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INDIA AND THE WTO IN THE CONTEXT OF AGRICULTURE. HOW IS WTO DIFFERENT FROM GATT?

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Presentation on theme: "INDIA AND THE WTO IN THE CONTEXT OF AGRICULTURE. HOW IS WTO DIFFERENT FROM GATT?"— Presentation transcript:

1 INDIA AND THE WTO IN THE CONTEXT OF AGRICULTURE

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 UNDERSTANDING AGREEMENT 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

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 Value of Agri Exports Percentage Change In Rs. Crores In Rs. Crores at prices In Million Dollars GROWTH OF AGRICULTURAL EXPORTS IN POST-WTO PERIOD

23 Sl.No.Item Total exports (113.80) (144.72) 2.Total Agricultural Exports (35.37) 6013 (70.77) 3.%share of Agri Exports to Total Exports (-36.70) (-30.20) 4.Total imports (51.7) ( Total Agricultural Imports (-33.26) 1676 (23.78) 6.%share of Agri Imports to Total Imports (-56.1) 3.37 (-40.03) 7.Value of Agri Imports as (-50.73) (-27.50) 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) Sl.No.Commodity Fresh Fruits Processed Fruits and Vegetables Poultry and Dairy Products Tea Spices Other Cereals Non-Basmati Rice Meat and Meat Preparations Groundnut Coffee Basmati Rice Wheat Marine Products Fresh Vegetables Fruits and Vegetable seeds Source: CMIE Reports

25 Country and Category Base European Union Amber Blue Green Japan Amber Blue Green United States Amber Blue Green WTO DOMESTIC SUPPORT NOTIFICATIONS ($ BILLION) Source: WTO Notifications

26 ESTIMATES OF SUPPORT TO AGRICULTURE IN OECD (FIGURES IN US DOLLARS BILLION) Item Producer Support Estimate (PSE) Total Support Estimate (TSE) Source : OECD data base

27 PERCENTAGE AGGREGATE MEASURE OF SUPPORT BY MAJOR COUNTRIES Country as % of value agricultural Year of Production Domestic Support EU Japan USA Canada

28 INDIA’S AGGREGATE MEASUREMENT OF SUPPORT (RS. CRORES) Item Product Specific Non Product Specific * * % of Value of Agricultural Production** 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

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

52 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 WheatDurum Wheat RiceBasmati Rice SugarPotatoes Onion Eggs

53 Thank You


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