World Trade Organization With

Reference To

AGREEMENT ON AGRICULTURE

SERIAL
NO

CONTENTS

PAGE
NO

CHAPTER-I

8-17

World trade organization

History
Uruguay Round
Ministerial Conference
Doha Round

CHAPTER-II

18-22

Principles Of The Trading Systems

Organizational Structural
Dispute Settlement In The WTO

3
4

CHAPTER-III
WTO Accession And Membership
CHAPTER-IV

23-27
28-38

Agreement On Agriculture
Salient Features
Three Pillars

CHAPTER-V

39-41

Agriculture Negotiations

CHAPTER-VI

42-46

Issues On Interest To Developing Countries

CHAPTER-VII

47

CONCLUSION

48
BIBLOGRAPHY

CHAPTER-I

WORLD TRADE ORGANIZATION (WTO) WITH

REFERENCE TO AOA

The World Trade Organization (WTO) is an intergovernmental

organization which regulates international trade. The WTO officially commenced
on 1 January 1995 under the Marrakech Agreement, signed by 123 nations on 15
April 1994, replacing the General Agreement on Tariffs and Trade (GATT),
which commenced in 1948. The WTO deals with regulation of trade between
participating countries by providing a framework for negotiating trade agreements
and a dispute resolution process aimed at enforcing participants' adherence to
WTO agreements, which are signed by representatives of member governments
and ratified by their parliaments. Most of the issues that the WTO focuses on
derive

from

previous

trade

negotiations,

especially

from

the Uruguay

Round (19861994).
The WTO is attempting to complete negotiations on the Doha Development
Round, which was launched in 2001 with an explicit focus on developing
countries. As of June 2012, the future of the Doha Round remained uncertain: the
work programmer lists 21 subjects in which the original deadline of 1 January
2005 was missed, and the round is still incomplete. The conflict between free trade
on industrial goods and services but retention of protectionism on farm subsidies to
domestic agricultural

sector (requested

by developed

countries)

and

the substantiation of fair trade on agricultural products (requested by developing

countries) remain the major obstacles. This impasse has made it impossible to
launch new WTO negotiations beyond the Doha Development Round. As a result,
there have been an increasing number of bilateral free trade agreements between
governments. As of July 2012, there were various negotiation groups in the WTO
system for the current agricultural trade negotiation which is in the condition of
stalemate. The WTO's current Director-General is Roberto Azevdo, who leads a
staff of over 600 people in Geneva, Switzerland. A trade facilitation agreement
known as the Bali Package was reached by all members on 7 December 2013, the
first comprehensive agreement in the organization's history.

HISTORY

The economists Harry White (left) and John Maynard

Keynes at the Bretton Woods Conference. Both had been strong advocates of a
central-controlled international trade environment and recommended the
establishment of three institutions: the IMF (for fiscal and monetary issues); the
World Bank (for financial and structural issues); and the ITO (for international
economic cooperation).

The

WTO's

predecessor,

the

General

Agreement

on

Tariffs

and

Trade

(GATT),

was

established

after World War II in the wake of other new multilateral

institutions dedicated to international economic cooperation
notably
Bank and

the Bretton

Woods

the International

institutions known
Monetary

Fund.

as
A

the World
comparable

international institution for trade, named the International Trade

Organization was successfully negotiated. The ITO was to be a
United Nations specialized agency and would address not only
trade barriers but other issues indirectly related to trade,
including employment, investment, restrictive business practices,
and commodity agreements. But the ITO treaty was not approved
by the U.S. and a few other signatories and never went into
effect.
In the absence of an international organization for trade, the GATT would over the
years "transform itself" into a de facto international organization.

GATT

ROUNDS OF NEGOTIATIONS:

The GATT was the only multilateral instrument governing international

trade from 1946 until the WTO was established on 1 January 1995. Despite
attempts in the mid-1950s and 1960s to create some form of institutional
mechanism for international trade, the GATT continued to operate for almost half a
century as a semi-institutionalized multilateral treaty regime on a provisional basis.

From Geneva to Tokyo:

Seven rounds of negotiations occurred under GATT. The first real GATT
trade rounds concentrated on further reducing tariffs. Then, the Kennedy Round in
the mid-sixties brought about a GATT anti-dumping Agreement and a section on
development. The Tokyo Round during the seventies was the first major attempt to
tackle trade barriers that do not take the form of tariffs, and to improve the system,
adopting a series of agreements on non-tariff barriers, which in some cases
interpreted existing GATT rules, and in others broke entirely new ground. Because
these plurilateral agreements were not accepted by the full GATT membership,
they were often informally called "codes". Several of these codes were amended in
the Uruguay Round, and turned into multilateral commitments accepted by all
WTO members. Only four remained plurilateral (those on government
procurement, bovine meat, civil aircraft and dairy products), but in 1997 WTO
members agreed to terminate the bovine meat and dairy agreements, leaving only
two.

URUGUAY ROUND

During the Doha Round, the US government blamed Brazil and India for
being inflexible and the EU for impeding agricultural imports. The then-President
of Brazil, Luiz Incio Lula da Silva (above right), responded to the criticisms by

arguing that progress would only be achieved if the richest countries (especially the
US and countries in the EU) made deeper cuts in agricultural subsidies and further
opened their markets for agricultural goods.
Well before GATT's 40th anniversary, its members concluded that the GATT
system was straining to adapt to a new globalizing world economy. In response to
the problems identified in the 1982 Ministerial Declaration (structural deficiencies,
spill-over impacts of certain countries' policies on world trade GATT could not
manage etc.), the eighth GATT round known as the Uruguay Round was
Marrakes launched in September 1986, in Punta del Este, Uruguay.
It was the biggest negotiating mandate on trade ever agreed: the talks were
going to extend the trading system into several new areas, notably trade in services
and intellectual property, and to reform trade in the sensitive sectors of agriculture
and textiles; all the original GATT articles were up for review. The Final Act
concluding the Uruguay Round and officially establishing the WTO regime was
signed 15 April 1994, during the ministerial meeting at Marrakesh, Morocco, and
hence is known as the Agreement.
The GATT still exists as the WTO's umbrella treaty for trade in goods, updated
as a result of the Uruguay Round negotiations (a distinction is made
between GATT 1994, the updated parts of GATT, and GATT 1947, the original
agreement which is still the heart of GATT 1994). GATT 1994 is not however the
only legally binding agreement included via the Final Act at Marrakesh; a long list
of about 60 agreements, annexes, decisions and understandings was adopted. The
agreements fall into a structure with six main parts:

