Industry News

WTO Labels Agricultural Trade During COVID-19 "A Story of Resilience"

Oct. 15, 2020
By: Navpreet K. Moonga

It is undeniable that the COVID-19 global pandemic has had devastating economic effects on most industries globally. The World Trade Organization (WTO) reported that trade performance relying on transportation services has been hit most by the virus due to cross-border mobility restrictions being enforced by WTO members. However, the WTO also reported that agricultural trade has been more resilient to market changes than overall trade.

Agricultural products included in the WTO’s trade statistics are defined by the WTO’s Agreement on Agriculture. The definition is based on the harmonized system product classification and consists of basic and processed agricultural products, in addition to specific products such as wines, spirits and tobacco, raw animal skins destined for leather production, and fibers (for example, cotton, wool, and silk).

The WTO noted that an initial increase in exports for many food products in the first quarter of 2020, particularly in March, likely reflects the sharp increase in demand for consumer retail products for home use, as consumers moved away from eating out at restaurants and stock-piled foods. Further, comparing 2019 to 2020, total agricultural exports remained at similar levels in April, but certain food products did see a decline due to decreased demand and transportation restrictions, such as disruptions with airfreight. Specific to regions, most saw agricultural exports maintain or increase, and imports of agricultural products increased in virtually all regions. Exports from Asia fell during the first quarter of 2020, which was followed by a decline in exports from Europe and North America in April. By contrast, exports levels in South America experienced the highest increase.

In its report, the WTO recognized specific measures taken by governments to ensure agricultural products remained accessible to consumers during this difficult time. Broken down into two phases, Phase 1 focused on crisis management and the emergency actions taken to minimize the spread of the virus yet ensuring food product availability, and Phase 2 concentrated on steps taken to assist agricultural producers adapt to “new normal” procedures and attend to fragmented supply chains.

Phase 1

The WTO recognized that governments reacted to the global pandemic with the following categories of vital actions:

  • Lockdown measures: business closures, social distancing requirements, movement restrictions and travel bans, border restrictions and border closures;
    • Recognition of agriculture, food processing, and retailing, as essential activities; and
    • Measures to guarantee adequate supplies of food: focusing on facilitating imports (tariff reductions, streamlining border procedures, relaxation of labeling requirements), restricting exports, building or expanding stockpiles and food distribution to vulnerable populations.
Phase 2

Transitioning to a “new normal” environment has been challenging for farmers, but the WTO has highlighted the following measures that governments are focused on:

  • Measures to build resilience;
  • Measures to support producers’ revenues; and
  • Measures to support exports and facilitate trade.
With WTO member’s governments recognizing the importance of maintaining food supply for citizens with as little disruption as possible, economic stimulus packages have been announced to support the agricultural industry.

These necessary measures have secured and continue to secure the facilitation of agricultural trade while ensuring supply chains are maintained. As WTO members alleviate travel and border restrictions, it is unclear how food supply chains will be affected, especially since the virus is still very much prevalent and in existence. What is clear and well recognized by the WTO, is each government’s response to the need to adapt and continue to enable agricultural trade. By continuing to adapt trade policy as the situation with COVID-19 evolves, the WTO is positive that this ‘story of resilience’ will be further strengthened so long as there are transparent and timely communications between member states.

If you have any questions or would like information about COVID-19 implications to trade of agricultural products or cross-border mobility, contact an attorney at Barnes, Richardson & Colburn LLP.