Pros of the Grains Trade Convention

Egypt must have weighed the pros and cons before giving notice that it would withdraw from the UN Grains Trade Convention (GTC) at the end of June this year.

The convention, so it is said, was of little use to Egypt. One of its main criticisms and one of the reasons for wanting to withdraw from it was its inability to stabilise international wheat and grain prices and control the grain market.

However, this is easier said than done. Only OPEC has had notable success in influencing international prices, in this case of oil. The reasons for this are obvious since OPEC exclusively represents the interests of the oil producers and is able to manipulate the supply side of the equation.

But unlike OPEC, the signatories to the GTC are a diverse group of producers and consumers limited to 34 countries and including the EU. Thus, its members represent both sides of the equation, supply and demand, and they have widely diverse needs and interests. Unlike the agreement that binds the OPEC countries, the GTC has never been intended to stabilise supplies, prices, or trade since its inception in 1995.

The countries that signed and ratified the GTC were all armoured with good intentions and high ideals about the potential of such a limited agreement to achieve consensual behaviour among its members through reasonable negotiations. But the deal was crippled when the world’s two biggest wheat producers, Russia and Ukraine, went to war last year, and the effects of this have been more devastating for Egypt than for any other country.

Egypt sources 50 per cent and 30 per cent of its wheat imports from Russia and Ukraine, respectively. Those who thought the GTC could come to the rescue were wrong. International agreements are supposed to thrive when things go well. They are not equipped to deal with difficult situations, and they are the first to break in the face of crises.

The alleviation of the food-security crisis and the achievement of more stable wheat prices can only be done through internal negotiations and not through withdrawal from the GTC, however. Egypt is a leading country that believes in international cooperation and consensus-building, and it spares no effort to play an influential role in its natural circles, whether African, Arab, or in the developing world. Therefore, there must be some other reason that prompted Egypt to take such an unexpected and unusual decision.

Perhaps the withdrawal will help Egypt to take drastic decisions to boost its own production and buy more freely on the world market to meet its wheat needs. However, by withdrawing from the GTC, Egypt has reduced its ability in the current crisis to coordinate and work within the framework of multilateral approaches, which are more effective than the decision of any isolated country.

Egypt will also not have access to important information available to participating countries as a result of its withdrawal from the GTC. The GTC is a forum where members can share firsthand information, exchange analysis, and consult on grains market and policy developments.

Is this a test balloon that will soon be followed by more withdrawal decisions? Is it just the first in a series of withdrawals from international and regional agreements because of the cost of paying for subscriptions to UN and other regional agreements? Is Egypt reconsidering its policy of being an integral part of the international community? Will this decision affect Egypt’s foreign-policy stance on the international stage?

Egypt’s decision to withdraw from the GTC may undermine its foreign policy and its global and regional position as a leading developing country. Back in the 1980s when I was working as a counsellor in the Egyptian mission to the UN in New York, when the country’s external debt was becoming crippling we toyed with the idea of applying to join the group of the Least Developed Countries (LDCs), a bloc established in the late 1960s that has the lowest indicators of socio-economic development.

We quickly decided against this idea as it would have damaged Egypt’s reputation and status as a leading developing country in the international community. Egypt has an international position to support that should not be damaged by hasty decisions.

A final word of caution for countries large and small alike — breaking multilateral agreements comes at the expense of the world we have fought to build in order to save our international community from devastating wars. These agreements are intended to promote the exchange of views, compromise, and the search for consensus. Resigning under the pretext that there is “no added value” in being part of such an agreement is a misjudged argument.

This is because such “added value” is not given immediately or in return for something else. Instead, it lies in working for and being part of an international consensus. I wonder what “added value” Egypt derives from all of the other international and regional agreements it is part of. If Egypt pulls out of the GTC, how can it, as one of the world’s largest importers of wheat and corn, influence negotiations in international markets and combat rising prices?

It would be prudent for the international community to present an alternative to the present problems before they cripple the international system.

Source: Ahram Online