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CHAPTER 1

INTRODUCTION:

The WTO was born out of negotiations, and everything the WTO does is the result ofnegotiations. The bulk of the WTOs current work comes from the 198694 negotiationscalled the Uruguay Round and earlier negotiations under the General Agreement on Tariffsand Trade (GATT). The WTO is currently the host to new negotiations, under the DohaDevelopment Agenda launched in 2001.

Trade relations often involve conflicting interests. Agreements, including those painstakinglynegotiated in the WTO system, often need interpreting. The most harmonious way to settlethese differences is through some neutral procedure based on an agreed legal foundation.That is the purpose behind the dispute settlement process written into the WTO

agreements.

While the WTO is driven by its member states, it could not function without itsSecretariat to coordinate the activities. The Secretariat employs over 600 staff, and itsexperts lawyers, economists, statisticians andcommunications experts assist WTO members on adaily basis to ensure, among other things, thatnegotiations progress smoothly, and that the rules ofinternational trade are correctly applied and enforced 155members on 10 May 2012.

GATT is now the WTOs principal rule-book for tradein goods. The Uruguay Round also created new rules fordealing with trade in services, relevant aspects ofintellectual property, dispute settlement, and trade policyreviews. The complete set runs to some 30,000 pagesconsisting of about 30 agreements and separate commitments (called schedules) made byindividual members in specific areas such as lower customs duty rates and services market-opening.

ME

ANI

NG:

India

isone

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ofthefounding

membersofWTOwhichcameintoexistence

onJanuary01,1995replacingGATT(GeneralAgreement onTariffsandTrade)and

prom

isingtheherald ofneweraintherule

based

system of

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governingand

prom

otinginternationaltradeconcomitantwiththeneed

s oftheon-going

processorglobalization.

Wherecountrieshavefacedtrade

barriersand

wantedthemlowered,thenegotiationshavehelpe

d toopen

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marketsfortrade

. ButtheWTO isnot

justaboutopeningmarkets,andinsomecircumstancesitsrulessupport

maintainingtrade

barriers

forexam

ple,to

protectconsumers or

preventthespread ofdisea

se.At

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itsheartarethe

WTOagreements,negotiatedandsigned bythe

bulkoftheworldstradingnations.Thes

edocuments

providethelegalgroundrules

forinternationalcommerce.Theyareessentially

contracts,

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bindinggovernme

ntstokeeptheirtrade

policieswithinagreedlimits.Althoughnegotiatedandsigned bygove

rnments,thegoalis tohelp

producersofgoods

andservices,exporters,andimportersconducttheir

business,

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whileallowinggove

rnmentstomeetsocial andenvironmentalobjectives.

Traderelationsofteninvolveconflictin

ginterests.Agreements,includingthose

painstakin

glynegotiatedintheWTOsystem,oftenneed

interpreti

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ng.Themostharm

oniouswaytosettlethesedifferencesisthroughsomeneutral

procedure

based onanagreed

legalfoundation.Thatisthe

purpose

behind the

disputesettlement

processwrittenintotheWT

Oagree

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ments.

Ther

e areanum

berofwaysoflooking attheWorldTradeOrganization.It isanorganizati

onfortradeopening.It isaforumforgove

rnmentstonegotiatetradeagreements. Itis a

place

forthem

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tosettletradedispu

tes.Itoperates asystem oftraderules.Essentially,theWTO isa

placewheremem

bergove

rnmentstrytosortoutthetrade

problemsthey

facewitheachother.

TheWTOagreement

s arelengt

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hyandcomplex

becausetheyarelegaltextscovering awiderangeofactivities.Butanum

berofsimple,fund

amentalprinciplesrunthroughout allofthesedocu

ments.These

principlesarethefoundation of

themulti

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lateraltrading

system

WH

AT

WTO

STA

NDS

FOR

AND

WH

AT

WT

O

DO:

There areanum

berofwaysoflooking at

theWorl

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dTradeOrga

nization.It isanorganizationfortradeopening.It isaforumforgovernmentstonegot

iatetradeagreements. Itis a

placeforthemtosettle

tradedisputes.Itoperates asystem oftraderules.Esse

ntially,

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theWTO isa

placewheremem

bergovernmentstrytosortoutthetrade

problemstheyfacewitheachother

.

