IMPLICATIONS OF WTO ON INDIAN

AGRICULTURE SECTOR
1

INTRODUCTION
TOPICS TO BE COVERED.
1.
2.
3.
4.

GATT
WTO
INDIAN AGRICULTURE.
WTO AND INDIAN AGRICULTURE.

GATT
General Agreement on Tariffs and

Trade
GATT was formed in 1947 and lasted
until 1994
was replaced by the World Trade
Organization
On 1 January, 1948 the agreement
was signed by 23 countries.
GATT held a total of 8 rounds.

Uruguay Round - 1986-1993

The Uruguay Round began in 1986. It

was the most ambitious round to date,

hoping to expand the competence of the
GATT to important new areas such as
services, capital, intellectual property,
textiles, and agriculture. 123 countries
took part in the round.

WTO
World Trade Organization
The WTO was born out of theGeneral

Agreement on Tariffs and Trade (GATT).

Headquarters : Geneva, Switzerland
Formation : 1 January 1995
Membership : 153 member states
Budget
: 163 million USD (Approx).

WTO
It is an international organization

designed to supervise and liberalize

international trade.
The WTO has 153 members, which
represents more than 95% of total
world trade.
WTO cooperate closely with 2 other
component IMF and World Bank.

Find The Constitution of WTO

WTO vs GATT
GATT

WTO

It was ad hoc and

provisional

It is permanent, more
authority than GATT

It has no provision for

creating an organization.

It has legal basis because

member nations have verified
the WTO agreements

It allow contradiction in
local law and GATT
agreements.

It doesn't allow any

contradiction in local law.

Deals with trade in goods Deals in trade in services and

intellectual property as well
Dispute settlement less

Faster and more automatic

PURPOSE OF WTO
WTO is to ensure that global trade

commences
predictably.

smoothly,

freely

and

Transparency in trade policies.

Work as a economic research and

analysis centre.

AIM OF WTO

To create economic peace and

stability in the world through a
multilateral system based on
consenting member states, that
have ratified the rules of the WTO in
their individual countries as well.

List down the Objectives of WTO

to implement the new

world trade agreement.
promote multilateral
trade
promote free trade
enhance competitiveness

OBJECTIVES
OF WTO

increase the level of

production and
productivity with
employment
expand and utilize world
resources
improve the level of living
and speed up economic
development
development
poorest nation

of

List down the Functions of WTO

FUNCTIONS OF WTO
Administering the
international trade
Cooperating with IMF
and World Bank
Settling trade related
disputes

Reviewing trade related

economic policies
Providing technical
assistance and
guidance

Acting as forum for

trade liberalization

16

Trade in goods

Trade Related
Intellectual Property
Rights (TRIPs)

Scope
of
WTO

General Agreements
on Trade in Services
(GATS)

Trade related
investments
Measures (TRIMs)

Arguments in
favour of WTO

Increase in inflow of foreign

investment
Increase in agricultural export
Increase in foreign trade
Benefits for clothing and textile
industry
Improvement in services
Inflow of better technology and
better products

Find out more on WTO

Agreements.
GATS
TRIPs
TRIMs

WTO AND AGRICULTURE

Introduction

After over 7 years of negotiation the

Uruguay
Round
multilateral
trade
negotiations
were
concluded
on
December 1993 and were formally
ratified in April 1994 at Marrakesh,
Morocco.
The WTO agreement on agriculture was
one of the main agreements which were
negotiated during the Uruguay round.

Why agricultural sector?

In Developing Countries
Agriculture
Rural

Play a crucial role in

reducing poverty

Development
These sectors
Contribute a large share of GDP
primary Source of Employment

AGREEMENT ON AGRICULTURE
The WTO Agreement on Agriculture

contains provisions in three broad

areas of agriculture
1. Market access.
2. Domestic support.
3. Export subsidies.

MARKET ACCESS
This includes tariffication, tariff

reduction and access opportunities.