The Agreement Establishing the WTO

Goods and investment the Multilateral Agreements on Trade in Goods

including

the

GATT

1994

and

the Trade

Related

Investment

Measures (TRIMS)

Services the General Agreement on Trade in Services

Intellectual property the Agreement on Trade-Related Aspects of

Intellectual Property Rights (TRIPS)

Dispute settlement (DSU)

Reviews of governments' trade policies (TPRM)

In terms of the WTO's principle relating to tariff "ceiling-binding" , the Uruguay

Round has been successful in increasing binding commitments by both developed
and developing countries, as may be seen in the percentages of tariffs bound before
and after the 19861994 talks.

MINISTERIAL CONFERENCES:

The World Trade Organization Ministerial Conference of 1998, in the

Palace

(Geneva, Switzerland).

The highest decision-making body of the WTO is the Ministerial

Conference, which usually meets every two years. It brings together all members
of the WTO, all of which are countries or customs unions. The Ministerial
Conference can take decisions on all matters under any of the multilateral trade
agreements. The inaugural ministerial conference was held in Singapore in 1996.
Disagreements between largely developed and developing economies emerged
during this conference over four issues initiated by this conference, which led to
them being collectively referred to as the "Singapore issues". The second
ministerial

conference was

held

in Geneva in

Switzerland.

The

third

conference in Seattle, Washington ended in failure, with massive demonstrations

and police and National Guard crowd-control efforts drawing worldwide attention.
In 2001, the fourth ministerial conference was held in Doha in the Persian
Gulf nation of Qatar. The Doha Development Round was launched at the
conference. The conference also approved the joining of China, which became the
143rd

member

to

join.

The fifth

ministerial

conference was

held

in Cancn, Mexico, aiming at forging agreement on the Doha round. An alliance of

22 southern states,

the G20

developing

nations (led

by

India,

China,

Brazil, ASEAN led by the Philippines), resisted demands from the North for
agreements on the so-called "Singapore issues" and called for an end to agricultural
subsidies within the EU and the US. The talks broke down without progress.
The sixth WTO ministerial conference was held in Hong Kong from 1318
December 2005. It was considered vital if the four-year-old Doha Development
Round negotiations were to move forward sufficiently to conclude the round in
2006. In this meeting, countries agreed to phase out all their agricultural export
subsidies by the end of 2013, and terminate any cotton export subsidies by the end
of 2006. Further concessions to developing countries included an agreement to

introduce duty-free, tariff-free access for goods from the Least Developed
Countries, following the Everything but Arms initiative of the European Union
but with up to 3% of tariff lines exempted. Other major issues were left for further
negotiation to be completed by the end of 2010. The WTO General Council, on 26
May 2009, agreed to hold a seventh WTO ministerial conference session
in Geneva from 30 November-3 December 2009. A statement

by chairman

Amb. Mario Matus acknowledged that the prime purpose was to remedy a breach
of protocol requiring two-yearly "regular" meetings, which had lapsed with the
Doha Round failure in 2005, and that the "scaled-down" meeting would not be a
negotiating session, but "emphasis will be on transparency and open discussion
rather than on small group processes and informal negotiating structures". The
general theme for discussion was "The WTO, the Multilateral Trading System and
the Current Global Economic Environment"

DOHA ROUND (DOHA AGENDA):

Main article: Doha Development Round

The Doha Development Round started in 2001 is at an impasse. The

WTO launched the current round of negotiations, the Doha
Development

Round,

at

the

fourth

ministerial

conference

in Doha, Qatar in November 2001. This was to be an ambitious

effort to make globalization more inclusive and help the world's

poor, particularly by slashing barriers and subsidies in farming.

The initial agenda comprised both further trade liberalization and
new rule-making, underpinned by commitments to strengthen
substantial assistance to developing countries.
The negotiations have been highly contentious. Disagreements still continue
over several key areas including agriculture subsidies, which emerged as critical in
July 2006. According to a European Union statement, "The 2008 Ministerial
meeting broke down over a disagreement between exporters of agricultural bulk
commodities and countries with large numbers of subsistence farmers on the
precise terms of a 'special safeguard measure' to protect farmers from surges in
imports." The position of the European Commission is that "The successful
conclusion of the Doha negotiations would confirm the central role of multilateral
liberalization and rule-making. It would confirm the WTO as a powerful shield
against protectionist backsliding." An impasse remains and, as of August 2013,
agreement has not been reached, despite intense negotiations at several ministerial
conferences and at other sessions. On 27 March 2013, the chairman of agriculture
talks announced "a proposal to loosen price support disciplines for developing
countries public stocks and domestic food aid." He added: ...we are not yet close
to agreementin fact, the substantive discussion of the proposal is only
beginning.

FUNCTIONS:
Among the various functions of the WTO, these are regarded by analysts as the
most important:

It oversees the implementation, administration and operation of the covered

agreements.

It provides a forum for negotiations and for settling disputes.