TheWTOagreements arelengthyand

complex

becausetheyarelegaltextscovering awide

rangeof

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activities.Buta

numberofsimple,fundamental

principlesrunthroughout allofthesedocuments.These

principlesarethefoundation ofthemultilateral

tradingsystem

TheWTO isrun

byits

member

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governments.All

majordecisionsaremade

bythemem

bership asawhole,either byministers(whousually

meetatleastonceeverytwoyears) or

bytheiramba

ssadors ordelegates(whomeetregularlyinGeneva).

Whil

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e theWTO isdriven by

itsmem

berstates, itcouldnotfunctionwithout

itsSecretariattocoordinate theactivities.The

Secretariatemploysover600staff,anditsexperts

lawyers,economists,statisticiansandcommuni

cations

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experts assistWTO

memberson adaily

basistoensure,amongother

things,thatnegotiations

progresssmoothly,

andthattherulesofinternationaltradearecorre

ctlyappliedandenforced

It isa149-mem

berorga

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nizationwithPasc

alLamayasitshead.Itrepresentsallthetradingnations oftheworld,whoimport-

exportgoods &services.CreatedonJan1,1995

, itwasconsideredthe

biggestreform intradesince

WWII. Its

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predecessor,GAT

T(GeneralAgreement onTariff &Trade),hadatumultuous 47yearshistory.GATTmade

abeginningin1948, and

providedaframewor

k fortradeexpansionvis--visremoving

barrierson

freemove

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mentofgoods

andservices.It

provided

platformfor 8tradenegotiations initscheckeredhistoryuntil1994, the

lasttradenegotiationstheUruguayRound,result

ed inthecreationofWTO.Ineachofthese

Rounds

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(highlevelnegotiatio

ns),theWest,mostlyEuro

pe,Japanand

NorthAmericanegotiatedtradedealswiththem

selves inmind.Thedevelopingworldinclu

dingIndia,China,mostofAfricaandLatin

America

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wereforgottenas

backwardandwithoutanyclout. ForExample, theKennedyRound of1963quadrupled theworld

trade. AtthattimeIndiaandChinahadnotemer

gedandhence didnotfigure intheworldtrade

talks.Toky

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oRound of1973

-79quadrupled thealreadyquadrupledworldtradeinlast25years. Ineachcasetariffs

andtradedistortingsubsidieswere

progressivelyreduc

edonindustrialgoods &services.TheWestenjoy

edunpr

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ecedented

prosperity.

US&Japanwerethe

biggestgainers,followed

bytheallthenations oftheEuro

pe.

Poorcountriesstayed

poor.Nobodyspoke ontheir

behalf,andtheyhadnoclouttomaketheir

prese

ncefelt.

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There aresimple

reasonsforthat.First,the

poorcountrieshadnomoney tocompeteintheinternationalmark

etwithqualitygoods,secondsubsidies

provi

dedbythenations toencouragedevelopmentafter

WWII

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madetheir

products

muchchea

per.Hence adiewascastfor

poortostay

poor.In1982,China

burstonthe

internationaltradescene. In2002,India

became

anupcomingstarfortheworld totakenote.Henc

e anew

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tradebodywasneed

ed toregulateandencouragetrade.Hence attheUruguayRound, adecisionwastakentoset

up anewbody(WTO)tomanagethegrowing

trade.

TRA

DE

NEG

OTI

ATI

ONS

:

TheWT

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Oagreements

covergoods,servicesandintellectual

property.Theyspelloutthe

principlesofliberalization,

andthepermittedexce

ptions.Theyincludeindiv

idualcountriescommitmentstolowercustoms

tariffs

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andothertrade

barri

ers,andtoopenandkeepopenservicesmarkets.Theyset

proceduresforsettlingdisputes.Thes

eagreements arenotstatic;theyarerenegotiate

dfromtimetotimeandnewagreementscan

beadde

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d tothe

package.

