volumes. In the reallocation case, trade leads to a shift in production to lower-emitting producers thereby contributing to global mitigation. In the misallocation case, the opposite occurs. This paper analyses how various border measures, including border tax adjustments (BTAs) might be used to reduce potential carbon misallocation. The conclusion is that technical and legal constraints on the effective application of border measures for food and agricultural products to prevent carbon misallocation are extremely challenging and their use could open the door to protectionism. The use of carbon standards and labelling offers an alternative approach to reducing misallocation and promoting reallocation. It poses fewer technical difficulties and reduces the potential for legal challenges. An added advantage of labelling is that it can help to promote changes in consumption that will be needed to reduce the carbon footprint of food and agriculture. The use of the approach could be facilitated through the adoption of international standards for carbon measurement and labelling, such as those being developed through the International Organization for Standardization (ISO). Labelling is not a panacea and may have limited effectiveness when consumers base their consumption decisions primarily on the basis of price. For this reason, the use of domestic policy measures that increase carbon efficiency in agriculture (reduce emissions per unit of output) and limit changes in land use that contribute to emissions will also be important for achieving mitigation aims under the Paris Agreement. An increasing number of regional trade agreements (RTAs) have incorporated environmental provisions, with the most common types of provisions focusing on environmental cooperation. Recent agreements recognise the importance of mutually supportive trade and environmental policies, and national commitments to multinational environmental agreements. RTAs could play a supporting role to the Paris Climate Agreement, by fostering international cooperation on climate mitigation measures in the context of freer trade.
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