AGREEMENT ON AGRICULTURE

AGREEMENT ON
AGRICULTURE

PRESENTED BY:
BHAWNA PANDEY
General Agreement on Tariffs and
Trade(GATT)
 Predecessor of WTO
Established after World War II
Created in October 1947
Seven round of negotiations
occurred under
GATT
URUGUAY ROUND OF NEGOTIATION
 AGREEMENT ON
AGRICULTURE (AOA)

AOA and the Agreement on Application on

Sanitary & Phytosanitary Measures were
negotiated in parallel
Decisions on measures concerning the
possible negative effects of the reform
programme on least developed and net food
importing developing countries also part of
the package.
THREE MAIN ELEMENTS OF
THE AGREEMENT

Market Access
Domestic Subsidies
Export Subsidies
In addition, special concerns of developing countries and net food
importing countries are also addressed.
MARKET ACCESS
Tariffication of Non Tariff Barriers (NTB’s)
Reduction of Tariffs
By a simple average of 36% over 6 years for developed
countries
By a simple average of 24% over 10 years for developing
countries
Minimum Access
Not less than 3%, rising to 5% by 2004 for developing
countries
Not less than 3%, rising to 5% by 2004 for developing
countries
 DOMESTIC SUPPORT
Aggregate Measurement of Support (AMS)
Product Specific
Non-Product Specific
De Minimis Provisions

Three Categories of Domestic Support

“Green Box” Measures
“Blue Box” Measures
“Amber Box” Measures
 DOMESTIC SUPPORT
Green Box measures include all publically
funded government programmes which do
not provide price support to producers. For
example, research, pest and disease
control, marketing and promotion services,
infrastructure, public stock holding,
payments under environment programmes
etc. These measures are considered least
trade distorting and hence are exempt from
reduction.
 DOMESTIC
SUPPORT
Blue box policies represent the set of provisions in the
Agreement on Agriculture that exempts from reduction
commitments, those program payments received under
production-limiting programs, if they are based on fixed
area and yields, a fixed number of head of livestock, or if
they are made on 85 percent or less of base level of
production.
Amber policy subjects to careful review and reduction
over time. Amber box policies include policies such as
market price support, payments related to current
production or prices, and input subsidies.
 DOMESTIC SUPPORT
Developmental measures (Special and
Differential Treatment for Developing
Countries `SDT')
Investment subsidies in the Agriculture
sector
Input support to low income/resource
poor farmers
Support for diversification from illicit
narcotic crops
AGGREGATE MEASUREMENT OF SUPPORT
Reduction commitments are expressed
in terms of AMS
Includes all product specific and non-
product specific support
Members with a Total AMS have to
reduce base period support by 20 per
cent over 6 years (developed country
Members) or 13 per cent over 10 years
(developing country Members)
CALCULATION OF TOTAL AMS
Total AMS = (product-specific AMS exceeding de minimis +
non-product specific AMS exceeding de minimis)
Product-specific AMS = sum of all positive support to a basic
product (market price support + other types of support not
dependent on price gap)
Non-product-specific AMS = sum of all positive non-product
specific AMS
Market price support for a product = (administered price at
the farm gate - fixed external reference price) x eligible
production
Market price support for an input (service) =
(administered price at the farm gate - market price) x
quantity of input (service) receiving subsidy
 Product-specific AMS and non-product specific AMS
should be included in Total AMS only if they exceed the
de minimis level (5% for developed countries or 10% for
developing countries), i.e. if (product-specific AMS/market
value of total output of the product) x 100 is greater than 5
(or 10 in the case of developing countries.
Example
EXPORT SUBSIDY
Prohibited
Otherwise subject to reduction commitments
Value of Subsidy
By 36% over 6 years for developed countries
By 24% over 10 years for developing countries
No reduction for least developed countries
Quantity of Export
By 21% over 6 years for developed countries
by 14% over 10 years for developing countries
No reduction for least developed countries
 EXPORT SUBSIDIES
TYPES SUBJECT TO REDUCTION COMMITMENTS
provision by governments or their agencies of direct payments-in-kind,
to a firm, to an industry, to producers of an agricultural product, to a
co-operative or other association of such producers, or to a marketing
board, contingent on export performance
 the sale or disposal for export by governments or their agencies of non-
commercial stocks of agricultural products at a price lower than the
comparable price charged for a like product to buyers in the domestic
market;
payments on the export of an agricultural product that are financed by
virtue of governmental action, whether or not a charge on the public
account is involved, including payments that are financed from the
proceeds of a levy imposed on the agricultural product concerned, or
on an agricultural product from which the exported product is derived;
TYPES SUBJECT TO REDUCTION COMMITMENT
CONTINUED…
 The provision of subsidies to reduce the costs of
marketing exports of agricultural products (other than
widely available export promotions and advisory services)
including handling, upgrading and other processing
costs, and the costs of international transport and freight;
 Internal transport and freight charges on export
shipments, provided or mandated by governments, on
terms more favourable than for domestic shipments;
Subsidies on agricultural products contingent on their
incorporation in exported products.
 Types of export subsidies subject
to reduction commitments
direct export subsidies contingent on export
performance;
sales of non-commercial stocks of agricultural products
for export at prices lower than comparable prices for such
goods on the domestic market;
producer financed subsidies such as government
programmes which require a levy on all production
which is then used to subsidise the export of a certain
portion of that production;
Cost reduction measures such as subsidies to reduce
the cost of marketing goods for export: this can include
upgrading and handling costs and the costs of
international freight, for example;