Many arenow

beingnegotiatedunder theDohaDevelopmentAgenda,launched

byWTOtrademinis

tersinDoha,Qatar, in

November2001.

IMPLE

ME

NTA

TIO

N

AND

MO

NIT

ORI

NG:

WT

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Oagreements

requiregovernmentstomaketheirtrade

policiestrans

parent bynotifyingtheWTOaboutlaws

inforceandmeasuresadopted.VariousWTO

councilsandcommitteesseektoensurethat

theserequi

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rementsare

being

followedandthatWTOagreements are

beingproperlyimplemented.AllWTOmem

bersmust

undergoperiodicscrutinyoftheirtrade

policies

andpractices,eachreviewcontainingreports bythe

country

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concernedandthe

WTOSecretariat.

DIS

PUT

E

SET

TLE

ME

NT:

TheWTOs

procedureforresol

vingtradequarrelsunder theDisputeSettlement

Understandingisvitalforenforcingtherulesand

therefore

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forensuringthat

tradeflowssmoothly.Countries

bringdisputestotheWTO iftheythinktheirrightsunder theagree

ments arebeinginfringed.Judgments byspeciallyappoi

ntedindependentexpertsare

based oninter

preta

tionsof

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theagreements

andindividualcountriescommitments.

Thesystemencouragescountriestosettletheirdiffer

encesthroughconsultation.Failingthat,theycan

follow acarefullymappedout,stage-by-stage

proce

durethat

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includesthe

possi

bilityof aruling bya

panelofexperts,andthechance toappealtheruling onlegalgrounds.

Confidence inthesystem is

borne out

bythenum

berofcases

broughttotheWTO around

300cases

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ries,includinglonge

rtime

periods toimplementagreementsandcommitments,measurestoincreasetheirtradi

ngopportunities,andsupporttohelpthem

build

theirtradecapacity,tohandledisputesandto

implemen

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eaimstohelp

developingcountriesdeveloptheskillsandinfrastructureneeded toexpandtheirtrade.

WT

O IS

MO

RE

BEN

EFI

CIA

L

FOR

LESS

DEV

ELO

PED

CON

TRI

ES:

Giving

themmore

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timetoadjust,

greaterflexi

bilityandspecial

privileges;overthree-quartersofWTOmem

bersaredevel

opingcountriesandcountriesintransitionto

marketeconomies.TheWTOagreements

givethem

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nationalorganizati

ons,themediaandthegeneral

public onvariousaspects oftheWTOandtheongoing

Dohanegotiations,withtheaimofenhancingcoop

erationandincreasingawarenessofWTOactivi

ties.

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textiles,andwith

specificissuessuchasstatetrading,

productstandards,subsidiesandactionstakenagainst

dumping.

SER

VIC

ES:

Banks,insurance

firms,telecommunicationscompanies,touropera

tors,hotel

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ement onTrade inServi

ces(GATS).WTOmem

bershavealsomadeindiv

idualcommitmentsunderGATSstating

which oftheirservicessectorstheyarewilling

toopentoforeigncompetition,andhowopen

thosemark

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etsare.

INT

ELL

ECTUAL

PRO

PER

TY :

TheWTOsintellectual

propertyagreementamounts torulesfortradeand

investmentinideasandcreativity.Therulesstatehow

copyrights,

patents,trademarks,geographicalnames

usedto

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reviewfor

bringing

it inconformitywithWTO

provisions.A

particular

partofArticle 27mentioned

below

hasdirectimplicationsforagriculture.Even

theproduct

patentaspectwillhaveimplicatio

nsfor

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systemhas

beenprop

osed

(c)widespread

patentsearchfacili

tyforeducationalandentre

preneurialnetw

orksandcenters sothatquality ofresearchandeduc

ationcan

becompetitive,(d)

