INDIA AND THE WTO IN THE CONTEXT OF AGRICULTURE

HOW IS WTO DIFFERENT FROM GATT?

WTO IS GATT PLUS

WTO covers areas well beyond GATT
Textile and Agriculture Intellectual Property Rights Services Investment

BASIC PRINCIPLES OF WTO

Protection to domestic industry through tariffs. Binding of tariffs. Most Favoured Nation (MFN) Treatment. National Treatment

WORD TRADE ORGANISATION

How to make the best of it?

WORLD TRADE ORGANISATION Was there any option available?

JOINING WTO. EVEN IF THERE WAS AN OPTION AVAILABLE

With regard to Agreements in General and Agreement on Textiles in particular With regard Agriculture to Agreements on

MISAPPREHENSIONS ABOUT WTO

Potential
Removal of

benefits

of

Agreement on Agriculture Quantitative Restrictions.

UNDERSTANDING AGREEMENT ON AGRICULTURE (AOA)

AGREEMENT ON AGRICULTURE (AOA)

AOA and the Agreement on Application of 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 (NTBs) 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 measures refer to direct payments under production limiting programmes, which are also not subject to reduction commitments.
Amber Box measures include product specific support as well as non-product specific support extended to the farm sector. These are subject to reduction above the de minimis level.

DOMESTIC SUPPORT
Other exemptions include:
Investment subsidies in the Agriculture sector Input support to low income/resource poor farmers Support for diversification from illicit narcotic crops

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

NOTIFICATION OBLIGATIONS
Members bound to notify changes in Market Access, Export Subsidies and Domestic Support India notifies
AMS
Product Specific for 19 crops Non product specific: Fertilizer, Irrigation Electricity and seeds

Green Box Special & differential , provisions for low income/ resource poor farmers

INDIAS COMMITMENTS
Market Access
No tariffication; ceiling bindings of
100% for primary commodities 150% for processed agricultural products 300% for edible oils Cont----/----

INDIAS COMMITMENT
Domestic Support
Price Support for 19 products

AMS is negative by a large margin and below De Minimis

Export subsidy
India does not have these. No commitments

WHAT HAS HAPPENED SO FAR?

GROWTH OF AGRICULTURAL EXPORTS IN POST-WTO PERIOD

Value of Agri 19942000-2001 Exports 1995 In Rs. Crores 13712.00 28909.50 In Rs. Crores 121.88 at 1993-94 prices In Million 4227.30 Dollars 185.67 Percentage Change 110.83 52.33

6012.56

42.23

TRENDS IN AGRICULTURAL TRADE OVER THE LAST TWO VALUE IN US $ MILLION DECADES
Sl.No. Item 1980-81 1990-91 2000-01

1.
2. 3.

Total exports
Total Agricultural Exports %share of Agri Exports to Total Exports

8486
2601 30.65

18143 (113.80)
3521 (35.37) 19.40 (-36.70)

44400 (144.72)
6013 (70.77) 13.54 (-30.20)

4.
5. 6.

Total imports
Total Agricultural Imports %share of Agri Imports to Total Imports

15869
2030 12.80

24075 (51.7)
1354 (-33.26) 5.62 (-56.1)

49720 (106.52
1676 (23.78) 3.37 (-40.03)

7.

Value of Agri Imports as

78.04

38.45 (-50.73)

27.88 (-27.50)

* Figures in parentheses indicate percentage over the previous decade

WTO DOMESTIC SUPPORT NOTIFICATIONS ($ BILLION)

Country and Category European Union - Amber - Blue -Green Base 116 102 14 1995 117 62 28 27 1996 119 61 28 30 1997 99 56 22 21 1998 96 52 22 22

Japan
- Amber - Blue - Green United States

74
53 21 56

68
38 30 62

60
36 24 60

56
30 26 58

34
6 28 64

-Amber
-Blue - Green

27
29

6
5 51

5
55

5
53

10
54

Source: WTO Notifications

PERCENTAGE AGGREGATE MEASURE OF SUPPORT BY MAJOR COUNTRIES

Country as % of value agricultural EU Japan USA Year of Production 1997 1998 1997-98 Domestic Support 48.03 39.15 28.59

Canada

1997

10.60

INDIAS AGGREGATE MEASUREMENT OF SUPPORT (RS. CRORES)

Item Product Specific Non Product Specific 1986-89 -26491.70 1995-96 -29619.00 1996-97 -30550.50 1997-98 -28245.83

4581.40*

5772.06*

780.35

882.44

% of Value of 5.40 Agricultural Production**

7.52

1.83

2.07

Note: * - does not exclude support to resource poor farmers ** - indicated only for non-product specific support Source: Ministry of Commerce, Government of India

MAJOR COUNTRY POSITIONS

EU, Japan and certain Nordic countries advocating multifunctionality in an attempt to continue with the high degree of protection currently available to their agriculture. Cairns Group of agriculture exporting countries (18) calling for substantial reduction in tariffs, domestic support and elimination of export subsidies.