Internal transport subsidies applying to exports only,

such as those designed to bring exportable produce to
one central point for shipping; and

Subsidies on incorporated products, i.e. subsidies on

agricultural products such as wheat contingent on their
incorporation in export products such as biscuits.
 MAIN PROVISIONS ON EXPORT SUBSIDIES
COUNTRIES
DEVELOPING LEAST- DEVELOPED
DEVELOPED
1986-90 1986-90 1986-90

A.O.A
PROVISIONS
BASE PERIOD

IMPLEMENTATI 1994-2004 1995-2004 1995-2000

ON PERIOD
PROPORTIONATE REDUCTIONS IN:
VALUE OF 24% 0% 36%
EXPENDITURE
ON SUBSIDIES
QUANTITY OF 14% 0% 21%
SUBSIDIZED
EXPORT
EXEMPTIONS MARKETING COSTS OF NONE
 ANTI-CIRCUMVENTION
PRINCIPLE
Contains provisions that prevent the use of subsidies
that are not listed.
Transactions claimed to be food aid, but not meeting
the criteria in the Agreement, cannot be used to
undermine commitments.
ANNUAL NOTIFICATION
 All Members must notify the Committee on
Agriculture annually with respect to export subsidies.
The annual notification must contain the annual use
of subsidies in terms of both volume and budgetary
outlays.
Other issues
Export restrictions
Peace clause
Resolving disputes
Continuation clause
 DOHA DEVELOPMENt
AGENDA
WTO’s fourth Ministerial Conference in Doha (Qatar)
in November 2001 resulted in a new round of trade
negotiations-the Doha Development Agenda
Objective is to lower trade barriers around the world,
permitting free trade between countries of varying
prosperity.
The WTO Ministerial Meeting held in September
2003 - in Cancun ( Mexico) collapsed without
agreement on the way.

