Observers say reforms at the 30-year-old trade watchdog are urgently needed, with some believing the future of the organization is at stake. The WTO did not immediately comment.

Gridlocked negotiations

In particular, the consensus rule whereby all 166 members must agree to pass new trade deals has gridlocked negotiations for years, blocking even those that enjoy near universal support.

Norway’s WTO ambassador Petter Olberg wrote in the December 12 document seen by Reuters that the range of ideas for reforming decision-making meant that the issue cannot be resolved at a ministerial meeting in March 2026. However, he said progress was being made and ministers meeting in Yaounde, Cameroon should agree on a framework to move forward.

The U.S. voiced frustration in a communication sent to members that blockages in the consensus-based system were stopping members from joining plurilateral agreements. These deals allow groups of interested members to strike deals among themselves, with an option for others to sign on later.

It warned that this threatened the organization’s viability and could drive countries to negotiate new deals outside it.

Most Favoured Nation reform

The U.S. also called for reform discussions to address one of the WTO’s core principles – Most Favoured Nation (MFN) – which requires members to treat others equally. It said MFN was designed for an era where trade partners were expected to adopt open, market-oriented trade policies.

“That expectation was naive, and that era has passed,” it said in a statement.

“If the WTO does not reform by making tangible improvements in those areas that are central to its mission, it will continue its path toward irrelevancy,” the U.S. said in the communication.

A diplomatic source cautioned that the U.S.’ position was not widely supported by members.

“The U.S. views on WTO reform are far from those of most members and even challenge the WTO’s purpose and core principles. Simply put, without MFN, there’s no real multilateralism,” the source told Reuters.

Since U.S. President Donald Trump began imposing higher import tariffs this year on most trading partners, the share of global trade conducted under the WTO’s Most-Favoured-Nation terms is down from about 80 per cent to 72 per cent, WTO data shows.

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Canada has followed the lead of the United States and European Union, and announced last week a 100 per cent tariff on imports of Chinese electric vehicles and a 25 per cent tariff on imported steel and aluminium from China.

“China strongly deplores and firmly opposes the discriminatory unilateral restrictive measures taken by Canada against its imports from China despite the opposition and dissuasion of many parties,” a commerce ministry spokesperson said in a statement.

The ministry said China will also initiate an anti-dumping investigation into some Canadian chemical products.

More than half of canola produced in Canada makes its way to China, the world’s biggest oilseed importer. Canola, also called rapeseed for certain variants, is used as a cooking oil and in a wide range of products including renewable fuels.

China’s rapeseed meal futures on the Zhengzhou Commodity Exchange CRSMcv1 jumped 6 per cent to 2,375 yuan ($333.56) per metric ton following the announcement, hitting its highest since Aug. 6.

• RELATED: ICE canola drops as China announces anti-dumping investigation

The ICE canola contract for November delivery RSX4 dropped to its daily limit of $45, or 7 per cent, to $569.7 per metric ton.

“Canada’s canola exports to China have increased significantly and are suspected of dumping, reaching US$3.47 billion in 2023, with a 170 per cent year-on-year increase in volume and a continuous decline in prices,” the ministry said.

“Affected by the unfair competition of the Canadian side, China’s domestic rapeseed-related industries continued to suffer losses,” it said.

China’s rapeseed meal prices have plunged 22 per cent so far this year amid abundant oilseed supply and rising domestic production.

“The current (edible oil) domestic consumption is not strong, and there is an abundant supply of domestic stocks,” said Ma Wenfeng, senior analyst at Beijing-based agriculture consultancy Beijing Orient Agribusiness Consultancy.

China imports its canola predominantly from Canada, followed by Russia and Mongolia.

“Arrivals from Canada have been growing at a fast rate,” Ma said.

The world’s second largest economy imported 5.5 million tons of canola in 2023, valued at $3.72 billion. Imports from Canada accounted for 94 per cent of the total.

Comparatively, the bulk of China’s electric vehicle exports to Canada is from Tesla’s Shanghai factory and local Chinese firms have no big exposure to that export market yet.

Canadian imports of automobiles from China to its largest port, Vancouver, jumped 460 per cent year over year to 44,356 in 2023, when Tesla started shipping Shanghai-made EVs to Canada.

The Chinese spokesperson said it intends to resort to the World Trade Organization dispute settlement mechanism for Canada’s relevant practices.

