Export controls risk exacerbating food crisis, WTO chief warns

Economy News


Governments are risking a repeat of mistakes in previous food crises by imposing export controls amid spiralling commodity and energy prices, the head of the World Trade Organization has said.

In an interview with the Financial Times, Ngozi Okonjo-Iweala, who became WTO director-general a year ago, also urged countries to accept a contentious deal over patent waivers for Covid-19 vaccines and said the global supply chain crunch would last much longer than previously thought.

Okonjo-Iweala’s tenure has been marked by successive Covid-19 waves shutting down production and transport, severe congestion in land and sea container traffic, and a rupturing of global energy and food markets caused by the Ukraine war.

“I do hope we have learned something” from the previous global food crisis in 2007-2008, Okonjo-Iweala said, referring to a period in which problems were caused by droughts in key wheat and rice-producing countries, along with a surge in the cost of energy. “The signs we see now do not show that learning very much, because we’re having the same situation of spiking food prices, spiking energy prices and an emerging spiral.”

“We should try not to compound the issues by having export restrictions put in place that may encourage others to put on their own export restrictions,” she said. Governments with surplus stocks in products like vegetable oils and grains should release them on world markets, she said, although she declined to name specific countries.

Okonjo-Iweala, formerly Nigerian finance minister and World Bank managing director, said only around 12 WTO member countries had so far imposed export restrictions to keep food at home, which they are permitted to do under a loophole in WTO rules.

The Ukraine war has put intense stress on the WTO as a negotiating forum, as divisions between Russia and a coalition of mainly rich governments supporting Ukraine have spilled over into talks. Those governments have issued a statement in the WTO denouncing Moscow, blocked Belarus’s application to join the institution and withdrawn so-called “most-favored nation” status for Russia, enabling them to impose higher tariffs on Russian goods than on other members of the organization .

Okonjo-Iweala said that governments withdrawing most favored nation status were acting within their rights. “It’s something we obviously do not encourage, but under WTO rules it is something that can be done,” she said. Members had worked out ways to continue negotiating despite what she described as “a very delicate situation”.

In one positive development, governments are on the brink of a breakthrough agreement to waive patent protection for Covid-19 vaccines under WTO rules, in order to ease production in developing countries. The draft deal – agreed by a core negotiating group of the EU, US, India and South Africa – has been criticized by pharmaceutical companies for trampling on intellectual property (IP) rights and by health campaigners for being too narrow. The proposal will be put to the entire WTO membership for approval, which requires unanimous support.

“I think we must move because this is a workable solution,” Okonjo-Iweala said. “We have to remember the WTO is a negotiating forum. It’s not a dictation forum. It’s not a place where one party can come and say: ‘this is what I want, just give it to me’. ”

The draft agreement came despite a stark difference between the sweeping suspension of IP initially demanded by South Africa and particularly India and the much more limited approach pushed by the EU. “The ministers really must be commended for having devoted the necessary time to this,” she said. “They negotiated and tried to get a framework which they are not forcing on anybody. They’re just saying this might be a basis on which we might proceed. ”

The other big issue the WTO is trying to address is the snarl-up in global supply chains. Congestion, particularly at US west coast ports, started in 2021 after a huge surge in demand for consumer durables. It was prolonged by the Omicron coronavirus variant interrupting production and transport, particularly in China. The war in Ukraine has worsened the situation by blocking trade routes and depriving shipping lines of Ukrainian and Russian seafarers.

Last year Okonjo-Iweala was initially optimistic that the supply chain problems would resolve themselves quickly, but said she had become progressively gloomier about deep-seated issues.

Earlier this month she convened a summit of CEOs from shipping, logistics and trading companies. “After listening to [the CEOs]I think that there are more structural problems, which might mean that some of this may stretch out for some time, ”she said.

“It’s not just port congestion. It’s problems on land. They said we do not have enough warehousing, we do not have enough truck drivers. This is no longer an attractive job for many young people. ” The drive towards net zero carbon emissions had also strained the system by requiring different ships which affected the amount of cargo that could be carried, she said.



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