Establishment of developing country coalitions, most
notably the G20 (large middle-income DCs ) and the
G90 (a combination of the Least Developed Countries
(LDCs), the Africa Group and the ACP (African,
Caribbean and Pacific) Group).
The Hongkong Ministerial Meeting Dec
2005
Did (Doha round)
not deliver great progress but avoided failure
and left the door open to continue negotiations.
Agriculture: total elimination of all kind of export
subsidies for agriculture products by 2013.
Three bands of domestic market support reduction,
the EU being in the highest band, the US and Japan in
the second and the other countries, including DCs, in
the third, lower band of support reduction.
Four bands of tariff reductions in agriculture products,
the highest tariffs will suffer the highest cuts.
These principles must be concretised by end of April
and draft schedules be submitted by end of June.
 Development package:
 Duty-free and quota-free (DFQF) for all products exported
by the Least Developing Countries into developed
countries. The US and Japan have temporally limited to
97% of products, thus excluding a few, while the EU
already provides DFQF to all products since 2001.
 All forms of export subsidies for cotton (an important
product for many poor countries’ exports) will be eliminated
by developed countries by the end of 2006.
 The WTO Agreement on Intellectual Property (TRIPS) was
amended to facilitate access to cheaper medicines by the
poor countries.
 All developed countries announced increased funds to help
developing countries improve their trading capacity,
including infrastructure projects oriented to increase
exports. The EU will provide 2 billion pound in aid for trade
as of 2010.
 GENEVA, 2006
July 2006 talks in Geneva failed.
No consensus reached on reducing farming subsidies and
lowering import taxes.

POTSDAM, 2007
 June 2007, negotiations within the Doha round broke
down at a conference in Potsdam.
Major impasse occurred between the US, the EU, India and
Brazil.
main disagreement was over opening up agricultural and
industrial markets in various countries and also how to cut
rich nation farm subsidies.
 India-US Basmati
Rice Dispute
In late 1997, an American company RiceTec Inc, was granted a patent by
the US patent office to call the aromatic rice grown outside India 'Basmati'.
RiceTec Inc, had been trying to enter the international Basmati market with
brands like 'Kasmati' and 'Texmati' described as Basmati-type rice with
minimal success. However, with the Basmati patent rights, RiceTec will now
be able to not only call its aromatic rice Basmati within the US, but also
label it Basmati for its exports. This has grave repercussions for India and
Pakistan because not only will India lose out on the 45,000 tonne US import
market, which forms 10 percent of the total Basmati exports, but also its
position in crucial markets like the European Union, the United Kingdom,
Middle East and West Asia. In addition, the patent on Basmati is believed to
be a violation of the fundamental fact that the long grain aromatic rice
grown only in Punjab, Haryana, and Uttar Pradesh is called Basmati.
According to sources from the Indian Newspaper, Economic Times,
"Patenting Basmati in the US is like snatching away our history and culture
India and Pakistan who are joining hands to tackle the
crisis have a strong case against RiceTec Inc. British
traders are also supporting India and Pakistan.
According to Howard Jones, marketing controller of
the UK's privately owned distributor Tilda Ltd, "True
Basmati can only be grown in India or Pakisatan. We
will support them in any way if its necessary."
The Middle East is also showing support by only
labelling Indian or Pakistani rice as Basmati. The case
is still unfolding and it will be interesting to find out
what happens in the end once the government and
government agencies have gathered the necessary data
and information to support their case and to prevent
their cultural heritage from being taken away from
them.
The Indian Shrimp Industry Organizes to Fight the
Threat of Anti-Dumping Action
On 31 December 2003, the Ad Hoc Shrimp Trade
Action Committee (ASTAC), an association of shrimp
farmers in eight southern states of the United States,
filed an anti-dumping petition against six countries —
Brazil, China, Ecuador, India, Thailand and Vietnam.
The petition alleged that these countries had dumped
their shrimps in the US market
The main contentions of the petitioners were as
follows.
The six named countries accounted for 74% of shrimp
imports in the US market.
 