The Canadian embassy in Beijing did not immediately respond to a request for comment.

China has also initiated trade investigations on imports of pork, brandy and dairy from the European Union in response to curbs on its electric vehicle exports.

Alternative supplies

China had targeted Canadian canola in previous trade tensions. In 2019, it suspended two Canadian canola exporters before removing the restrictions three years later.

Analysts said China could turn to Australia and Ukraine for alternative supplies, especially as Australia’s canola production is ample.

Canola production in Europe has been hit by poor weather while China’s agriculture trade with Ukraine is limited.

“We expect China to buy larger volumes from Australia if restrictions on Australian canola are eased,” said Ole Houe, director of advisory services at IKON Commodities in Sydney.

“As of now Australia’s canola exports to China are negligible, just about 500 tons since the beginning of 2024,” Houe said.

China’s imports of Australian canola have been restricted due to concerns about blackleg disease.

($1 = 7.1201 Chinese yuan renminbi)

– Reporting by Mei Mei Chu, Naveen Thukral and the Beijing newsroom.

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Verheul was among those at the Canadian Federation of Agriculture’s annual meeting in late February.

Why it matters: Canadian agriculture thrives on trade, and that relies on effective and enforceable trade rules.

It’s his belief that the WTO is fundamentally broken and, because of that, agriculture is losing out.

“Agriculture in particular, probably more than most sectors, has the potential to benefit a lot from the WTO because it’s the only place to address subsidies. It’s the only place to address export subsidies. It’s the only place to address those cross-cutting issues, because you never get at those in any bilateral or regional agreement,” he said in an interview.

A level playing field for international trade is among the largest overarching issues for Canada’s agricultural trade, and that can’t be achieved without a functioning WTO, he said.

“I think we have no choice but to try to rebuild it,” Verheul said.

Canada is a mid-sized country trading with much larger partners, and it relies on the existence and enforcement trade rules to be able to do so.

The WTO is fixable, he maintained. In fact, the basic underpinnings of the organization should be left alone. They still work.

Past that, however, “we’ll probably never get unanimous agreement, as the WTO requires, on bold, new ambitious approaches.

“So, I think we’ll see more and more what they’re calling ‘pluralateral’ agreements, where you’ve got a handful of countries that are signing on to something and the others can sign on if they want to or not.”

The WTO could get back on track if the United States stopped blocking appointments to the appellate boards for dispute settlements, he argued.

But there’s also another issue at play, the tension between the U.S. and China and the U.S. and India.

“The gaps among countries are just much larger than they were in the past when we actually built the WTO,” he said. “Some of those could be insurmountable.”

Canada must work with its allies, keep politics out of agreements and continue to sign bilateral deals with like-minded countries, he told CFA delegates.

Those kinds of deals have more weaknesses than multilateral agreements, he admitted, but, for the most part, they’ve been effective.

Talk breakdown

Verheul was Canada’s chief agricultural negotiator between 2003 and 2009 and the country’s chief negotiator from 2017-21, during the time when the new U.S.-Mexico-Canada Agreement, the replacement for NAFTA, was reached.

That deal could be up for renegotiation in 2026. By July 1 of that year, each signatory country has to confirm, in writing, if they want the USMCA to continue as is.

If one country decides not to commit, Verheul said, “we’re into a world of uncertainty.”

Without a full slate of agreement, the deal would have to be reviewed annually until the hold out(s) change their mind, or the deal hits its 2036 expiration.

Verheul said that many expect the U.S. to push for changes.

“I think our hope is that there will be bigger issues that countries are focused on and this will be a little bit under the radar, but I think that’s wishful thinking,” he said. “The one issue that really concerns me is that I keep hearing rumblings, particularly out of the Trump camp, that they may try to overturn some of the dispute settlement decisions through the review.

“We’ve seen the U.S., maybe more than most other countries, becoming less attached to the rules of law if it interferes with their domestic objectives.”

Verheul also touched on Bill C-282, which intends to keep supply managed sectors off the table in future trade talks. Grain and livestock exporters oppose the bill, saying it puts deals at risk, while supply managed sectors say Canada has been dipping too often into concessions impacting their industries to help secure recent trade agreements.

That bill is more a political message than a threat to future negotiations, however, Verheul said.

