Agriculture and the WTO

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 2011-12 agricultural exports accounted for 13.8 per cent of Australian merchandise exports*. In 2011 Australia accounted for 2.1 per cent of all global exports of agriculture, fisheries, forestry, and rubber.

Australia's top 10 agricultural exports (by value) – 2011-12 financial year
Major agriculture export products FY2012 A$m Share of Rank Total 
Total Agriculture 36,693 100.0%
Wheat 6,350 1 17.3%
Beef 4,684 2 12.8%
Cotton 2,736 3 7.5%
Wool 2,689 4 7.3%
Wine 1,910 5 5.2%
Sugar 1,597 6 4.4%
Barley 1,523 7 4.2%
Lamb and mutton 1,493 8 4.1%
Rape and colza seeds 1,343 9 3.7%
Milk and cream 1,064 10 2.9%

* Based on the WTO definition of agriculture, which excludes fisheries, forestry and rubber. The value of Australian fisheries, forestry and rubber exports in 2011-12 was respectively: $1,015, $1,241 and $21 (million).

Australia's major agriculture export markets (by value) – 2011/2012 financial year
Major agriculture export markets FY2012 A$m Rank Share of Total
Total all countries 36,693 100.0%
China 6,706 1 18.3%
Japan 4,395 2 12.0%
EU27a 2,616 3 7.1%
Indonesia 2,563 4 7.0%
Republic of Korea 2,547 5 6.9%
United States 2,352 6 6.4%
New Zealand 1,473 7 4.0%
Thailand 981 8 2.7%
Malaysia 929 9 2.5%
Vietnam 899 10 2.5%

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

Source: DFAT STARS Database, based on ABS Cat No 5368.0, February 2013 data; ABS Special Data Service.

World Agricultural Markets – pursuing better access for Australian exporters

The Australian Government is actively working to reduce distortions in global agricultural trade and provide to better market access for Australian exporters.

Average global tariffs for agricultural goods are more than three times higher than for non-agricultural goods, some agricultural tariffs are as high as 800 per cent, and in no other area does domestic support distort international markets to the extent that it does in agriculture. In 2011 support and protection amounting to US$252 billion was provided for agriculture by OECD member states – with some countries continuing to provide around 50 per cent of farm income through government subsidies.

WTO trade rules tolerate export subsidies in the agricultural sector, the most trade-distorting form of subsidies, even though they have long since been prohibited for other goods.

Against this backdrop, the Government is actively working to reduce trade distortions and is pursuing better access to other countries' markets for Australian exporters  in multilateral, regional and bilateral settings.

Australia has reduced its own tariff levels and other protection on agricultural and food products since the early 1970s.  Australia’s simple average applied tariff on agriculture is 1.4 per cent. Australia provides agricultural produce 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 Organisation for Economic Cooperation and Development (OECD). The PSE estimates the percentage of farm income arising from government support. Australia’s PSE in 2011 was only 2.97 per cent, the second lowest among OECD countries.

Trade reform and global food security

Millions of farmers around the world, including in developing countries, are unfairly disadvantaged in the world market as a result of trade distortions in agriculture. Trade and production distorting measures, including, for example, export restrictions, lead to greater price volatility and can create a disincentive for farmers to increase output and productivity. Distortions such as this also impede the achievement of long term food security.  Australia advocates a comprehensive approach to food security which includes appropriate economic and trade policies. Further agricultural trade policy reform is essential to achieving poverty alleviation and food security objectives.

World Trade Organization (WTO) and Agriculture

The WTO, which was established in 1995, is the successor organisation to the General Agreement on Tariffs and Trade (GATT). For most of the post-war period, agricultural products were largely excluded from the multilateral trade liberalisation which took place during GATT negotiations. In the early 1980s, it was widely acknowledged that agriculture had become the most heavily protected and distorted sector in the world economy, with consequent substantial negative effects on international trade, developing countries that are heavily reliant on agriculture for their economic development being particularly affected.

Reform of the global rules covering agricultural trade began with the Uruguay Round of GATT negotiations. The Uruguay Round Agreement on Agriculture, which has been in effect since 1995, provided for the conversion of non-tariff trade barriers to more transparent tariff protection, increased access to markets around the world through tariff cuts, and a reduction in export subsidies and trade-distorting domestic support measures.

Agriculture in the Doha Round

WTO members agreed to launch the current “round” of WTO negotiations in November 2001, in Doha, Qatar. The Doha mandate on agriculture calls for ambitious reform. Members agreed to achieve “substantial improvements in market access; reductions of, with view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support.”

At the Eighth WTO Ministerial Conference held in Geneva on December 2011, WTO Members acknowledged that the Doha Round of negotiations was at an impasse. They reaffirmed their commitment to the Doha Mandate and agreed to pursue “new pathways” to an outcome, notably by breaking the negotiations into smaller, more manageable components and attempting to reach agreement on these issues. The Australian Government remains committed to pursuing multilateral trade liberalisation through the WTO and in the lead up to the Ninth WTO Ministerial Conference to be held in December 2013, has encouraged other WTO members to consider new pathways, including for agriculture given that it is central to the negotiations.

Cairns Group

The Cairns Group of 19 agricultural exporting countries, chaired by Australia, has played an instrumental role in achieving global agricultural trade reform since its formation in 1986. The Group is a diverse coalition, bringing together developed and developing countries from the Americas, Africa, Asia and the Pacific region.

The Cairns Group has been active in the current Doha Round negotiations, both in setting the agenda for the agriculture negotiations and in pressing the WTO membership to meet in full their mandate. Today it continues to highlight the centrality of agriculture in any agreement and the need for serious engagement on agriculture in the negotiations.

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.

Role of FTAs in achieving freer and fairer agricultural trade

While multilateral trade liberalisation offers the greatest prospective benefits, Australia also continues to press for ambitious and comprehensive regional and bilateral trade agreements, including for agriculture.

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 in relation to quarantine and food safety. 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 recognised as relevant international standards protecting human, plant and animal health from additives, contaminants, toxins or disease in food.

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 consumer interests. 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 continually improve the conditions faced by Australian exporters in overseas markets.