Imports from the six countries increased from 466
million lb. in 2000 to 650 million lb in 2002
 Import prices of the targeted countries had dropped by
28% in the previous three years. The average unit value of
the targeted countries in 2000 was $3.54; this had fallen
to $2.55 in 2002, on a headless, shell-on equivalent basis.
 The average dockside price for one count size of gulf
shrimp dropped from $6.08 to $3.30 per pound from
2000 to 2002.
 The United States was the most open market in the
world. High tariff rates in other large importing
countries provided a powerful incentive for exporters to
increase shrimp shipments to the United States.
Likewise, the US market also served as the market of last
resort when shrimp shipments were denied entry to
other markets such as the European Union due to the
discovery of unacceptable levels of contaminants.
It put forward two major differences between the Indian and
the US sea-caught shrimp and offered reasons why Indian
shrimp is cheaper.
First, there are specific variations between the shrimp caught
off the south-west coast of the United States and in Indian
waters, so that prices are bound to be different. ‘The threat for
the domestic shrimp farmer in the United States comes from
China, Thailand, Indonesia and Ecuador. India’s shrimp exports
are predominantly of black tiger and scampi varieties which are
not cultivated in the United States’, according to the president
of SEAI.
Second, while fishing in the United States is a capital-intensive
activity calling for major investment, in India shrimp capture is
carried out with a very low level of capital and requiring hardly
any investment. This makes the cost of production considerably
lower in India compared with that for shrimp sea-caught off the
US coast.
Jose Cyriac observed, after the decision to initiate
investigations, that the cost of cultured and captured shrimp
in India was far lower than that of shrimp caught and bought
in the US market, enabling Indian exporters to compete with
US shrimp in price. Further, the petition filed before the US
Department of Commerce had mixed up count and weight
(shrimp is sold by size and the number of shrimp constituting
1 kg), providing another avenue to contest the case.
the preliminary affirmative decision came on 17 February
2004, the Indian shrimp industry termed it ‘discriminatory and
unjust’.
 WTO Agreement on Agriculture
(At a glance)
India is under no obligation to reduce domestic support
or subsidies currently extended to agriculture as the support
being given is well below the permissible level of 10 per cent of
the value of its agricultural output.
Under the Agreement, there can be no restrictions on
farm trade except through tariffs -- i.e., non-tariff
barriers such as quantitative restrictions on imports
through quotas, import licensing etc., are to be replaced
by tariffs or duties on imports to provide the same level of
protection to domestic agriculture and thereafter, tariff levels
are to be progressively reduced. However, some developing
countries like India were permitted to offer ceiling
bindings instead of tariffication on account of the fact that
India was maintaining QRs on Balance of Payment grounds.
• Reduction commitments on export subsidies do not
apply to India as export subsidies as are subjected to
reduction commitments under the Agreement, are not
practiced in India.
• The Uruguay Round of Trade Negotiations did not bring
about trade liberalization in agriculture, as expected.
There has been no significant reduction in domestic as
well as export subsidies given by the developed
countries. The anticipated increase in exports of
agricultural products from developing countries,
therefore, has not materialised.
• Continuation of high domestic support to agriculture in
many developed countries is a cause for concern as it
leads to low international prices for farm produce.
• Implementation of the WTO Agreement on Agriculture
since 1995 has brought out the inadequacies inherent in
the Agreement. The ongoing negotiations in the WTO on
the Agreement on Agriculture present an opportunity for
us to rectify these inadequacies and inequalities.
Government have taken a series of measures to
safeguard our agriculture sector in the context of phase-
out of QRs -- i.e., import duties on a large number of agro
and other items have been substantially increased and
import of 131 products have been made subject to
compliance of Indian quality standards as applicable to
domestic goods;
In the Budget 2001-2002, customs duty on tea, coffee,
copra and coconut as well as desiccated coconut has
been raised from 35% to 70%. Similarly, duty on
refined edible oils except soyabean oil has been raised
to a uniform level of 85% and on crude edible oil to
75%. Although maintenance of QRs on imports are not
permitted, the government can, if the situation so
warrants, raise the applied tariffs within the bound
levels and also take measures such as anti-dumping
action, safeguard action, levy of countervailing duties
under certain circumstances as permitted under the
WTO Agreement
Government have consulted all stakeholders in
preparing proposals for the WTO negotiations on
agriculture. Extensive consultations have been held with the
State Governments, farmers' organisations, political parties,
NGOs, agricultural universities, experts & academicians and
all other stakeholders in formulating the proposals and these
consultations will be a continuing process.
 India has submitted its proposals to the WTO for the current
negotiations on the Agreement on Agriculture in the areas of
market access, domestic support, export competition and
food security.
 Food & livelihood security of our people, protection of
the interest of domestic farmers and maximising export
opportunities for Indian agricultural products are the
guiding principles of India's proposals at the WTO
negotiations on agriculture.
Thank You