Each side always has “red lines” when talks begin, he noted.

“I really see this more as a political signal of support to the dairy sector and to supply management more broadly.”

He added that Canada has “already negotiated with most of the major dairy exporters to Canada. There’s no other imminent threat out there.”

CPTPP

Canada had agreed to grant the United Kingdom entrance to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, but talks stalled after Canadian livestock producers criticized the deal. Regulatory issues mean that they don’t have fair access to that market, groups like the Canadian Cattle Association, Canadian Pork Council, Canadian Meat Council and National Cattle Feeders’ Association have said.

Verheul said Canada does not seem eager to get back to the table until the United Kingdom indicates a more amiable approach.

Future deals

He also expects that climate issues will increasingly affect trade deals.

It’s unfair, for example, to impose environmental requirements on Canadian producers and then expect them to compete with countries that don’t, he said.

“There does need to be further thought and some common approaches developed to try to make that a level playing field too, because I think that risks being the next real challenge of having a divide between different countries,” he said.

– Karen Briere is a reporter with The Western Producer.

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“A big volume was (exported) in December… but the rate (in January) will drop,” Solsky told national television.

“There are problems in the Red Sea and part of our exports went and are going through the Red Sea to China, Asia and African countries and therefore the movement of ships has slowed down a lot,” he said.

Attacks by Iran-allied Houthi militia in Yemen on ships in the region since November have slowed trade between Asia and Europe and alarmed major powers. The U.S. has begun strikes on Houthi sites aiming to degrade their ability to attack shipping in the Red Sea.

Solsky said an additional reason for lower shipments was the New Year holidays.

Ukraine exported 4.8 million metric tons of food via its Black Sea corridor in December, surpassing the maximum monthly volume exported under a previous U.N.-brokered grain deal.

Prior to Russia’s invasion in February 2022 Ukraine exported about 6 million tons of food per month via the Black Sea.

It now relies on the corridor along its western Black Sea coast near Romania and Bulgaria, its small ports on the Danube River, and exports over land via eastern Europe.

Kyiv believes it has managed to dislodge Russian forces from the western part of the Black Sea, securing grain exports which are crucial to its economy as well as for important imports.

Wheat shipments plunge

Wheat shipments via the Suez Canal fell by almost 40 per cent in the first half of January to 0.5 million metric tons due to attacks in the Red Sea and Gulf of Aden, the World Trade Organization said today on social media platform X (formerly Twitter).

The WTO data, based on a dashboard developed jointly by the International Grains Council (IGC) and the World Trade Organization, adds to signs of ship diversions following attacks on vessels by Iran-aligned Houthi militants in Yemen.

Earlier this week, shipping sources had said they expected some grain cargo diversions but that most would continue to risk passing through the Suez Canal which is the shortest shipping route between Europe and Asia.

In December, around 8 per cent of wheat shipments from the European Union, Russia and Ukraine that would typically travel via the Suez Canal followed alternative routes, the WTO said.

That surged to around 42 per cent in the first half of January, it said. Prior to the attacks, the share of alternative routes was only about 3 per cent on average, it said.

However, it appeared that few if any shipments were being cancelled altogether. “The surging number of diversions appears to have had a limited impact to date on total deliveries,” the WTO said.

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Poland, Slovakia and Hungary announced restrictions on imports on Friday after the European Commission decided not to extend a ban on sales into Ukraine’s five EU neighbours, which also include Romania and Bulgaria.

Ukraine retaliated by filing complaints Monday with the World Trade Organization (WTO) against Poland, Slovakia and Hungary, while other EU members condemned the unilateral moves.

Spain’s agriculture minister on Monday said the bans seemed illegal while his French counterpart said they called European solidarity into question.

Poland, with a parliamentary election looming in October, distanced itself even further and withdrew from a co-ordination platform — a group including the five neighbours, Ukraine and the European Commission — that has been looking at solutions to boost Ukraine grain transit to global markets.

“We have to look forward, since Ukraine said it wants to sue Poland… every comment we would have made on this platform could be used against us,” Poland Agriculture Minister Robert Telus told reporters in Brussels.

For much of the last year, some 60 per cent of Ukrainian grain has transited through the five EU countries using so-called Solidarity Lanes as an alternative to the Black Sea due to Russian threats.

