Life Without the WTO – Part II: Looking to the Everyday

Editors’ Note: This is the second post of a two part series by EJIL:Talk Contributing Editor Michael Fakhri. Part I can be found here.

In this second post I want to provide two examples of how life might look like without the WTO. One could do this in a myriad of ways and my purpose is to encourage more thinking along these terms and not to define that debate (well, not yet at least). Let’s see what the world looks like when we highlight the everyday practices of procuring food and doing business:

If a central tenet of the WTO is trade liberalization, the Agreement of Agriculture has always been a failure no matter what your definition of liberalization is. Developing countries had, either through the coercion of IMF structural adjustment programs or unilaterally with the aid of World Bank programs, already implemented a small revolution and liberalized their agricultural sectors before 1994. By the late 1980s, they were export-oriented and did little to protect (i.e. support) domestic agricultural production. So, developing countries did not need the WTO to liberalize their agricultural markets.

Instead, the Agreement of Agriculture, took what was an exception under GATT, and turned it into the norm through things like the Green Box (defined in Annex 2 of the Agriculture Agreement). The most popular way that rich countries made exceptions within GATT for their agricultural policy was under GATT Article XII which allowed for quantitative restrictions to be temporarily employed in order to avoid a fiscal crisis caused by a serious balance of payment deficit. In 1955, this temporary exception became the permanent rule when a very generous waiver was granted to the US (BISD 3S/34-5) and a more conditional ‘Hard Core Waiver’ (BISD 3S/39) for the rest of the world but which primarily favored the then EEC. The result was that the GATT now granted countries permission to impose quantitative restrictions for trade in agriculture. The waivers became the rule and were in effect until 1994. With the WTO’s Agreement of Agriculture, the world’s largest markets continued to be closed off to developing countries.

But then it has never been clear why international trade in agriculture should been dictated only by doctrines of freer trade. For about fifty years (1930s-1980), the principal focus for agricultural commodities has been market stabilization (through supply management). What remains untested, however, is constructing an international regime that attends to freer trade and market stabilization, but places food security as the principal doctrine. The Agreement of Agriculture could be retired and institutions like the FAO or UNCTAD could take up the issue. International commodity agreements could be revived not as supply-management mechanisms solely devoted to market stability, but instead reimagined as sites where the specific context of each agricultural product can be negotiated as a matter of food security being served by doctrines of market stability and freer trade. This would be a place of novel institutional design and there would be no reason why a rice agreement should operate anything like a wheat agreement.

Today, most food grown, collected, or hunted is not traded. If we only focus on agriculture, 85 per cent of food is produced by the farming households that consume it or exchange it locally; only 15 per cent of food is traded across borders. But at the same time, the international trade in food is key to certain communities’ food security and commercial life. If we then look at trade law in those terms of everyday life, the purpose of international trade would be to continue this trend in which the majority of food is procured for the purpose of immediate consumption or preservation – part of the practice of householding. Then, most of the remaining surplus would be sold locally and what is left after that would be traded internationally. Another approach would emphasize tariffs that ebb and flow based on changes in the seasons across the world (an already existing practice); seeing that climate change is creating more instability, negotiations around these seasonal tariffs would be more nimble than in the past.

Trade law and policy could then focus on ensuring food security. If we understand the doctrine of free trade to mean any policy that encourages an efficient and dynamic flow of goods, it may then operate as an exception; in times of great need, trade law would strive to ensure that states immediately do away with all barriers to trade as quickly as possible so that food can efficiently flow from any producer in the world to those who are hungry in a way that may still be commercially viable for the producer. For example, in times of shortage farmers could be granted temporary support in order to purchase their particular crop on the international market duty free, receive some financial support, and sell in their home market at a price that consumers can afford in order to avoid hunger. This would ensure consumers are not wanting and that farmers are not destitute. Indeed, this could lead to a new type of jurisprudence in which a “barrier to trade” is defined as any government instrument that slows down the global distribution of food in times of shortage, hunger, starvation, or famine. By treating trade as a means to distribute food to those in need, in socio-legal and economic terms, it can be compared to other distributive practices such as householding, sharing, and gifting. Thinking about food distribution in these terms could change the epistemology of international trade law in agriculture.

This focus on everyday commercial practices leads me to my second example of informal markets. Admittedly, this is hardly my area of study (which is why I’ll be brief), but I was recently inspired by colleagues over at AfronomicsLaw (you should just go read Mariam Olafuyi, Chris Chanwe Nshimbi, and James Gathii).While the WTO was born into a legitimacy crisis and today jurists are devoting a significant amount of energy to WTO politics, the African Continental Free Trade Agreement as it’s being ratified is being born into a unchartered future and is generating critical engagement. The ideal behind AfCFTA is that it would significantly promote intra-African trade in goods and services, bringing together fifty-four African countries with a combined population of over 1 billion and a combined gross domestic product of more than US$3.4 trillion. The growing concern is that for the agreement to be successful it must build more and better opportunities for people in the informal services sector – this includes small traders and temporary migrant workers. What inspired me is the likes of Olafuyi who is proactively calling out the fact that even though informal cross border trade is prevalent amongst African countries, there remains “a measure of regulatory blindness to its importance in intra-African trade” (despite the fact that Gathii raised the issue in an international forum early on). The informal economy in African countries varies but generally most people depend on the agricultural sector. Moreover, it is a gendered economy: women are overrepresented when compared to the formal sector. This line of study remains underexamined as an opportunity in global labor law and policy. And as Nshimbi points out defining and categorizing it will be the challenge. The key is to stop criminalizing the informal sector, treating is a transition to formality, or conflating it with the shadow economy. I am convinced that the future – and not just amongst African countries – lies in building on already-existing networks and treating the informal sector as a central source of new thinking and opportunity for trade law.