Additionally, it is the WTO's duty to review and propagate the national trade
policies, and to ensure the coherence and transparency of trade policies through
surveillance in global economic policy-making. Another priority of the WTO is
the assistance of developing, least-developed and low-income countries in
transition to adjust to WTO rules and disciplines through technical cooperation and
training.
1. The WTO shall facilitate the implementation, administration and operation
and further the objectives of this Agreement and of the Multilateral Trade
Agreements, and shall also provide the frame work for the implementation,
administration and operation of the multilateral Trade Agreements.
2. The WTO shall provide the forum for negotiations among its members
concerning their multilateral trade relations in matters dealt with under the
Agreement in the Annexes to this Agreement.
3. The WTO shall administer the Understanding on Rules and Procedures
Governing the Settlement of Disputes.
4. The WTO shall administer Trade Policy Review Mechanism.
5. With a view to achieving greater coherence in global economic policy
making, the WTO shall cooperate, as appropriate, with the International

Monetary Fund (IMF) and with the International Bank for Reconstruction
and Development (IBRD) and its affiliated agencies.
The above five listings are the additional functions of the World Trade
Organization. As globalization proceeds in today's society, the necessity of
an International Organization to manage the trading systems has been of vital
importance. As the trade volume increases, issues such as protectionism, trade
barriers, subsidies, violation of intellectual property arise due to the differences in
the trading rules of every nation. The World Trade Organization serves as the
mediator between the nations when such problems arise. WTO could be referred to
as the product of globalization and also as one of the most important organizations
in today's globalized society.
The WTO is also a center of economic research and analysis: regular
assessments of the global trade picture in its annual publications and research
reports on specific topics are produced by the organization. Finally, the WTO
cooperates closely with the two other components of the Bretton Woods system,
the IMF and the World Bank.

CHAPTER-II

PRINCIPLES OF THE TRADING SYSTEMS:

The WTO establishes a framework for trade policies; it does not define or
specify outcomes. That is, it is concerned with setting the rules of the trade policy

games. Five principles are of particular importance in understanding both the pre1994 GATT and the WTO:
1. Non-discrimination:- It has two major components: the most favored
nation (MFN) rule, and the national treatment policy. Both are embedded in
the main WTO rules on goods, services, and intellectual property, but their
precise scope and nature differ across these areas. The MFN rule requires
that a WTO member must apply the same conditions on all trade with other
WTO members, i.e. a WTO member has to grant the most favorable
conditions under which it allows trade in a certain product type to all other
WTO members. "Grant someone a special favour and you have to do the
same for all other WTO members." National treatment means that imported
goods should be treated no less favorably than domestically produced goods
(at least after the foreign goods have entered the market) and was introduced
to tackle non-tariff barriers to trade (e.g. technical standards, security
standards et al. discriminating against imported goods).
2. Reciprocity. It reflects both a desire to limit the scope of free-riding that
may arise because of the MFN rule, and a desire to obtain better access to
foreign markets. A related point is that for a nation to negotiate, it is
necessary that the gain from doing so be greater than the gain available
from unilateral liberalization; reciprocal concessions intend to ensure that
such gains will materialize.
3. Binding and enforceable commitments. The tariff commitments made by
WTO members in a multilateral trade negotiation and on accession are
enumerated in a schedule (list) of concessions. These schedules establish
"ceiling bindings": a country can change its bindings, but only after

negotiating with its trading partners, which could mean compensating them
for loss of trade. If satisfaction is not obtained, the complaining country may
invoke the WTO dispute settlement procedures.
4. Transparency. The WTO members are required to publish their trade
regulations, to maintain institutions allowing for the review of
administrative decisions affecting trade, to respond to requests for
information by other members, and to notify changes in trade policies to the
WTO. These internal transparency requirements are supplemented and
facilitated by periodic country-specific reports (trade policy reviews)
through the Trade Policy Review Mechanism (TPRM). The WTO system
tries also to improve predictability and stability, discouraging the use
of quotas and other measures used to set limits on quantities of imports.
5. Safety valves. In specific circumstances, governments are able to restrict
trade. The WTO's agreements permit members to take measures to protect
not only the environment but also public health, animal health and plant
health.
There are three types of provision in this direction:
articles allowing for the use of trade measures to attain non-economic
objectives;
Articles aimed at ensuring "fair competition"; members must not use
environmental protection measures as a means of disguising protectionist
policies.
Provisions permitting intervention in trade for economic reasons.

Exceptions to the MFN principle also allow for preferential treatment

of developing countries, regional free trade areas and customs unions.

ORGANIZATIONAL STRUCTURAL:
The General Council has the following subsidiary bodies which oversee
committees in different areas:
Council for Trade in Goods:There are 11 committees under the jurisdiction of the Goods Council each
with a specific task. All members of the WTO participate in the committees. The
Textiles Monitoring Body is separate from the other committees but still under the
jurisdiction of Goods Council. The body has its own chairman and only 10
members. The body also has several groups relating to textiles.

Council for Trade-Related Aspects of Intellectual Property Rights:Information on intellectual property in the WTO, news and official records
of the activities of the TRIPS Council, and details of the WTO's work with other
international organizations in the field.

Council for Trade in Services:The Council for Trade in Services operates under the guidance of the
General Council and is responsible for overseeing the functioning of the General
Agreement on Trade in Services (GATS). It is open to all WTO members, and can
create subsidiary bodies as required.

Trade Negotiations Committee:The Trade Negotiations Committee (TNC) is the committee that deals with
the current trade talks round. The chair is WTO's director-general. As of June
2012 the committee was tasked with the Doha Development Round.

The Service Council has three subsidiary bodies: financial services,

domestic regulations, GATS rules and specific commitments. The council has
several different committees, working groups, and working parties. There are
committees on the following: Trade and Environment; Trade and Development
(Subcommittee on Least-Developed Countries);Regional Trade Agreements;
Balance of Payments Restrictions; and Budget, Finance and Administration. There
are working parties on the following: Accession. There are working groups on the
following: Trade, debt and finance; and Trade and technology transfer.

DECISION-MAKING:
The WTO describes itself as "a rules-based, member-driven organization all
decisions are made by the member governments, and the rules are the outcome of
negotiations among members". The WTO Agreement foresees votes where
consensus cannot be reached, but the practice of consensus dominates the process
of decision-making.
Richard Harold Steinberg (2002) argues that although the WTO's consensus
governance model provides law-based initial bargaining, trading rounds close
through power-based bargaining favouring Europe and the U.S., and may not lead
to Pareto improvement.