Tariffication means that all non-tariff
barriers such as.
1. Quotas
2. Variable levies
3. Minimum import prices
4. Discretionary licensing
5. State trading measures

AOA PROVISIONS ON MARKET ACCESS

Prohibition of quantitative restriction

on import
Tariff binding and reduction
Bound versus Applied tariffs
Tariff Rate Quota
Special safeguard measures

DOMESTIC SUPPORT
WTO uses a traffic light analogy to group

program

Green means permitted

Amber means slow(be reduced)
Red means forbidden
NO RED BOX FOR AOA
But things exceeding reduction commitment

levels in Amber box are prohibited

One more box Blue means subsidies that are
tied to programs that limit production

MEASURE BE PLACED IN GREEN BOX

1. It must be publicly funded govt. program
and does not involve transfers from
consumers.
2. It must not have the effect of price support
to producer
Or it must comply to these criteria
. A general service e.g. pest and disease
control, training, extension, advisory
services, health, safety etc.
. Stockholding of product for food security
. Domestic food aid
. Income insurance or income safety program
. For natural disaster relief etc.

MEASURE BE PLACED IN BLUE BOX

Be based on fixed area and yield
Be made of 85% or less of the base
level of production
If livestock payments, be made on
fixed no of head

MEASURE BE PLACED IN AMBER BOX

Product specific domestic support

Non-product specific domestic support

27

AoA AND RED BOX

The Agriculture Agreement has no red
box, although domestic support
exceeding the reduction commitment
levels in the amber box is prohibited;
and there is a blue box for subsidies
that are tied to programmes that limit
production. There are also exemptions
for developing countries (sometimes
called an S&D box).

EXPORT SUBSIDIES
28

Export subsidy reduce the price paid by foreign

importer, which mean domestic consumer pay

more than foreign consumer
Export subsidy in Agricultural Sector
Direct export subsidies contingent on export
performance
Sale of non-commercial product on less prices
than domestic market
Producer financed subsidy
Cost reduction measures

EXPORT SUBSIDIES
29

Some of agricultural product under 23 product groups,

such as wheat, coarse grain, sugar, beef, cheese and

oilseeds.
Rates of cut

Developed countries
21%

by volume
36% corresponding budgetary outlay
Over 6 years

Developing countries
14%

by volume
24% corresponding budgetary outlay
Over 10 years

SPECIAL AND DIFFERENTIAL TREATMENT

1.

These include purchases for and sales from food

security stocks at administered prices provided that
the subsidy to producers is included in calculation
of AMS.

2.

Developing countries are permitted untargeted

subsidised food distribution to meet requirements
of the urban and rural poor.

IMPLICATIONS OF AOA ON INDIA

Market access
Developing countries like India who had not converted their quantitative
restrictions into tariffs, were allowed to have ceiling bindings, which were not
subjected to reduction commitments
India had bound its tariff as 100% for primary products, 150% for processed

products and 300% for edible oils

India has not taken any commitment to provide minimum market access

opportunities which other countries who had tariffed their QRs had to undertake 5%
of domestic consumption at the end of implementation period
Though India is not entitled to use the Special Safeguard Mechanism of the

agreement, it can safeguard action under WTO Agreement of safeguards, if

there is a surge in imports causing serious injuries ( or threats) to the domestic
producers

Continued.
Domestic Support
For agricultural sector, domestic support upto 10% of total value of
agricultural produce is allowed in developing countries, and 5% in
developed countries
In India, the product specific support is negative, while non product

specific support( Subsidies on power, irrigation, fertilisers, etc.) are

well below the permissible level of 10% of value of agricultural
output
So, India under no obligation to reduce domestic support currently

extended to the agricultural sector

Continued
Export subsidies
Export subsidies of the kind listed in the AOA, which attract
reduction commitments are not extended in India
Developing countries free to provide certain subsidies

subsidising of export marketing costs, internal and

international transports and freight charges, etc.
India making use of these subsidies in certain schemes of

APEDA (Agricultural and Processed food products Export

Development Authority)

HOW INDIA WILL BE IMPACTED BY WTO TRADE

FACILITATION AGREEMENT
Due to Indias outdated farming techniques, there are worries

that Indian farmers will struggle to compete once trade

barriers are removed
As a developing country, needs to invest in modernized
equipment.
It is not mature enough to compete in global market, with
practices from US and EU it will take a huge hit
A classic case is Indian farmers having to buy high-cost

genetically engineered seeds and chemicals from

multinational corporations like Monsanto, which has been
eyeing Indias vast farming sector for its products.

