Ag Policy Blog

President Barack Obama announced his support Sunday for a new World Trade Organization agreement reached Saturday in Bali, Indonesia.

"This new deal, and particularly the new trade facilitation agreement, will eliminate red tape and bureaucratic delay for goods shipped around the globe," the White House stated. "Small businesses will be among the biggest winners, since they encounter the greatest difficulties in navigating the current system. By some estimates, the global economic value of the new WTO deal could be worth hundreds of billions of dollars."

The U.S. Trade Representative's Office stated the deal would be positive for American agriculture and farmers.

The USTR cited one study from the Organization for Economic Cooperation and Development that the deal could cut trade costs by almost 14.5% for low-income countries, 10% for high-income countries.

The White House said a deal among the 159-member WTO "also represents the rejuvenation of the multilateral trading system that supports millions of American jobs and offers a forum for the robust enforcement of America’s trade rights."

Roberto Azevedo, director-general of the WTO, said of the agreement, "For the first time in our history the WTO has truly delivered. I challenged you all, here in Bali, to show the political will we needed to take us across the finish line."

According the WTO, the "Bali package" effectively involved some key components of the trade agenda that began in Doha 12 years ago.

The USTR stated agriculture is a key element in the agreement. "The United States has put food security – including increasing the productivity and trade of agricultural products – front and center on the global development agenda."

Michael Froman, head of the USTR, said efforts to reach a global deal became over time "far more difficult, far messier, far more challenging than seemed possible to overcome." Still, both major economies and developing countries came together for an agreement, though most everyone agrees the deal struck in Bali is far more modest than the WTO negotiators originally envisioned.

"Today, we celebrate a new WTO not just because we have reached an agreement – but because of the way we did so," Froman said. "Throughout this process we have been reminded over and over again that we are, now, a truly multilateral organization.

In a fact sheet, the USTR stated that, "In the WTO, the United States has been highlighting and discouraging the use of trade distorting policies that can undermine the food security of other nations. Because of the trade-distorting nature of market price supports to farmers, the WTO has clear criteria and limits on such support, including when farmers are offered an administered price for crops used as part of a program of public stockholding of food. But a number of developing countries utilize this type of support to create stockpiles of staple foods for feeding programs, and spending on these programs has increased."

The USTR added that the Bali agreement will ensure that developing countries won't face a legal challenge for stockpiling staple foods for domestic feeding programs.

"But the United States worked to ensure that this freedom from challenge is only available to members if their programs do not distort trade, and if they meet certain transparency conditions to share the details of their support mechanisms."

The new agreement will also require more transparency in trade for agricultural export subsidies, credits, food and state enterprises trading agricultural productions.

The WTO deal also addresses the issue of "low fill rates" in the way countries administer quota limits on low tariff rates. Countries must also provide more details on how they are filling their tariff-rate quotas. The USTR stated this would lead to "increased opportunities for U.S. farmers, ranchers, workers, and food processors to enhance exports to a number of WTO member countries, including the European Union, Japan, Norway, and Switzerland."

It is unclear what, if any, effect the trade deal will have on talks over the farm bill's commodity and trade programs being negotiated in Congress.

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