Presentation to the

IPC Seminar Challenges facing the Doha Development Round Trade Negotiations On Agriculture

By MR. DEVI DAYAL Former Secretary Deptt of Banking ,Ministry of Finance Government of India.

PART I Agriculture in India

Current Scenario and Policy Framework
2

Indian Agriculture has made rapid strides since independence

From food shortages and import to self-sufficiency and exports. From subsistence farming to intensive and technology led cultivation. Today , India is the front ranking producer of many crops in the world. Ushered in through the green, white, blue and yellow revolutions

Indian Agriculture- Some Facts

Total Geographical Area - 328 million hectares Net Area sown - 142 million hectares Gross Cropped Area 190.8 million hectares Major Crop Production (1999-2000)

Rice Wheat Coarse Cereals Pulses Oilseeds Sugarcane

89.5 million tonnes 75.6 million tonnes 30.5 million tonnes 13.4 million tonnes 20.9 million tonnes 29.9 million tonnes

Indian Agriculture- Some Facts

Contributes to 24% of GDP Provides food to 1Billion people Sustains 65% of the population : helps alleviate poverty Produces 51 major Crops Provides Raw Material to Industries Contributes to 1/6th of the export earnings One of the 12 Bio-diversity centers in the world with over 46,000 species of plants and 86,000 species of animals recorded
5

Major Achievements
India is

Largest producer in the world of pulses , tea , and milk Second Largest producer of fruits, vegetables, wheat , rice, groundnut and sugarcane.

IndianAgriculture Scenario STRENGTHS

WEAKNESS

Rich Bio-diversity Arable land Climate Strong and well dispersed research and extension system
Bridgeable yield crops Exports Agro-based Industry Horticulture Untapped potential in the N.E.

Fragmentation of land Low Technology Inputs Unsustainable Water Management Poor Infrastructure Low value addition
Unsustainable Resource Use Unsustainable Regional Development Imports

OPPORTUNITIES

THREATS

Current Concerns

Pressure of the Population on Land Skewed distribution of operational holdings Land Degradation Water Balance Low level of mechanization Low Fertilizer Consumption

The First Ever National Agriculture Policy was announced in July 2000. The Policy seeks to overcome these constraints and achieve

A Growth rate in excess of 4 percent per annum in the agriculture sector. Growth that is based on efficient use of resources, and conserves our soil, water , and bio diversity. Growth with equity, i.e. growth which is widespread across regions, and different classes of farmers. Growth that is demand driven and stabilizes domestic markets and maximizes benefits from exports in the face of Global Challenges. Growth that is sustainable ,technologically , environmentally, and economically.
9

The Policy has indicated a nine-fold package of policy initiatives to achieve the objectives

Development of Sustainable agriculture Food and Nutritional security Generation and Transfer of Technology Improvement of input efficiency Provision of incentives for agriculture Promotion of Investments in agriculture Strengthening of institutional infrastructure Better risk management Introduction of Management Reforms

10

TARGETS

Food Grain Production will be doubled in ten years, so as to make India hunger free . Special emphasis will be on horticulture production in order to achieve a quantum increase. Allied sectors like live stock, dairy poultry, fisheries, will be promoted Production of oilseeds and pulses will be raised substantially.

11

Strategies & Initiatives : Enhancing Value Addition

- 98% of fruits and vegetables are sold as fresh products.
-

processing accounts for only 7% of agricultural value.

wastage levels are extremely high.

Improved post harvest interventions: price support mechanism, grading, handling, storage, packaging, marketing, processing.

12

Strategies & Initiatives : Enhancing Value Addition

Draft National Policy on Food Processing prepared.

Draft Processed Food Development Act formulated. Package of promotional schemes available for infrastructure development and quality improvement.

To raise the processing level by 10% , an investment of approximately Rs 1400 billion required.
13

Indias International Trade - 2001-02

Agriculture Non-Agriculture 2500 2000
120 289

1500
1000 500 0 Exports Imports 2148 1736

Rs Billions
14

Strategies & Initiatives : Promotion of Exports

Indias competitive advantage - Diverse agro climatic conditions.

