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

WTOProtection 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 and TRIPS in particular

With regard to Agreements on Agriculture

MISAPPREHENSIONS ABOUT WTO

Potential benefits of

Agreement on

Agriculture

Removal of Quantitative

Restrictions.

UNDERSTANDINGAGREEMENT ON AGRICULTURE

(AOA)

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 AccessDomestic SubsidiesExport Subsidies

In addition, special concerns of developing countries and net food importing countries are also addressed.

MARKET ACCESSTariffication of Non Tariff Barriers (NTB’s)Reduction of Tariffs

By a simple average of 36% over 6 years for developed countriesBy a simple average of 24% over 10 years for developing countries

Minimum AccessNot 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 SpecificNon-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 sectorInput support to low income/resource poor farmersSupport for diversification from illicit narcotic crops

EXPORT SUBSIDYProhibitedOtherwise subject to reduction commitments

Value of Subsidy

By 36% over 6 years for developed countries By 24% over 10 years for developing countriesNo 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 SupportIndia notifies

AMS Product Specific for 19 crops Non product specific: Fertilizer, Irrigation

Electricity and seeds

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

INDIA’S COMMITMENTS

Market AccessNo tariffication; ceiling bindings of

100% for primary commodities 150% for processed agricultural products 300% for edible oils

Cont----/----

INDIA’S COMMITMENT

Domestic Support

Price Support for 19 productsAMS is negative by a large margin and below De Minimis

Export subsidy

India does not have these.No commitments

WHAT HAS HAPPENED SO FAR?

Value of Agri Exports

1994-1995

2000-2001

Percentage Change

In Rs. Crores

13712.00

28909.50 110.83

In Rs. Crores at 1993-94 prices

121.88 185.67 52.33

In Million Dollars

4227.30 6012.56 42.23

GROWTH OF AGRICULTURAL

EXPORTS IN POST-WTO PERIOD

Sl.No.

Item 1980-81 1990-91 2000-01

1. Total exports 8486 18143(113.80)

44400(144.72)

2. Total Agricultural Exports

2601 3521(35.37)

6013(70.77)

3. %share of Agri Exports to Total Exports

30.65 19.40(-36.70)

13.54(-30.20)

4. Total imports 15869 24075(51.7)

49720(106.52

5. Total Agricultural Imports

2030 1354(-33.26)

1676(23.78)

6. %share of Agri Imports to Total Imports

12.80 5.62(-56.1)

3.37(-40.03)

7. Value of Agri Imports as

78.04 38.45(-50.73)

27.88(-27.50)

TRENDS IN AGRICULTURAL TRADE OVER THE LAST TWO

DECADESVALUE IN US $ MILLION

* Figures in parentheses indicate percentage over the previous decade

CHANGES IN UNIT EXPORT PRICES (DOLLAR PER KG)

Sl.No.

Commodity 1994-1995

2000-2001

1. Fresh Fruits 0.13 0.60

2. Processed Fruits and Vegetables

0.54 0.64

3. Poultry and Dairy Products 0.42 1.73

4. Tea 2.05 2.13

5. Spices 1.26 1.45

6. Other Cereals 0.10 0.19

7. Non-Basmati Rice 0.24 0.25

8. Meat and Meat Preparations 1.01 1.07

9. Groundnut 0.63 0.50

10. Coffee 2.61 1.36

11. Basmati Rice 0.62 0.55

12. Wheat 0.15 0.12

13. Marine Products 3.51 2.75

14. Fresh Vegetables 0.89 0.20

15. Fruits and Vegetable seeds 1.16 1.09Source: CMIE Reports

Country and Category

Base 1995 1996 1997 1998

European Union 116 117 119 99 96

- Amber 102 62 61 56 52

- Blue - 28 28 22 22

-Green 14 27 30 21 22

Japan 74 68 60 56 34

- Amber 53 38 36 30 6

- Blue - - - - -

- Green 21 30 24 26 28

United States 56 62 60 58 64

-Amber 27 6 5 5 10

-Blue - 5 - - -

- Green 29 51 55 53 54

WTO DOMESTIC SUPPORTNOTIFICATIONS ($ BILLION)

Source: WTO Notifications

ESTIMATES OF SUPPORT TO AGRICULTURE IN OECD

(FIGURES IN US DOLLARS BILLION)

Item 1986-88

1997-99

1997

1998 1999

Producer Support Estimate (PSE)

246 267 246 271 283

Total Support Estimate (TSE)

308 347 329 352 361

Source : OECD data base

PERCENTAGE AGGREGATE MEASURE OF SUPPORT BY MAJOR

COUNTRIES Country as % of value agricultural

Year of Production

Domestic Support

EU 1997 48.03

Japan 1998 39.15

USA 1997-98 28.59

Canada 1997 10.60

INDIA’S AGGREGATE MEASUREMENT OF

SUPPORT (RS. CRORES)

Item 1986-89 1995-96 1996-97 1997-98

Product Specific

-26491.70 -29619.00 -30550.50 -28245.83

Non Product Specific

4581.40* 5772.06* 780.35 882.44

% of Value of Agricultural Production**

5.40 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 filed between developed and developing countriesAOA 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

INDIA’S OBJECTIVES

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

PROPOSALSAs 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 grainsUse of special safeguard in the event of a surge in imports or a decline in pricesMeasures for poverty alleviation, rural development and employment to be exempt from AMS.

Cont…….

PROPOSALSPrimary 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 countriesEventual abolition of TRQsTransparent 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 calculationsElimination 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 countriesDown payment by way of 50% reduction in trade distortion and tariffs by developed countries by the end of 2001Retaining 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

AgricultureAgreed 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

TRIPSAgreed 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 & EnvironmentAgreed 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 Basmati RiceSugar Potatoes

OnionEggs

Thank You