DISPUTE SETTLEMENT IN THE WTO:

The WTO's dispute-settlement system "is the result of the evolution of rules,
procedures and practices developed over almost half a century under the GATT
1947". In 1994, the WTO members agreed on the Understanding on Rules and
Procedures Governing the Settlement of Disputes (DSU) annexed to the "Final
Act" signed in Marrakesh in 1994. Dispute settlement is regarded by the WTO as
the central pillar of the multilateral trading system, and as a "unique contribution to
the stability of the global economy". WTO members have agreed that, if they
believe fellow-members are violating trade rules, they will use the multilateral
system of settling disputes instead of taking action unilaterally.
The operation of the WTO dispute settlement process involves case-specific panels
appointed by the Dispute Settlement Body (DSB), the Appellate Body, The
Director-General and the WTO Secretariat, arbitrators, and advisory experts.
The priority is to settle disputes, preferably through a mutually agreed solution,
and provision has been made for the process to be conducted in an efficient and
timely manner so that "If a case is adjudicated, it should normally take no more
than one year for a panel ruling and no more than 16 months if the case is
appealed... If the complainant deems the case urgent, consideration of the case
should take even less time. WTO member nations are obliged to accept the process
as exclusive and compulsory.

CHAPTER-III

WORLD

TRADE

ORGANIZATION

ACCESSION

AND

MEMBERSHIP:
The process of becoming a WTO member is unique to each applicant
country, and the terms of accession are dependent upon the country's stage of
economic development and current trade regime. The process takes about five
years, on average, but it can last longer if the country is less than fully committed
to the process or if political issues interfere. The shortest accession negotiation was
that of the Kyrgyz Republic, while the longest was that of Russia, which, having
first applied to join GATT in 1993 was approved for membership in December
2011 and became a WTO member on 22 August 2012. The second longest was
that of Vanuatu, whose Working Party on the Accession of Vanuatu was established
on 11 July 1995. After a final meeting of the Working Party in October 2001,
Vanuatu requested more time to consider its accession terms. In 2008, it indicated
its interest to resume and conclude its WTO accession. The Working Party on the
Accession of Vanuatu was reconvened informally on 4 April 2011 to discuss
Vanuatu's future WTO membership. The re-convened Working Party completed its
mandate on 2 May 2011. The General Council formally approved the Accession
Package of Vanuatu on 26 October 2011. On 24 August 2012, the WTO welcomed
Vanuatu as its 157th member. An offer of accession is only given once consensus
is reached among interested parties.

ACCESSION PROCESS

WTO accession progress:

Members (including dual-representation with the European Union)
Draft Working Party Report or Factual Summary adopted
Goods and/or Services offers submitted
Memorandum on Foreign Trade Regime (FTR) submitted
Observer, negotiations to start later or no Memorandum on FTR submitted
Frozen procedures or no negotiations in the last 3 years
No official interaction with the WTO
A country wishing to accede to the WTO submits an application to the
General Council, and has to describe all aspects of its trade and economic policies
that have a bearing on WTO agreements. The application is submitted to the WTO

in a memorandum which is examined by a working party open to all interested

WTO Members.
After all necessary background information has been acquired; the working
party focuses on issues of discrepancy between the WTO rules and the applicant's
international and domestic trade policies and laws. The working party determines
the terms and conditions of entry into the WTO for the applicant nation, and may
consider transitional periods to allow countries some leeway in complying with the
WTO rules.
The final phase of accession involves bilateral negotiations between the
applicant nation and other working party members regarding the concessions and
commitments on tariff levels and market access for goods and services. The new
member's commitments are to apply equally to all WTO members under normal
non-discrimination rules, even though they are negotiated bilaterally.
When the bilateral talks conclude, the working party sends to the general
council or ministerial conference an accession package, which includes a summary
of all the working party meetings, the Protocol of Accession (a draft membership
treaty), and lists ("schedules") of the member-to-be's commitments. Once the
general council or ministerial conference approves of the terms of accession, the
applicant's parliament must ratify the Protocol of Accession before it can become a
member. Some countries may have faced tougher and a much longer accession
process due to challenges during negotiations with other WTO members, such as
Vietnam, whose negotiations took more than 11 years before it became official
member in January 2007.

MEMBERS AND OBSERVERS:

The WTO has 161 members and 23 observer governments. Seychelles is the
most recent member, having joined in April 2015. In addition to states, the
European Union is a member. WTO members do not have to be fully independent
states. Instead, they must be a customs territory with full autonomy in the conduct
of their external commercial relations. Thus Hong Kong has been a member since
1995 (as "Hong Kong, China" since 1997) predating the People's Republic of
China, which joined in 2001 after 15 years of negotiations. The Republic of
China (Taiwan) acceded to the WTO in 2002 as "Separate Customs Territory
of Taiwan, Penghu, Kinmen and Matsu" (Chinese Taipei) despite its disputed
status. The WTO Secretariat omits the official titles (such as Counselor, First
Secretary, Second Secretary and Third Secretary) of the members of Chinese
Taipei's Permanent Mission to the WTO, except for the titles of the Permanent
Representative and the Deputy Permanent Representative.
As of 2007, WTO member states represented 96.4% of global trade and
96.7% of global GDP Iran, followed by Algeria, are the economies with the largest
GDP and trade outside the WTO, using 2005 data. With the exception of the Holy
See, observers must start accession negotiations within five years of becoming
observers. A number of international intergovernmental organizations have also
been granted observer status to WTO bodies. 14 UN member states have no
official affiliation with the WTO.

AGREEMENT:

The WTO oversees about 60 different agreements which have the status of
international legal texts. Member countries must sign and ratify all WTO
agreements on accession. A discussion of some of the most important agreements
follows. The Agreement on Agriculture came into effect with the establishment of
the WTO at the beginning of 1995. The AoA has three central concepts, or
"pillars": domestic support, market access and export subsidies. The General
Agreement on Trade in Services was created to extend the multilateral trading
system to service sector, in the same way as the General Agreement on Tariffs and
Trade (GATT) provided such a system for merchandise trade. The agreement
entered into force in January 1995. The Agreement on Trade-Related Aspects of
Intellectual Property Rights sets down minimum standards for many forms of
intellectual property (IP) regulation. It was negotiated at the end of the Uruguay
Round of the General Agreement on Tariffs and Trade (GATT) in 1994.

The Agreement on the Application of Sanitary and Phytosanitary Measures

also known as the SPS Agreementwas negotiated during the Uruguay
Round of GATT, and entered into force with the establishment of the WTO at the
beginning of 1995. Under the SPS agreement, the WTO sets constraints on
members' policies relating to food safety (bacterial contaminants, pesticides,
inspection and labelling) as well as animal and plant health (imported pests and
diseases).

