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INDIA AND THE WTO IN THE CONTEXT OF AGRICULTURE

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.

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INDIA AND THE WTO IN THE CONTEXT OF AGRICULTURE

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  1. INDIA AND THE WTO IN THE CONTEXT OFAGRICULTURE

  2. HOW IS WTO DIFFERENT FROM GATT?

  3. WTO IS GATT PLUS WTO covers areas well beyond GATT • Textile and Agriculture • Intellectual Property Rights • Services • Investment

  4. BASIC PRINCIPLES OF WTO • Protection to domestic industry through tariffs. • Binding of tariffs. • Most Favoured Nation (MFN) Treatment. • National Treatment

  5. WORD TRADE ORGANISATION How to make the best of it?

  6. WORLD TRADE ORGANISATION • Was there any option available?

  7. 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

  8. MISAPPREHENSIONS ABOUT WTO • Potential benefits of Agreement on Agriculture • Removal of Quantitative Restrictions.

  9. UNDERSTANDINGAGREEMENT ON AGRICULTURE(AOA)

  10. 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.

  11. 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.

  12. 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

  13. 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

  14. 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.

  15. 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.

  16. 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

  17. 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

  18. 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

  19. INDIA’S COMMITMENTS • Market Access • No tariffication; ceiling bindings of • 100% for primary commodities • 150% for processed agricultural products • 300% for edible oils Cont----/----

  20. INDIA’S 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

  21. WHAT HAS HAPPENED SO FAR?

  22. GROWTH OF AGRICULTURAL EXPORTS IN POST-WTO PERIOD

  23. TRENDS IN AGRICULTURAL TRADE OVER THE LAST TWO DECADES VALUE IN US $ MILLION * Figures in parentheses indicate percentage over the previous decade

  24. CHANGES IN UNIT EXPORT PRICES (DOLLAR PER KG) Source: CMIE Reports

  25. WTO DOMESTIC SUPPORTNOTIFICATIONS ($ BILLION) Source: WTO Notifications

  26. ESTIMATES OF SUPPORT TO AGRICULTURE IN OECD (FIGURES IN US DOLLARS BILLION) Source : OECD data base

  27. PERCENTAGE AGGREGATE MEASURE OF SUPPORT BY MAJOR COUNTRIES

  28. INDIA’S AGGREGATE MEASUREMENT OF SUPPORT (RS. CRORES) Note: * - does not exclude support to resource poor farmers ** - indicated only for non-product specific support Source: Ministry of Commerce, Government of India

  29. 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.

  30. 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

  31. S&D PROVISIONS • Ostensibly designed to create a level playing filed 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

  32. 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.

  33. 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…….

  34. 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…….

  35. 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…….

  36. 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…….

  37. 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

  38. WHAT HAPPENED AT DOHA?

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

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

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

  42. 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

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

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

  45. FUTURE STRATEGY FOR DEVELOPING COUNTRIES WITH REGARD TO AGRICULTURE

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

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

  48. FUTURE STRATEGY • Proactive preparations for penetrating the markets when the duties and the subsidies come down. Are we prepared?

  49. FUTURE STRATEGY • Active participation in Codex meetings. • Forging common platform for SPS related barriers.

  50. FUTURE STRATEGY • Emphasis on quality within the country……… the “Quality” culture has to be developed

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