Like most countries in central and eastern Europe, Poland and Slovakia have been some of Kyiv’s strongest allies in its fight against Russia’s invasion that began in February 2022. Hungary’s stance has been more ambivalent, as the only member of the EU and NATO alliance to maintain close relations with Moscow, still the main source of its oil and natural gas.

But grain exports have been an area of friction throughout the region.

Exports disrupted

Ukraine’s war with Russia has disrupted its ability to export agricultural products through its Black Sea ports, leading to a surge in shipments via road, rail and barge through its five EU neighbours.

Farmers in those countries protested these shipments were distorting local markets, leading the EU to approve trade restrictions — while still allowing transit — until Sept. 15.

Spain’s agriculture minister Luis Planas Puchades said it was up to the European Commission to judge whether the unilateral bans have broken any laws, but said the measures seemed illegal.

France’s agriculture minister, Marc Fesneau, was also critical of the measures.

“For solidarity there needs to be unity… We must keep hold of the two elements, otherwise the European project is at risk. The single market is a fundamental element,” he said.

Romanian Prime Minister Marcel Ciolacu said on Monday his country would look to extend a trade ban on Ukrainian grain for 30 days if import requests rise.

Ciolacu said Romania had not seen requests to import grain from Ukraine since Friday and did not want a repeat of the situation earlier this year that impacted Romanian farmers.

“The Ukrainian prime minister promised to send the export licensing proposal today, which we will discuss,” Ciolacu said.

“If there will be export requests to Romania I will ask the agriculture and economy ministers to draft an order extending the ban for a period of 30 days until things are clarified.”

The Bulgarian parliament voted to lift its ban on Ukrainian grains last week.

— Reporting for Reuters by Julia Payne in Brussels and Yuliia Dysa in Kyiv; additional reporting by Luiza Illie in Bucharest, Tom Balmforth and Pavel Polityuk in Kyiv, Sybille de La Hamaide in Paris, and Marek Strzelecki; writing by Nigel Hunt.

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The WTO’s appeals bench, which rules on top disputes, has been mothballed for over two years due to Trump-era blockages of adjudicator appointments. Under U.S. President Joe Biden, Washington has resisted calls by WTO members to approve appointments and has instead been leading negotiations on how to reboot the WTO’s dispute system.

“Our goal is a fully functioning (dispute system) by 2024,” deputy U.S. Trade Representative Maria Pagan told Reuters in her first public comments on the closed-door talks, saying Washington was “very committed” to reforms.

Asked whether it was possible to revive the Appellate Body, Pagan did not rule it out. “I think it needs a lot of revamping,” she said. The U.S. has criticized the WTO’s alleged overreach and lengthy processes and it has strongly contested some of its recent rulings against the United States.

The U.S.-led consultations with more than 70 countries over the past year have involved 12 reform themes expected to result in concrete proposals, Pagan said.

She declined to give details but suggested they would include alternatives to formal disputes such as mediation.

The appeals bench freeze means 24 WTO cases are stuck in legal purgatory because the losing party has appealed into a void.

WTO director-general Ngozi Okonjo-Iweala has previously said the global trade body can reach deals on difficult topics like reform by its next major meeting (MC13) in early 2024, although Pagan said that might be too soon.

“We don’t view this as work that has to be done by MC13. But that does not mean that we’re not committed to working as quickly as we can on this because we are,” she said.

Some delegates have expressed disappointment with the U.S. engagement with the 28-year-old WTO, which it helped establish. Theycite Washington’s no-show at a key WTO meeting at Davos last week as an example. However, Pagan has refuted this, saying there was a scheduling clash.

WTO members agreed on the body’s first global trade rules reform in years last June which cut fish subsidies, but progress has stalled amid a dispute over who will chair talks. Pagan described the process as “frustrating” but said she was hopeful a breakthrough had been found, without elaborating.

— Emma Farge is a senior Reuters correspondent in Geneva; additional reporting by Philip Blenkinsop in Brussels.

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The WTO Dispute Settlement Body (DSB) panel suspended its work as of Tuesday, the complaint said.

Work can be suspended at any time at the request of the complaining party for a period of up to 12 months, said the complaint. If work is suspended for longer than that, the authority for establishing the panel lapses, it added.