The Agreement

on

Technical

Barriers

to

Trade is

an

international treaty of the World Trade Organization. It was negotiated during

the Uruguay Round of the General Agreement on Tariffs and Trade, and entered
into force with the establishment of the WTO at the end of 1994. The object
ensures that technical negotiations and standards, as well as testing and
certification

procedures,

do

not

create

unnecessary

obstacles

to

trade". The Agreement on Customs Valuation, formally known as the Agreement

on Implementation of Article VII of GATT, prescribes methods of customs
valuation that Members are to follow. Chiefly, it adopts the "transaction value"
approach.
In December 2013, the biggest agreement within the WTO was
signed and known as the Bali Package

CHAPTER-IV

AGREEM
ENT ON AGRICULTURE
ABSTRACT
`Indian is no exception to these general trends, with a few special features.
During last two decades. Indias agriculture exports as a part of total merchandise
exports have continued to decline from the preponderant position they occupied in
the pre-independence. But with achievement of self-sufficiency in food grains and

some other major agricultural commodities, which used to account for large
portion of import bill, overall import of agricultural commodities have sharply
declined. The outlay on agricultural imports as a proportion of earnings from
agricultural exports has progressively declined, and all the balance has become
progressively more favorable. Discussions on these issues has, naturally to take
into account the new trade regime as the stated objectives of firstly to study the
performance of Indias agricultural exports under WTO regime, secondly, to
analyze the competitiveness of top agri-exports of India under WTO regime.
Finally, to suggest policy measures in the identified Indias agricultural. In the first
part of discuss briefly introduce, the developments in agricultural trade specially
the agricultural exports at the world levels in the recent years and discuss the
performance of Indian agricultural in this respect finally shaped the shifts in this
policy. Finally part, I will try to spell out the ingredients of a strategy to augment
agricultural exports in the changing, and more demanding, global economy.

Introduction to the Agreement on Agriculture

The Agreement on Agriculture, (the Agreement), came into force on
1 January, 1995. The preamble to the Agreement recognizes that the agreed longterm objective of the reform process initiated by the Uruguay Round reform
programme is to establish a fair and market-oriented agricultural trading system.
The reform programme comprises specific commitments to reduce support and
protection in the areas of domestic support, export subsidies and market access,
and through the establishment of strengthened and more operationally effective
GATT rules and disciplines. The Agreement also takes into account non-trade
concerns, including food security and the need to protect the environment, and
provides special and differential treatment for developing countries, including an

improvement in the opportunities and terms of access for agricultural products of

particular export interest to these Members.
The obligations and disciplines incorporated in the Agreement on Agriculture,
therefore, relate to (A) Market access; (B) Domestic subsidy or Domestic support;
and (C) Export subsidy.
SALIENT FEATURES:
The Agreement on Agriculture contains provisions in the following three
broad areas of agriculture and trade policy:
(A) Market Access: On market access, the Agreement has two basic elements:
(i) Tariffication of all non-tariff barriers. That is to say, non-tariff barriers such as
quantitative restrictions and export and import licensing etc. are to be replaced by
tariffs to provide the same level of protection. Tariffs, resulting from this
"tariffication" process together with other tariffs on agricultural products, are to be
reduced by a simple average of 36% over 6 years in the case of developed
countries and 24% over 10 years in the case of developing countries. With India
being under balance of payments cover (which is a GATT-consistent measure), we
had not undertaken any commitments with regard to market access and this has
been clearly stated in our schedule filed under GATT. The only commitment India
has undertaken is to bind its tariffs on primary agricultural products at 100%;
processed foods at 150%; and edible oils at 300%.
(ii) The second element relates to setting up of a minimum level for imports of
agricultural products by member countries as a share of domestic consumption.
Countries are required to maintain current levels (1986-88) of access for each

individual product. Where the current level of import is negligible, the minimum
access should not be less than 3% of the domestic consumption, during the base
period and tariff quotas are to be established when imports constitute less than 3%
of domestic consumption. This minimum level is to rise to 5% by the year 2000 in
the case of developed countries and by 2004 in the case of developing countries.
However, special Safeguards Provisions allow for the application of additional
duties when shipments are made at prices below certain reference levels or when
there is a sudden import surge. The market access provision, however, does not
apply when the commodity in question is a traditional staple of a developing
country.
(B)DOMESTIC SUPPORT: Provisions of the agreement regarding domestic
support have two main objectives- first to identify acceptable measures that
support farmers. These provisions are aimed largely at the developed countries
where the levels of domestic agricultural support have risen to extremely high
levels in recent decades.
All domestic support is quantified through the mechanism of total Aggregate
Measurement of Support (AMS). AMS is a means of quantifying the aggregate
value of domestic support or subsidy given to each category of agricultural
product. Each WTO member country has made calculations to determine its AMS
wherever applicable. Commitment made requires a 20% reduction in total AMS for
developed countries over 6 years. For developing countries, this percentage is 13%
and no reduction is required for the least developed countries. The base period
external reference price on which the reductions were calculated was 1986-88.
AMS consists of two partsproduct-specific subsidies and non-product specific
subsidies. Product-specific subsidy refers to the total level of support provided for

each individual agricultural commodity, essentially signified by procurement price

in India. Non-product specific subsidy, on the other hand, refers to the total level of
support for the agricultural sector as a whole, i.e., subsidies on inputs such as
fertilizers, electricity, irrigation, seeds, credit etc.
There are three categories of support measures that are not subject to reduction
under the Agreement, and support within specified de-minims level is allowed.
These three categories of exempt support measures are:
(i). Measures which have a minimum impact on trade and which meet the basic
and policy specific criteria set out in the Agreement (the so-called Green Box
measures in the terminology of WTO). These measures include Government
assistance on general services like (i) research, pest and disease control, training,
extension, and advisory services; (ii) public stock holding for food security
purposes; (iii) domestic food aid; and (iv) direct payment to producers like
governmental financial participation in income insurance and safety nets, relief
from natural disasters, and payments under environmental assistance programmers.
(ii). Developing country measures otherwise subject to reduction which meet the
criteria set out in paragraph 2 of Article 6 of the Agreement (the so-called Special
and Differential Treatment or the S&D Box). Examples of these are (i) investment
subsidies which are generally available to agriculture in developing countries; and
(ii) agricultural input services generally available to low income and resource poor
producers in developing countries.
3. Direct payments under production limiting programme which conform to the
requirement set out in paragraph 5 of Article 6 of the Agreement (the so-called