CRITISICM
Civil society for reducing tariff protection for small farmers, a

key source of income for developing countries

NGOs for categorising subsidies. . As efficient agricultural
exporters press WTO members to reduce their trade-distorting
amber box and blue box support, developed countries green box
spending has increased a trend widely expected to continue.
A book from the International Centre for Trade and Sustainable
Development shows how green box subsidies do in fact distort
trade, affect developing country farmers and can also harm the
environment.
Third World Network states that; "This has allowed the rich
countries to maintain or raise their very high subsidies by
switching from one kind of subsidy to another

THE BALI DECISION

Based on Stockholding :- developing countries fear they

could breach the limits they have agreed on trade-distorting

domestic support
Used Green Box supports, which was allowed without any
limit because they do not distort trade
They started altering the trade-distorting support using a
different method of taking inflation into account, or a peace
clause shielding any breaches of the agreed limits from legal
challenge
The peace clause is an interim solution. Members agreed in
Bali to find a permanent solution by 2017 (the 11th Ministerial
Conference)

AFTER THE BALI

The first proposal for a permanent solution came from the G33

on 16 July 2014, -- to move these programmes into the Green

Box
In the General Council on 25 July 2014, India, a G33 member,
complained of slow progress on the permanent solution
They spelt out that the permanent solution should be found
through meetings of the agriculture negotiations, but in
dedicated sessions that would be accelerated and separate
from the rest of the Doha Round agriculture talks. And, they
said, negotiations would also continue to progress on all three
pillars of the agriculture negotiations

After US deal, India to push for Doha

agenda at WTO in 2015

India and the US -- key to get the multilateral
trading system back on track
India also wants to bring back the long-stalled
Doha round on the table

ISSUES FOR NEGOTIATIONS

India argued for additional flexibility by

appropriate adjustments to the provisions

of the AoA, in order to enable us to pursue
our legitimate non-trade concerns
India believes that a focused discussion
on the subject will contribute to increased
awareness to the non-trade concerns such
as food security and rural employment

IMPACT ON INCREASING AGRI EXPORTS

FROM INDIAS A RESULT OF WTO AOA
More to gain from the trade reforms
Reduction in export subsidy and

domestic support to the agricultural

sector by the developed countries may
lead to a decrease in production in
those countries.
Scope for expansion of exports from
developing countries

DOHA DEVELOPMENT AGENDA (DDA)

Early 2000 Negotiations on agriculture began under Article 20 of

the WTO Agriculture Agreement

November 2001 - Fourth Ministerial Conference in Doha, Qatar

WTO Member governments agreed to launch new negotiations and

other issues, in particular the implementation of the present
agreements.
121 governments submitted a large number of negotiating
proposals with respect to agriculture
The declaration confirmed and elaborated the objectives, and set a
timetable. Agriculture became part of the single undertaking in
which virtually all the linked negotiations were to end by 1
January 2005
long-term objective in the WTO Agreement: to establish a fair and
market-oriented trading system through a programme of
fundamental reform.

Continued.
The programme included strengthened rules, and specific

commitments on government support and protection for

agriculture.
Purpose: to correct and prevent restrictions and
distortions in world agricultural markets.
The Implementation decision included:
Rural development and food security for developing
countries
Least-developed and net food-importing developing
countries
Export credits, export credit guarantees or insurance
programmes
Tariff rate quotas

The member Government aimed at:

1. Market access: substantial reductions

2. Exports subsidies: reductions in all forms of export
subsidies .
(1 August 2004 framework members agreed to eliminate
export subsidies by a date to be negotiated)
3. Domestic support: substantial reductions for supports that
distort trade
(1 August 2004 framework -developed countries pledged to
slash trade-distorting domestic subsidies by 20% from the first
day any Doha Agenda agreement is implemented)

September 2003 - Fifth Ministerial Conference in Cancn,

Mexico, was intended as a stock-taking meeting but the meeting

was soured by discord on agricultural issues, including cotton.
1 August 2004 Some real progress was evident when members

agreed on a framework with a set of decisions in the General

Council (sometimes called the July 2004 package).
January 2005 Original deadline was missed.
end of 2006 - Members unofficially aimed to finish the

negotiations, but again unsuccessfully.