China blocked imports of canola seed from two major Canadian exporters starting in March 2019, alleging pest contamination. However, the ban was widely believed to be a retaliation for Canada’s arrest of a Chinese tech executive the previous December on a U.S. warrant alleging bank and wire fraud.

Canada began the trade challenge process in September 2019, seeking bilateral consultations with China at the WTO.

The arrested executive, Huawei’s Meng Wanzhou, was released from house arrest in September last year and returned to China after reaching a deal with U.S. prosecutors.

A DSB panel had been requested last June and organized last November last year to hear Canada’s canola case, but China lifted its ban on the two affected companies’ canola in May this year before a DSB hearing could be arranged.

— Writing for Reuters by Miranda Murray; includes files from Glacier FarmMedia Network staff.

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The deals were ground out over five days of bargaining at a conference of more than 100 trade ministers that was seen as a test of the ability of nations to strike multilateral trade deals amid geopolitical tensions heightened by the Ukraine war.

Delegates cheered after they passed the package of six agreements just before dawn on Friday.

Director-general Ngozi Okonjo-Iweala told them: “The package of agreements you have reached will make a difference to the lives of people around the world. The outcomes demonstrate that the WTO is in fact capable of responding to emergencies of our time.”

Earlier she had appealed to WTO members to consider the “delicate balance” required after nearly round-the-clock talks that were extended for an extra two days and have at times been charged with anger and accusations.

At one stage, a series of demands from India, which sees itself as the champion of poor farmers and fishermen as well as developing countries, appeared set to paralyze talks but accommodations were found, trade sources said.

The WTO’s rules dictate that all decisions are taken by consensus, with any single member able to exercise a veto.

The package, which Okonjo-Iweala called “unprecedented,” included the two highest profile deals under consideration — on fisheries and on a partial waiver of intellectual property (IP) rights for COVID-19 vaccines.

The accord to curb fishing subsidies is only the second multilateral agreement setting new global trading rules struck in the WTO’s 27-year history and is far more ambitious than the first, which was designed to cut red tape.

The fishing subsidies deal has the potential to reverse collapsing fish stocks. Though pared back significantly, it still drew approval.

“This is a turning point in addressing one of the key drivers of global over-fishing,” said Isabel Jarrett, manager of The Pew Charitable Trusts’ campaign to reduce harmful fisheries subsidies.

The deal on a partial IP waiver to allow developing countries to produce and export COVID-19 vaccines has divided the WTO for nearly two years, but finally passed. It has also drawn the fiercest criticism from campaign groups that say it barely expands on an existing exemption in WTO rules and is too narrow by not covering therapeutics and diagnostics.

“Put simply, it is a technocratic fudge aimed at saving reputations, not lives,” said Max Lawson, co-chair of the People’s Vaccine Alliance.

One agreement had also been reached on Thursday, on maintaining a moratorium on e-commerce tariffs, which is considered vital to allow the free flow of data worldwide.

In her closing statement to ministers, Okonjo-Iweala said that “while we all agree on the vital importance of agriculture in our economies, differences on some issues, including public stockholding for food security purposes, domestic support, cotton and market access, meant that we could not achieve consensus on a new roadmap for future work.”

However, she added, ministers have “taken steps to make trade in food and agricultural inputs more predictable, and hence prices less volatile” and are “going to make it easier for the World Food Programme to do its difficult job of feeding millions of the world’s most vulnerable people.”

Specifically, WTO members adopted a ministerial decision that they won’t impose export prohibitions or restrictions on food “purchased for non-commercial humanitarian purposes” by the WFP — except for WTO-compliant measures a member country imposes to ensure its “domestic food security.”

In a separate declaration on the emergency response to food insecurity, WTO ministers said they “commit to take concrete steps to facilitate trade and improve the functioning and long-term resilience of global markets for food and agriculture, including cereals, fertilizers, and other agriculture production inputs.”

Last week, 13 Canadian farm and ag industry organizations had signed onto a joint statement by like-minded groups in eight ag-exporting countries, calling for much more concrete decisions from the ministerial meeting.

Those groups, including the Canadian Cattlemen’s Association, Canadian Pork Council, Pulse Canada and Cereals Canada, among others, had said that “with record food prices and ever-increasing food insecurity, it would be unimaginable for the WTO to fail to deliver a substantial outcome on agriculture” at this week’s conference.