Blue Box measures). These are relevant from the developed countries point of
view only.
Under the de-minims provision of Article 6.4 of the Agreement, there is no
requirement to reduce support in this residual category whose value in any year, in
the case of product specific support does not exceed 10% for developing countries
of the total value of production of the basic agricultural product in question or of
the value of total agricultural production in the case of non-product specific
support. Where the support is below 10 per cent, as in the case of India, productspecific and non-specific de-minims ceiling may be raised to those levels.
(C) EXPORT SUBSIDIES:

The Agreement on Agriculture lists several types

of subsidies to which reduction commitments apply. However, such subsidies are

virtually non-existent in India as exporters of agricultural commodities do not get
direct subsidy. Even exemption of export profits from income tax under Section
80-HHC of the Income Tax Act is not among the listed subsidies. It is also worth
noting that developing countries are free to provide three of the listed subsidies,
namely, reduction of export marketing costs, internal and international transport
and freight charges.
In general, it may be noted that the virtual explosion of export subsidies in the
industrialized countries in the years leading to the Uruguay Round was one of the
key issues addressed in the agricultural negotiations. While under GATT 1947,
prohibition of export subsidies for industrial products has been effective since
1956, in the case of agricultural primary products, such subsidies were only subject
to limited disciplines which, moreover, did not prove to be operational or effective.
As a result, in the 1970s and 1980s, success in international markets for
agricultural products was increasingly determined by the financial power and

largesse of national treasuries rather than the efficiency and marketing skills of
agricultural producers and exporters. Export subsidies also became a major factor
in depressing or destabilizing world market prices for many agricultural
commodities. The Uruguay Round marked a radical departure from the earlier
GATT disciplines in the areas of agricultural export subsidies. Members are
required to reduce the value of direct export subsidies to a level of 36% below the
1986-90 base period level over a six year implementation period. The quantity of
subsidized export is to be reduced by 21% over the same period. In the case of
developing countries, the reductions are two-thirds those of the developed
countries over a ten-year period and there are no reductions for least developed
countries. Under the Agreement, export subsidies are defined as "subsidies
contingent on export performance" and the list covers export subsidy practices
such as direct export subsidies contingent on export performance; sales of noncommercial stocks of agricultural products for export at prices lower than
comparable prices for such goods in the domestic markets; producer-financed
subsidies such as government programmers which require a levy on production
which is then used to subsidies the export of the product; cost-reduction measures
such as subsidies to reduce marketing costs for exports including handling costs
and costs of international freight; internal transport subsidies applying only to
exports; subsidies on incorporated products i.e., subsidies on agricultural products
such as wheat contingent on their incorporation in export products made of wheat
etc. All such export subsidies are subject to reduction commitments in terms of
both the volume of subsidized export and budgetary outlays for such subsidies. As
indicated earlier, such measures are virtually non-existent in India and, hence, the
issue of reduction of export subsidy on agricultural products is not of particular
relevance for India.

Product coverage
The Agreement defines agricultural products by reference to the harmonized
system of product classification. The definition covers not only basic agricultural
products such as wheat, milk and live animals, but the products derived from them
such as bread, butter, other dairy products and meat, as well as all processed
agricultural products such as chocolates and sausages. The coverage includes
wines, spirits and tobacco products, fibers such as cotton, wool and silk, and raw
animal skins destined for leather production. Fish and fish products are not
included nor are forestry products.
Implementation period
The implementation period for the country-specific commitments is the six-year
period commencing in 1995. However, developing countries have the flexibility to
implement their reduction and other specific commitments over a period of upto 10
years. Members had the choice of implementing their concessions and
commitments on the basis of calendar, marketing (crop) or fiscal years. A WTO
Members implementation year for tariff reduction may thus differ from the one
applied to export subsidy reductions. For the purpose of the peace clause the
implementation period is the nine-year period commencing in 1995.
Peace Clause
The Agreement on Agriculture contains a "due restraint" or "peace clause" (Article
13) which regulates the application of other WTO agreements on subsidies in
respect of agricultural products. The Article provides that Green Box domestic

support measures cannot be the subject of countervailing duty action or other

subsidy action under the WTO Agreement on Subsidies and Countervailing
Measures, nor can they be subject to actions based on nullification or impairment
of tariff concessions under the GATT. Other domestic support measures which are
in conformity with the provisions of the Agreement on Agriculture may be the
subject of countervailing duty actions, but due restraint is to be exercised by
Members in initiating such investigations. Further, in so far as the support provided
to individual products does not exceed that decided in the 1992 marketing year,
these measures are exempt from other subsidy action or nullification or impairment
action. Export subsidies conforming to the Agreement on Agriculture are subject to
countervailing duty actions, but here also due restraint is to be exercised by
Members in initiating such investigations. The peace clause remains in effect for a
period of nine years from 1995, i.e., the entry into force of the WTO Agreement.
Committee on Agriculture
The Agreement on Agriculture is overseen by the Committee on Agriculture which
reviews progress in the implementation of commitments mentioned above. The
Agreement also calls for further negotiations to be initiated before the end of the
fifth year of implementation. The Agreement is thus coming up for review at the
end of 1999.
India has not undertaken any commitments under the Uruguay Round Agreement
on Agriculture (AoA) which constrain us from following our developmental policy
with regard to agriculture or which entail any action on our side immediately. We
would, however, need to study the implications of removal of quantitative
restrictions on market access, subsidy to farmers and tariffs on imports. The
structure of the Agreement on Agriculture as it exists today seems to be slightly

imbalanced, since it enables countries subsidizing the agriculture sector heavily to

retain a substantial portion of their subsidies upto the end of the implementation
period while those countries which were not using these measures earlier are
prohibited to use these measures in future beyond the de-minims limit. We have to
find ways to bring about more equity into the structure of the Agreement.