- Sufficiency of Inputs. - Reasonable labour costs.

Agriculture exports from India account for less than 1% world trade in Agriculture commodities. - Target is to raise Indias share to 2% .

Thrust Areas
Improvement and maintenance of quality. Consonance with International Standards. Strengthening of Infrastructure. Identification of niche products and markets.
15

Indias Agricultural Export Potentials

Marine Products Rice Wheat Condiments and Spuces Cashew Tea Coffee Castor Jute Fruits and Vegetables- Onions, Mango, Grapes, Banana, Tomato , Potato , Lichchi ,etc.
16

PART II
Negotiations on WTO Agreement On Agriculture

17

Uruguay Round Agricultural Negotiations

Prompted by surpluses in post-war period and consequent disarray in world agriculture. Disciplines with regard to all measures affecting trade in Agriculture envisaged. Including not only import access but also domestic policies, export subsidies , sanitary and phytosanitary measures.
18

Agreement on Agriculture (AOA)

AOA and Agreement of Application on Sanitary and Phytosanitary Measures were negotiated in parallel Decision on measures concerning the possible negative effects of the reform programme o least developed and net food importing developing countries also a part of the package

19

Mandated Negotiations under Article 20 of AOA for continuation of the reform process

Negotiations to commence one year before the end of the implementation period i.e. in January 2000, taking into account: Experience in implementing reduction commitments Effect on world trade in Agriculture Non Trade concerns, S&D treatment Further Liberalization

20

Two Fold Approach

Experience in the implementation of the Agreement leads us to conclude that basically the problems can be tackled on two planes, namely;
a)

Through positive efforts and binding commitments by Developed Countries in Undertaking substantive reductions in tariff levels, tariff escalation, trade distortive domestic support and elimination of export subsidies and tariff peaks,etc

21

Two Fold Approach

b.

Through specific and targeted S&D provisions within the existing framework of AOA , which would go beyond longer transition periods and reduced rates of reduction, keeping in view the developmental objectives in developing countries

22

Indias Priorities / Recommendations in Negotiations

Domestic Support
Remove ambiguities in the calculation of AMS
Empty Blue Box and put a ceiling on all forms of direct

payments and include these in AMS

Negative product specific support figures should be allowed to

be adjusted against the positive non-product-specific AMS support figures

23

Indias Priorities / Recommendations in Negotiations

Domestic Support
Product specific support provided to low-income resource-

poor farmers should be excluded from AMS calculations

Total domestic support should be brought down below the de

minimis level within a maximum period of three years by developed countries and five years by developing country members

24

Indias Priorities / Recommendations in Negotiations

Food Security & Development Concerns
Strengthen mechanisms to deal with genuine food security

concerns of developing countries through a food security box Developed country members should not be allowed to use SPS measures for protectionist purposes by prescribing overly stringent trade restrictive SPS measure for denying market access to developing countries

25

Indias Priorities / Recommendations in Negotiations

All measures taken by developing countries for poverty

alleviation from rural development, rural employment and diversification of agriculture should be exempted from any reduction commitments

Market Access
Appropriate level of tariff bindings to be allowed to be

maintained by developing countries as a Special & Differential Measure , keeping in mind their developmental needs and high distortions prevalent in international markets

26

Indias Priorities / Recommendations in Negotiations

Developing country members should be exempt from any

obligation to provide any minimum market access.

A special safeguard mechanism including a provision for

imposition of quantitative restrictions under specified circumstances to be made available to all developing countries in case of search in imports or decline in prices etc.