justas agloba

lregist

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B

Thecountryhasmadesignificantimprovementsinagricultural

production,

buttheachie

vementshave

beenmainlyconfinedto afewareas

.Themajorchallenges forouragriculture

system

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wouldalways

beincreasing

productionand

productivitytoensurefoodsecurityfortherising

popu

lation.Meetingthischallengemeansalsoensur

ingfoodsecurityanda

betterstandardof

living for

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statisticiansandcom

municationsexperts assistWTOmem

berson a

dailybasistoensure,amongotherthings,

thatnegotiations

progresssmoothly,andthatthe

rulesofinternationaltradearecorrectlyapplied

andenfor

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regimeinmanysigni

ficantways. Inthisround,

besidesnegotiatio

nareasoftariffandnon-tariffmeasures,three

newareasweretouched:

1.Tradein

services,

2.Traderelatedin

vest

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rtsintoitsown

market.Thesystemalsogivesdevelopingcountriessomeflexi

bilityinimplementingtheircom

mitments.

TheUruguayRoundalso

persists

withthistrend,suchas inthegovernment

proc

urement

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tionovertime.Gain

sfromtheUruguayRound

At thetimeofsigningtheMarrakeshagreement

, thefollowingkindsofgainswereto

benefitthe

signatories:

1.Staticgains

due

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miesthat

have

beenhighly

protec

ted.

3.Dynamicgain

sduetoim

provedte

chnicalefficiencyorlo

wer

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tradeinservices,trade

-relatedintellectual

propertyrights(TRI

PS),andtrade-relatedinvestmentmeas

ures(TRIMS),inthreedistinctthematicgrou

ps.

Thefirstwasreducingspecifictrade

barriersand

improvin

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gmarketaccess for

partnercountries.Areasunderthisweretariff

s,non-tariffmeasures,tropical

products,natur

alresource-

based

products,textilesandcloth

ing,andagriculture. Asecondthemewasone

ofstren

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Page | 148


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ie

n

c

ya

n

d

h

i

g

h

e

r

p

r

o

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ct

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it

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Page | 149


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I

n

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ia.

1

6

E

n

v

ir

o

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e

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ta

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p

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Page | 150


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e

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e

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ir

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Page | 151


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n

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Page | 152


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b

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Page | 153


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r

l

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ff

s

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s

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el

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s

Page | 154


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a

n

d

ith

a

s

b

e

e

n

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Page | 155


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it

s

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g

at

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o

n

s.

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is

t

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i

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n

s

i

n

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r

k

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Page | 156


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e

w

o

ul

d

r

e

d

u

c

e,

w

h

ic

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w

o

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l

d

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n

e

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t

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n

d

Page | 157


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c

o

n

su

m

e

r.

C

H

A

P

T

E

R

THE

AGR

EE

ME

NT

ON

AGR

ICULTU

RE:

The

Agre

emen

t on

Agri

cultu

re

Page | 158


159/288

signe

d at

the

end

ofthe

Urug

uay

Roun

d of

negot

iatio

ns

deals

main

ly

with

the

natur

e of

entry

of

the

imported

good

s in

dome

stic

mark

ets

and

thenatur

e of

supp

ort

provi

ded

to

the

dome

stic

Page | 159


160/288

farm

ers

and

expo

rtersof

agric

ultur

al

good

s by

their

gove

rnme

nts.

It

also

lists

the

differ

ent

types

of

cropssubsi

dies

that

have

to be

reduc

ed.

TheAgreement onAgriculturesigned attheend

ofthe

Page | 160


161/288

UruguayRound ofnegot

iations,whichhasasitsobjectivetheestab

lishmentof afairandmarket-orientedagric

ulturaltradingsystem,dealtwiththreegrou

ps of

issues.Thesewere

b

r

Page | 161


162/288

l

MA

RKE

T

ACC

ESS:

M

arketaccesswassought to

beincreasedin anum

berofways.First,theAoAmadetarrificationmandatory.Thatis,countrieshadtodism

antle,in a

Page | 162


163/288

phasedmanner,any

non-tariff

barrierssuchas a

banonimportsof

particularagricultural

productsorceilings

setonthequantitiesofindividual

productsthat

couldbeimported(otherwisetermedquantitative

restriction

Page | 163


164/288

s orQRs), andonlyuse

importtariffs orduties asmeans of

protection.