THREE PILLARS:-The Agreement on Agriculture has three pillars domestic

support, market access, and export subsidies.

DOMESTIC SUPPORT:The first pillar of the Agreement on Agriculture is "domestic support". The WTO
Agreement on Agriculture negotiated in the Uruguay Round (19861994) includes
the classification of subsidies into "boxes" depending on their effects on
production and trade: amber (most directly linked to production levels), blue
(production-limiting programmers that still distort trade), and green (minimal
distortion). While payments in the amber box had to be reduced, those in the green
box were exempt from reduction commitments. Detailed rules for green box
payments are set out in Annex 2 of the AoA. However, all must comply with the
"fundamental requirement" in paragraph 1, to cause not more than minimal
distortion of trade or production, and must be provided through a governmentfunded programme that does not involve transfers from consumers or price support
to producers.
The

Agreement

on

Agriculture's

domestic

support

system

currently

allows Europe and the United States to spend $380 billion a year on agricultural
subsidies. The World Bank dismissed the EU and the United States' argument that
small farmers needed protection, noting that more than half of the EU's Common
Agricultural Policy subsidies go to 1% of producers while in the United States 70%

of subsidies go to 10% of its producers, mainly agribusinesses. These subsidies

end up flooding global markets with below-cost commodities, depressing prices,
and undercutting producers in poor countries, a practice known as dumping.

MARKET ACCESS:Market access refers to the reduction of tariff (or non-tariff) barriers to trade by
WTO members. The 1995 Agreement on Agriculture required tariff reductions of:

36% average reduction by developed countries, with a minimum per-tariff

line reduction of 15% over six years.

24% average reduction by developing countries with a minimum per-tariff

line reduction of 10% over ten years.

Least developed countries (LDCs) were exempt from tariff reductions, but they
either had to convert non-tariff barriers to tariffsa process called tarifficationor
"bind" their tariffs, creating a ceiling that could not be increased in future.[5]

EXPORT SUBSIDIES:Export subsidies are the third pillar. The 1995 Agreement on Agriculture
required developed countries to reduce export subsidies by at least 36% (by value)
or by 21% (by volume) over six years. For developing countries, the required cuts
were 14% (by volume) and 24% (by value) over ten years.

CHAPTER-V
AGRICULTURENEGOTIATIONS:

DOMESTIC

SUPPORT

IN

AGRICULTURE

The boxes
In WTO terminology, subsidies in general are identified by boxes which are
given the colours of traffic lights: green (permitted), amber (slow down i.e. be
reduced), red (forbidden). In agriculture, things are, as usual, more complicated.
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 programmers that limit production. There are also
exemptions for developing countries (sometimes called an S&D box, including
provisions in Article 6.2 of the agreement).
AMBER BOX

All domestic support measures considered to distort production and

trade (with some exceptions) fall into the amber box, which is defined in Article 6
of the Agriculture Agreement as all domestic supports except those in the blue and
green boxes. These include measures to support prices, or subsidies directly related
to production quantities. These supports are subject to limits: de minims minimal

supports are allowed (5% of agricultural production for developed countries, 10%
for developing countries); the 30 WTO members that had larger subsidies than the
de minims levels at the beginning of the post-Uruguay Round reform period are
committed to reduce these subsidies. The reduction commitments are expressed in
terms of a Total Aggregate Measurement of Support (Total AMS) which includes
all supports for specified products together with supports that are not for specific
products, in one single figure. In the current negotiations, various proposals deal
with how much further these subsidies should be reduced, and whether limits
should be set for specific products rather than continuing with the single overall
aggregate limits.

BLUE

BOX

This is the amber box with conditions conditions designed to reduce

distortion. Any support that would normally be in the amber box is placed in the blue box if the
support also requires farmers to limit production (details set out in Paragraph 5 of Article 6 of
the Agriculture Agreement). At present there are no limits on spending on blue box subsidies. In
the current negotiations, some countries want to keep the blue box as it is because they see it as a
crucial means of moving away from distorting amber box subsidies without causing too much
hardship. Others wanted to set limits or reduction commitments, some advocating moving these
supports into the amber box.

GREEN BOX

The green box is defined in Annex 2 of the Agriculture Agreement. In order to

qualify, green box subsidies must not distort trade, or at most cause minimal distortion
(paragraph 1). They have to be government-funded (not by charging consumers higher prices)
and must not involve price support.
They tend to be programmers that are not targeted at particular products, and include direct
income supports for farmers that are not related to (are decoupled from) current production
levels or prices. They also include environmental protection and regional evelopment
programmers. Green box subsidies are therefore allowed without limits, provided they comply
with the policy-specific criteria set out in Annex 2.
In the current negotiations, some countries argue that some of the subsidies listed in Annex 2
might not meet the criteria of the annexs first paragraph because of the large amounts paid,
or because of the nature of these subsidies, the trade distortion they cause might be more than
minimal. Among the subsidies under discussion here are: direct payments to producers

CHAPTER-VI
ISSUES OF INTEREST TO DEVELOPING COUNTRIES
(Informal Paper by India)
India welcomes the papers submitted by Pakistan, Peru and the Dominican
Republic (AIE/6) and the paper submitted by Cuba (AIE/12) on the issues of
interest to developing countries. We would also like to thank the Secretariat for
their paper on the special and differential (S&D) treatment provisions relating
to the AOA (AIE/S6) and the studies on the implementation and impact of the
AOA on developing countries (AIE/S7). These papers provide extremely useful
factual data in the context of the issues which have been highlighted by
delegations regarding the S&D provisions for developing countries.
1. India would like to reiterate the importance that it attaches to the special and
differential treatment provisions as provided for in the AOA. Since we are in a
process, which we hope will help to clarify some of the issues which are likely
to be deliberated upon during the new round of negotiations, it would not be out
of context to recapitulate some of the concerns which developing countries had
during the UR and which were sought to be allayed by the S&D provisions.
2. As is well known a large number of developing countries are predominantly
agrarian countries where a very large percentage of the population is dependent
on agriculture for its livelihood. While in the initial years the main concern of
these Members was to ensure food sufficiency, this concern, once fulfilled, and
gradually evolved into a concern of finding markets for their agricultural
surpluses, so as to ensure the continued provision of agricultural livelihood to