Overall, however, many observers were broadly supportive and said Friday that the deals reached should boost the WTO — which was weakened by former U.S. President Donald Trump’s crippling of its ability to intervene in trade disputes — and set it on a course for reform.

“There’s now a package on the table at (the ministerial conference) that would provide a real boost to the credibility and strength of the WTO system,” said John Denton, secretary general of the International Chamber of Commerce, before the package passed.

— Reporting for Reuters by Emma Farge and Philip Blenkinsop. Includes files from Glacier FarmMedia Network staff.

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The Geneva-based trade watchdog ruled in 2019 against China’s use of tariff-rate quotas for agricultural imports, which Washington successfully argued had limited market access for U.S. grain exports. Such quotas allow a specified quantity of goods to be imported at lower rates than usual.

China has said it has since implemented the WTO recommendations but the United States does not agree and last month said it was entitled to take “countermeasures” against Beijing, without providing details of the level of retaliation.

“The United States is not in a position to agree with China that it has come into compliance with the DSB (dispute settlement body) recommendations in this dispute,” a U.S. delegate told a recent closed-door meeting, according to comments shared by the U.S. mission in Geneva.

However, the delegate expressed a willingness to work with Beijing to resolve the dispute.

China’s mission in Geneva did not immediately respond to a request for comment.

A trade official attending the meeting said China’s delegate expressed deep concern about the U.S. approach to this dispute, adding that it was up to Washington to prove it was at fault.

The WTO’s dispute settlement panel usually presents its ruling to the parties involved within six months, after a series of hearings and consultations. 

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They also hope an upcoming summit will put the WTO on a path that not only returns it to previous functionality but also helps it climb higher on the evolutionary road.

Why it matters: Canada is a trading nation, but small in influence and so an independent arbiter of global disputes is critical for a country like Canada competing against larger entities.

“Can the rules of trade be more enabling?” Gerald Masila, executive director of the Eastern Africa Grain Council, said in a recent symposium about efforts to rebuild the WTO.

“Can they be clear? . . . Can they be objectively set?”

Representatives of most of the world’s trading nations will gather later this year to begin the process of fixing the WTO, which has been ravaged in recent years by squabbling between significant traditional supporters such as the United States and insurgent players including China.

The U.S. has refused to allow new appellant judges to be appointed to the WTO’s dispute settlement process, rendering it mostly inoperative.

Getting a dispute settlement back in operation is vital, said Marcel van der Vliet, president of a group that represents about 35,000 European food importers and exporters.

“It is very important to have the judges nominated as soon as possible, make that jump, get the system up and running again so that trade disputes can be settled as soon as possible,” said van der Vliet.

However, fixing what’s broken is not nearly enough, said van der Vliet and others. The WTO agri-food agreement is decades old and out of date.

“While this agreement remains the only instrument to govern global ag trade, the rules have not changed,” said Alanna Koch, chair of the Global Institute for Food Security, based in Canada.

“We remain too far from (the original agreement’s) aspirations. We need a global rules-based trade platform and framework that eases the delivery of sustainable food and food solutions across the world.”

Masila said the WTO agricultural agreement tends to get bogged down in technical compliance and fights over rule interpretations, rather than being used to improve the freedom of global agri-food trade.

Van der Vliet said the governments of trading nations must stop pushing agri-food trade into disputes in which the sector is not involved.

“It’s very important that agri-food trade is taken out of the equation. We have seen many times … collateral damage in non-agri-food disputes,” he said. “No more collateral damage, please.”

Koch said a new agreement should deal more with the “consistency, transparency and predictability” of governments’ policies to reduce distortionary farm support policies and increase support for non-distortionary risk management for producers.

“Unpredictable changes in trade policy … serves no one and is costly and devastating for businesses and consumers,” said Koch.

Masila said that when looking at commodity trade invoices, he often notices the underlying cost of the commodity is only 15 to 20 per cent of the total. The rest comes from transportation and handling, including regulatory costs. That slows the amount of trade that can occur.

Van der Vliet said the new WTO agreement needs to limit the scope for non-tariff trade barriers, like phytosanitary standards, to be used to block or hobble imports.

“Most of the trade irritants come from non-tariff trade barriers,” he said.

“Let’s … sit together, prevent the race to the bottom.”

This article was originally published at The Western Producer.

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