Second,theagreementrequiredthatthe

developedcountriesreducetheirtarifflevels by36

percentoverasix-year

periodfromthestart

ofimpl

Page | 164


165/288

ementation,witha

commitmenttoreducetariffs oneachtariffline

by aminimumof10

percent.Developing

countrieswererequiredtoreducetariffs by24

percentovera 4-year

period,andensure atariff

reduction

Page | 165


166/288

of10

percent ineach

tariffline17.Third, allcountrieshadtospecify

ceilings atwhichtheirtariffswere

bound, or

themaximumleveltowhichtariffswould be

raisedunderanycircumstances.Finally,there

wasa

Page | 166


167/288


168/288

by1995and5

perce

nt ofthesame

by2000inthecaseofthedevel

opedcountriesand2004inthecaseofthe

developingcountries.Ifcountriesdidnotrefle

ctthisminimumaccess,theywereexpectedto

usethe

Page | 168


169/288

mechanism oftariff-rate

quotas,orlowertariffs forimportsof amagn

ituderequiredtoensure therealizationofmini

mumaccessrequirements.Despitethesedetailed

specifications,theAoA

providedcountrieswithan

escape

Page | 169


170/288

clause intheeventof a

largeanddisru

ptiveinflow ofimports.Under theSpeci

alSafeguards

provisions,countriesthat

hadtarrifiedtheirQRs,Itneeds to

benotedthat

giventhelevelofsuchtariffs atthetimeofimpl

ementatio

Page | 170


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n ofthetariffreduction

commitment,theactualincreaseinaccess

maynot

besubstantial.Theleastdeveloped

countrieswere

providedaconcession, astheywere

notrequiredtoreducetheirtarifflevels.tarrif

iedprod

Page | 171


172/288

ucts,withanimport

surgeor

by afallinimport

prices tolevels

thatwerelowrelative tothosethat

prevaileddurin

g the1986-88reference

period,wereallowed toimpo

sehighertariffsandotherrestrictions torestra

inimpo

Page | 172


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rts.

DO

MES

TICSUP

POR

T

TheAoAdefinedthe

princ

iplesonthe

basisofwhich theAggregateMeas

ureofSupport(AMS)

provided

bythegove

rnment ofacountry toitsagriculturalsector

wasto be

Page | 173


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computed.Theaggregate

measureofsupportwasthesumtotalofthe

AoAproduct-specificandnon-

product-speci

ficsupport

provided

bynationalandsub-natio

nalorfederalgovernmentsinindividualcount

ries.The

Page | 174


175/288

originalDunkelDraft

oftheUruguayRoundAgreement

provided

forcommitmentstoreducedomesticsupp

orton aproduct-

by-product

basis.However,

theagreement

betweentheG-2,theUS,andEC

atmeeti

Page | 175


176/288

ngsthattook

placeat

BlairHouse inWashingtonin

November1992(kno

wnastheBlairHouseAccord),which

paved thewayforthesuccessfulconclusionofthe

negotiationsontheUruguayRound,replaced

theseprod

Page | 176


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uct-wisecommitments

to acommitmenttoreduceoverallsupport

toagriculture18.

Notallofthesemeasures

ofsupportwereconsideredviolativeoffreetrade

principlesandthereforeeligi

bleforinclusionin

calculatio

Page | 177


178/288

ns oftheAMS. Infact,

theAgreement onAgriculturecategorized thediffer

entpossiblemeasuresofsupportintothree

categories.Thefirst,termedtheamber

boxmeas

ures,wereseenasthose

policies,which dohave

asubst

Page | 178


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antialimpact onthe

patte

rnsandflowoftrade.Allsuchdomesticsupp

ortmeasureswereto betakenintoaccountwhile

computingtheAMSlevel,andcountrieshadtocom

mitthemselves toreduce intheaftermathofthe

agreement

Page | 179


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.Thesecondterm

edthegreen-

boxmeasureswerethosethatwere

seenashaving nomajoreffect on

productio

nandtradeandwereconsideredcompletelynon-viola

tiveoftheAoAandnotsubjectedtoanyreduc

tioncom

Page | 180


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mitments.