this large population. During the UR these concerns got manifested into two
broad areas. The first of these broad provisions related to domestic support
which allowed developing countries to provide assistance, whether direct or
indirect, to encourage agricultural production as an integral part of the overall
objective of rural development. The second area related to the market access,
where it was felt that there was a need to improve access for developing country
Members by improving both the opportunities and terms of access for
agricultural products of interest to these Members.
3. These two very broad aspects were sought to be translated in to specific
provisions for the developing countries. As highlighted in the Secretariat paper
AIE/S6 there are five broad areas where special and differential provisions have
been provided for in the AOA. These include the following, which in our view
merit detailed deliberations:
i. market access;
ii. food security, with specific reference to net food importing countries:
iii. domestic support commitment;
iv. export subsidy commitment; and
v. notification requirements and technical assistance.
1. All these five areas need to be considered in detail during the course of this
informal process of analysis and information exchange since they have
important ramifications for developing countries. For example in the context of
the improved market access which the Agreement had sought to provide to

developing countries, India would like to draw attention to the first special and
differential treatment provision highlighted in the Secretariat doc. No. AIE/S6.
The preamble of the Agreement specifically mandates developed countries to
provide greater opportunity and market access to the agricultural products of
interest to developing countries. Unfortunately, however, the status of
implementation as far as this provision is concerned is not totally clear from the
information provided in the Secretariat paper. Members have already
highlighted some of the specific areas where we need additional information to
correctly evaluate the impact of the Uruguay Round. We would like to highlight
one specific area where we need certain clarifications. On page 2 of the
Secretariat paper AIE/S6 it has been indicated that there has been a "greaterthan-average reduction in tariffs on products of interest to developing
countries". The factual situation would perhaps have been clearer if figures
relating to specific products had been provided. We no doubt agree that
compiling data for all products may not be possible but it would be helpful if
this committee could analyze the post-UR status for at least some products of
interest to developing countries. In this context, we would like to draw attention
to a World Bank Policy Research Working Paper titled "Agricultural Trade
Liberalization in the UR", in which it has been indicated that the post-UR base
tariffs of a number of sensitive commodities in many industrialized countries
are higher than the actual tariff equivalents of all border measures which existed
in 1986-88. For instance, for rice, which is of particular interest to India, the
World Bank had calculated that the tariff differential for a particular group of
countries had increased by as much as 207%. It would therefore be helpful if
the Secretariat could perhaps provide additional data as far as some specific
products are concerned, since this would help us to better analyze the impact of
the AOA on developing countries.

 2. Similarly issues of food security also need to be adequately addressed. The

preamble to the Agreement specifically highlights the need for Members to take
into account non trade concerns such as food security. While this term has been
extensively used in the past, we are not entirely sure whether the objectives
relating to food security which have so clearly been spelt out in the preamble,
have been met. In this context it may be mentioned that it was in the Bali
Declaration of the Non-Aligned Movement that an attempt was made, perhaps
for the first time, to define food security. The Declaration recognized that in
spite of substantial increase in the worlds food output, the number of people
suffering from hunger and malnutrition had increased in many developing
countries. India therefore feels that it is extremely important that one of the
goals of agricultural trade liberalization remains, the achievement of the
objective of food security. It would be perhaps too simplistic to assume that
agricultural liberalization would by itself be able to overcome the problem of
food security. Free trade in agriculture is not without its long term social and
economic ramifications. India would therefore like to suggest that it would help
to clarify Members perception, if during this process of analysis and exchange
of information the Committee considers certain specific examples where
agricultural liberalization may have had some undesirable effects, specially
from the point of food security. This would help identify those areas, policies
and practices which may have had such an effect and which the impending
round of negotiations would provide an opportunity to rectify.
3. Issues relating to domestic support commitments, export subsidies,
notification requirements and technical assistance also need to be similarly
examined. A good way would be to encourage developing countries to submit
papers on these issues. However, it may be necessary for the Secretariat to

provide technical assistance to these delegations so that they can appropriately

organize their country experiences in the form of submission papers.
4. In this context we also support the suggestion made earlier, that organizations
like FAO, UNCTAD, WORLD BANK, etc. which have done some excellent work
in this area are invited to make general contributions on issues of interest to
developing countries, particularly regarding the implementation and impact of the
Agreement on Agriculture. These contributions could be in the form of papers
which the Secretariat could

circulate to Members. The relevant organizations

could then be invited to a special meeting of the AIE process when their papers can
be taken up for consideration.
5. We have highlighted only some of the issues of interest to
developing countries. As evident there are a number of other
critical areas and issues which need to be addressed during the
course of the Analysis and Information Exchange process. Some
of these we have listed in Para 3 above. Others have been
identified in the papers submitted by Pakistan, Peru, Dominican
Republic and Cuba. This list is obviously not exhaustive. We would
therefore suggest that as the Committee deliberates on the
special and differential provisions, an evolving check-list of issues
of interest to developing countries is prepared. This would help
focus further work on special and differential treatment in the
context of market access, food security, domestic support,
notification
assistance.

requirements,

special

safeguards

and

technical

CHAPTER-VII
CONCLUSION
The finally Indian agricultural products by seeking a reduction in high
tariffs and subsidies prevent in developed countries. A higher growth
in agriculture, thus, needs a comprehensive revamp of agricultural policy with
reorientation towards rapid diversification of this sector. A progressive correction is
required in the incentive structure for agriculture so that the excessively high
minimum supports prices do not continue to distort resource allocation in
agriculture. After come across out results Technology Mission and the market
intervention operations by the public agencies. A heartening feature of the growth
in oilseeds production has been that it occurred in the agriculturally backward
areas of states. This suggests that there exists some scope for raising agricultural
output through improvements in technical efficiency, without resort to new
improved technologies. This will ensure that farmers diversification towards high
value added segments of agriculture in response to the new demand structure.

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