December 2005- Further progress in narrowing members

differences was made at the Hong Kong Ministerial

Conference
July 2008- ministers came to negotiate modalities in

Geneva where Director-General Pascal Lamy said they had

agreed tentatively on a number of issues but were stuck on the
special safeguard mechanism for developing countries.
new agriculture negotiations chairperson, Ambassador David

Walker of New Zealand, has been holding talks on unsettled

issues arising from the December 2008 draft

Current status
28 November 2014 Members seek more

information on policies affecting latest cotton market

trends
17 December 2014 During an informal meeting
WTO members discuss how to advance services
negotiations for post-Bali work programme which
will be determined based on the progress in
agriculture and non agricultural market access
negotiation.

TRENDS IN INDIA'S AGRICULTURAL EXPORTS DURING 1990-91 TO 2010-11

Year

47

India's Total

Annual

Agri-

Annual

% share of Agri-

Exports (Rs.

Growth

exports

Growth

Exports in Total

Crore)

Rate (%)

(Rs. Crore)

Rate (%)

Exports

1990-91

32553

17.7

6317

16.5

19.4

1991-92

44041

35.3

7894

24.9

17.9

1992-93

53688

21.9

9082

15.0

16.9

1993-94

69751

29.9

12632

39.1

16.1

1994-95

82674

18.5

13269

5.0

16.0

1995-96

106353

28.6

20344

53.3

19.1

1996-97

118817

11.7

24362

19.8

20.5

1997-98

130100

9.5

24626

1.1

18.9

1998-99

139752

7.4

25387

3.1

18.1

2000-01

203571

27.6

27288

12.3

13.4

2001-02

209018

2.7

28144

3.1

13.4

2002-03

255137

22.1

32473

15.4

12.7

2003-04

293367

15.0

34615

6.6

11.7

2004-05

375340

27.9

38078

10.0

10.1

Source: 1. Govt. of India, Economic Survey- 2011-12, P. A 80.

2005-06
456418
21.6
45220 Statistics At a Glance18.8 2010.
2. Govt.
of India, Ministry of
Agriculture, Agricultural

0.9

ANNUAL COMPOUND GROWTH RATES (ACGR) OF INDIA'S TOTAL

EXPORTS
AND AGRICULTURAL EXPORTS

48

INDIA'S % SHARE IN TOTAL WORLD AGRI- EXPORTS

49

Trends in India's trade (1995-96 t0

2009-10) Rs. In crores

50

HURDLES IN THE WAY OF

AGRICULTURAL EXPORT

51

52

SUGGESTIONS
Based on the above discussion the following steps may be relevant to
boost the space of growth of Agri-exports from India in near future.
1. Lack of co- ordination among various department engaged in the
promotion of agricultural exports has created number of problems.
Hence, there is an urgent need to establish efficient co-ordination
among these departments.
2. In the wake up new economic policy of liberalization and WTO
rules special care should be taken by the government to protect the
interest of exporting farmers.
3. It is also necessary to create the awareness among the exporting
farmers with regards to sanitary and phyto-sanitary standards
imposed by developed countries.
4. Agri-exports need to organize themselves untidily to face global
competition instead of each exporter trying to export in small
quantities in an unorganized manner.

53

[Link] present, new emerging markets like Eastern Europe, China, UAE,
African countries have a lot of potential for absorbing more Agriexports. Hence, the efforts should be made to tap the potential of
there markets
6. The apex marketing agency like APEDA should intensify and speedup the export procedure of quality agricultural product.
7. High rate of interest for export finance make India's exports noncompetitive. Therefore, the rate of interest changed by financial
intuitions is reasonable.
8. The government should come forward to invest on basic
infrastructure. In this regard a complete cold chain facility needs
to be created on urgent basis.
9. Sincere and dedicated efforts are also needed to increase the
quality of exportable fruits and vegetables because there is
immense scope for increasing exports of fruits and vegetables in
India.
10. The proper branding of agricultural products needs to be
promoted as the branded products gets higher prices in comparison
to unbranded items.

India

as a developing economy, has been

benefitted being a founding member of
World trade organization. The country at
large has seen many significant changes
which have taken place after the
formation of WTO. There are some issues
which are yet to be sorted out with the
WTO and but by and large things are
falling in shape for the Indian Economy.

Conclusion
54

k
n

a
h
T u
o
Y

55