Theyinclu

dedavariety ofdirect

paymentstofarmers,

whichwereseenasaugmentingtheirinco

meswithoutinfluencing

productiondecisions.

Some ofthemwere:

P

R

E

Page | 181


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R

P

A

D

C

G

SUP

POR

T

IN

THE

FOR

M

OF

SUBSIDI

ES

CO

MES

BY

WA

Y

OF:

pr

ice

Page | 182


183/288

support,

ormeasuressuchasgo

vernment

procurem

ent,backed

byex

port

orim

portcontrolsus

ing

Page | 183


184/288

tariffsand

QRsand

budgetary

support,inthefor

mofex

plicit

budgeta

ryoutlaysonsu

bsidie

so

Page | 184


185/288

nfarmin

putsandcredit,agricu

lturalresearchandex

tension,deficiency

pay

ments,insuranceanddi

sast

Page | 185


186/288

erpaymen

ts,diversion

payments

fortem

poraryretir

ementofresources,an

dcom

pensationinlieu

ofre

Page | 186


187/288

ductions

inmarket

pricesu

pp

ortorim

plicit

bu

dgetaryoutlayinthe

formofrevenuesfore

go

Page | 187


188/288

neasamea

sureofsu

pporttoagri

culture.

Page | 188


189/288

WT

O &

AGR

ICU

LTU

RE

IN

INDI

A:

Indiais

oneofthefoundingmem

bersofWTOwhic

hcameintoexistenceonJanuary01,1995repla

cingGATT(GeneralAgreement onTariffsandTrad

Page | 189


190/288

e)and

promising

theherald ofneweraintherule

basedsyste

m ofgoverningand

promotinginternationaltradeconcomitantwiththeneeds oftheon-going

processorglobalization.

WTO

provisionsrelate

d tointer

Page | 190


191/288

nationaltradeare

nowsimilarlyapplicabletoagriculturewhich

wasbroughtwithin thefoldofGATT intheUruguayRound(1986-93)ofmultilateraltrade

Negotiations(MT

Ns).

Application ofWTO

provisions

Page | 191


192/288

onagriculture

involvesmanycontentionsissuesandis anarea

ofseriousconcernfordevelopingcountrieswhich are

primarilyagrarianeconomies,More

over,theworld,despitegrowinginterdependen

ceand

Page | 192


193/288

integration, ishighl

yheterogeneouswithregard tolevels ofdevelopme

nt.Thisheterogeneityisverymuchnoticeablewhenwecomparetheagriculturalsector ofdevel

opedanddevelopingcountries.

Supportinfra

structure

Page | 193


194/288

likestorage,

proce

ssing,finance,marketing,trans

portandR&D

facilitiesaremuchmoreadvancedandorganized. Insharpcontrast,in acountrylikeIndia, formilli

onsoffarmerswhoderivedtheirlivelihoodfrom

agricultur

Page | 194


195/288

al, itisstilla

wayoflifeandnotanoccu

pationtheyhave

chosenforthemselves.Indianfarmersaremostlyinvolvedinsubsistencefarming

withverylittleornomarketablesurplus.

Onthe

Page | 195


196/288

otherhand,therehave

veerinstanceswhere intheUSAfarmershave

been

givensubsidiesworthmillionsofdollars tokeeptheirfarmlanduncultivated. InIndia70%ofthe

holdingarenotoftheeconomysize,making

applicatio

Page | 196


197/288

n ofmoderntechn

ologydifficultandunafforda

bleforthefarm

ers.