27

Indias Priorities / Recommendations in Negotiations

Low tariff bindings in developing countries as could not be

rationalized in earlier negotiations should be allowed to be raised to the ceiling bindings for similar category of products, committed during the Uruguay Round

28

Indias Priorities / Recommendations in Negotiations

Export Competition
Bring down excessively high tariffs to moderate levels in

developed countries through an appropriate formula Tariff reductions for developing countries should commensurate with their developmental needs Abolish TRQs. Restrictions on trade only in the form of tariffs and tariffs only If not possible ,then make their administration transparent , fair and equitable
29

Status of Negotiations

Negotiations in agriculture commenced with the first special

session of the Committee on Agriculture held in March 2000

The first phase of the negotiations ended in March 2001

India also filed its proposals in the areas of market access,

food security, domestic support and export subsides & cosponsored proposals on market access and export subsidies

30

Status of Negotiations

The second phase began in May 2001 and has concluded with

the Special Session meeting of February 2002

Country positions fairly well defined during this phase of

negotiations

A non paper on S&D presented by India in the Special Session held in February 2002

31

Developed Country Positions

EU against fast track approach to liberalization Nordic Countries and Japan for continuation of

subsidy regimes in agriculture Australia , New Zealand and Canada (of Cairns Group) favor a totally market oriented approach and oppose trade distorting subsidies and protectionist regimes of EU and Japan US , opposing EU, but not completely with Cairns Group either, aggressively seeks market access in other WTO member countries
32

Cairns Group Position

Demands elimination of export subsidies and

domestic subsidies as goals of on going agricultural negotiations Calls for better information and analysis of tariff rates tariff quota administration Supports transparent and targeted S&D for developing countries

33

Developing Country Positions

India, Pakistan, Sri Lanka, ASEAN etc highlight

significance of role of agriculture in their economies and seek to preserve domestic policy flexibility to guard food security concerns Developing Cairns Group Countries (Argentina, Brazil ,South Africa) favour a market oriented & non trade distortive approach Net Food Importing Countries (Single Crop economies) like Egypt, Mauritius, etc favour gradual and phased reduction in export subsidies
34

Indias Objectives / Strategy in the Negotiations

Extend the use of SSGs to all countries and make their use

more transparent Get rid of special clauses and bilateral commodity specific arrangements Eliminate discretion in application of SPS standards Abolish export subsidies completely within a time frame of 3 to 5 years. Include all forms of export subsidies in the calculation of total subsidies

35

Indias Objectives / Strategy in the Negotiations

Flexibility to pursue our domestic support policies for

agriculture to protect our food security and livelihood concerns Retaining appropriate level of bound tariffs for protecting our farmers Seek additional opportunities for increasing our exports

36

Doha Ministerial Declaration

The long term objective of establishing a fair and market oriented trading system reaffirmed Need for fundamental reform through strengthened rules and specific commitments on support and protection reiterated Comprehensive negotiations sought for affecting:
substantial improvements in market access

Reductions leading to eventual phasing out of all forms

of export subsidies

37

Doha Ministerial Declaration

Substantial reduction in trade distorting domestic support Special & Differential treatment to be an integral part of the negotiations Modalities for further commitments to be finalised by 31March 2003 Comprehensive draft schedules to be submitted by the 5th Session of the Ministerial Conference

38

Some Elements of Indian Work Programme

Market Access

Tariff line wise analysis required to be undertaken to formalize our position with regard to tariff reductions In depth study with regard to the utility and application of the special safegaurd mechanism for developing countries like India Formulate our position on Tariff Rate Quotas (TRQs)with a view to increasing our market access through the same

39

Some Elements of Indian Work Programme

Domestic Support and Export Subsidies

Review of the Green Box measures to make them more development oriented An analysis of the current level of trade distorting support and subsidies which are required to be disciplined in view of the prevalent distortions in the international market Developing disciplines on export credits ,export guarantees, insurance , etc

40

Some Elements of Indian Work Programme

Special and Differential provisions

Specific modalities under the 3 areas of market access , domestic support and export subsidies would need to be developed This would involve development of sound economic justification for seeking either differential rate of reduction or specific measures so as to safegaurd food and livelihood security objectives in developing countries agricultural sector

41

THANK YOU

42