MAJOR COUNTRY POSITIONS

United States looking for greater market access for its products, championing trade in genetically modified products, calling for reduction in tariffs and trade distorting support. Developing countries having a difference of opinion keeping in view their status as net importers of food or exporters of agricultural products

S&D PROVISIONS
Ostensibly designed to create a level playing field between developed and developing countries AOA provides S&D treatment favouring the developed countries, i.e. the continuance of Blue Box, export subsidies, unlimited Green Box and domestic support levels and TRQs

INDIAS OBJECTIVES
To preserve flexibility in domestic support policies to ensure food and livelihood security. To create opportunities for a meaningful expansion of agricultural exports.

PROPOSALS
As a S&D measure, developing countries to be allowed to maintain appropriate levels of tariffs Developing countries to retain flexibility for public stock holding and public distribution of food grains Use of special safeguard in the event of a surge in imports or a decline in prices Measures for poverty alleviation, rural development and employment to be exempt from AMS.
Cont.

PROPOSALS
Primary agricultural commodities like jute, rubber, coir and primary forest produce which provide employment and livelihood to many to be covered by AOA. Exemption to developing countries from any obligations to provide minimum market access. Historical low tariff bindings to be rationalised commensurate with bindings on similar category of products under the Uruguay Round. Negative product specific support to be allowed to be adjusted against positive non-product specific support.
Cont.

PROPOSALS
To achieve meaningful market access it is proposed to seek:
Substantial reduction in tariffs, tariff peaks and tariff escalation by developed countries Eventual abolition of TRQs Transparent administration of TRQs with preference to developing countries in the interregnum
Cont.

PROPOSALS
Suitable accounting of all trade distorting support (e.g. paras 5,6,&7 of Annex 2 and Art. 6.5 of AOA) in the AMS calculations Elimination of all forms of export subsidies including export credits, guarantees, insurance etc. by developed countries. Flexibility available to developing countries under ASCM to be preserved in AOA
Cont.

PROPOSALS
Peace clause not to be extended for developed countries Down payment by way of 50% reduction in trade distortion and tariffs by developed countries by the end of 2001 Retaining and strengthening the existing S&D provisions

WHAT HAPPENED AT DOHA?

AT DOHA
Implementation related concerns
Agreed to negotiate on outstanding implementation issues which shall be an integral part of the work programme

AT DOHA
Agriculture
Agreed to a comprehensive negotiation for substantial improvement in market access, phasing out of export subsidies and reducing domestic support.

AT DOHA
Market access for non agricultural products
Agreed to negotiate for reduction of tariffs, including peak tariffs and removal of non-tariff barriers

AT DOHA
TRIPS
Agreed to consider extension of the protection of geographical indications provided for in Article 23. Waiver from TRIPs for cheap medicines overriding patents in times of public health emergencies

AT DOHA
Trade & Investment/Trade & competition/Government procurement/Trade facilitation
Negotiation to take place but through explicit consensus

AT DOHA
Trade & Environment
Agreed to negotiate on the relationship between existing WTO rules and specific trade obligations set out in multilateral environment agreements.

FUTURE STRATEGY FOR DEVELOPING COUNTRIES WITH REGARD TO AGRICULTURE

FUTURE STRATEGY
Ensure reduction of AMS and duties in letter and spirit . The implementation issues

FUTURE STRATEGY
Forge a common platform to change the rules of the game: special and differential treatment, AMS, reduction of duties.

FUTURE STRATEGY
Proactive preparations for penetrating the markets when the duties and the subsidies come down.

Are we prepared?

FUTURE STRATEGY
Active participation in Codex meetings.

Forging common platform for SPS

related barriers.

FUTURE STRATEGY
Emphasis on quality within the country the Quality culture has to be developed

FUTURE STRATEGY
Identify subsidies which are WTO compatible Agri Export Zones are a move in this direction.

FUTURE STRATEGY
Take a fresh look at agricultural commodities which are being supported and move towards such commodities which are market driven rather than State driven
Wheat Durum Wheat

Rice Sugar

Basmati Rice Potatoes Onion Eggs

Thank You