ThedevelopedcountriesliketheUSA,

JapanandEUcountriesheavilysubsidizetheiragriculturewithhighqualitystandardsand

aggressive

Page | 197


198/288

marketing

practices,

thesecountrieshold72%shareofworldtradein

agricultural

productsarekeepthedevelopingcountriesvirtuallyatthe

peripheryofworl

dmarket.

Thesilentfeatures0fthisagree

mentinclu

Page | 198


199/288

dethreemain

provi

sionswhichhave

becomeeffective1Jan,2000

.

Underaccess allnon-tariff

barrierslike

quotawill

beconvertedintotariffs.Indiahasalreadyremovedquantitativerestrictiononall

herimpo

Page | 199


200/288

rt. Ithasnowimpo

sedprotectivetariffonimportsofsensitiveagric

ultural

productsinorderto

protecttheinterestofitsfarmingcommunity.

Asfarasthemaximumlimitoftariffisconcerned

nocount

Page | 200


201/288

ry ispermittedto

imposetariff

beyond acertainlimit.Allindustriali

zationcountriesaretoreducetariff

by36%within sixyears. Forindividualagricultural

prod

uctstariffhastoreduce byatleast15%.Developin

gcount

Page | 201


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rieslikeIndiahave

toreducetariff

by24%within 10years. Onany

individualagro

producttariffcuthasto beatleast

by10%.

UnderExportCom

petitionthedevelopedcountriesaretoreduce thevalueof

direct

Page | 202


203/288

exportsubsidies

by36%overa

period ofsixyearsandinvolu

meterms21%.The

baseperiod forthesecutis1986-90or91-92 ifexportswerehigher inthat

period.Overthesame

periodsthedeveloping

countries

Page | 203


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aretoreduce the

valueofdirectexportsubsidies

by24%and

volumeterms

by10%.

Underdomesticsupp

ortthisissueislinked to

providingstatesupporttofarmersinfarm

production.Under

AoA(Agr

Page | 204


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eementonAgri

culture)thedevelopedcountriesaretoreduce

AMBERBOXsubsidieswithin 6years

by20cstartingfrom1995with1986-88

periods as

base.The

samehasto bereduced

by13cwithin 10years

by

developin

Page | 205


206/288

gcountries.

AoAhasclassifiedallsubsidiesgiventofarmers

intothreecategoriesAMBERBOXsubsidies,BLUE

BOXsubsidiesandGREENBOXsubsidies.UnderAMBER

boxsubsidiessuchdomesticsupport

itsinclu

Page | 206


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dedwhich ismean

t toencouragefarmersto

producemore.

BLUEBOXsubsidiesarerelated toquantumof

outputandhence areconsideredminimallytradedistorting.Suchsubsidedis

providedonlyup

tocertai

Page | 207


208/288

nlimitof

prod

uction.GREENBOXsubsidiaryaidtofarmers

comesunderthiscategory.Thedevelopedcountrieshaveused

provisionsofAoAtofurther

infestoftheirfarmers.

Thedevelopedcountries

haveused

Page | 208


209/288

provisionsofAoA

tofurthertheinterestoftheirfarmers.For

example,theyhaveremodelledAMBERBOXsubsidiesinsuchawaythatthesequalitiesto be

putintoBLUE orGREENBOXsubsidies.These

countries

Page | 209


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areconstantly

press

uringthedevelopingcountriesforgreatermark

etaccess foragricultural

product

butarenotwillingto

bringdownthelevelsupportthat

theyprovide totheirownfarmers.

Developing

countries

Page | 210


211/288

likeIndiafeelthat

theyare

beingdiscriminatedagainst inmatterlike

tariffonfoodimportsintodevelopedcountries.Forexam

ple,inthenameofmutualaccess,

OECDcountriesimposeverylowtariffonimpo

rtsfrom

Page | 211


212/288

fellowmem

bers

whilesimilarimportsfromdevelopingcountries

aresubjectedtohighertariffs.

TheNov.

2001Doharound ofministerialtalksweretermedasDevelopmentRound

becausecomprehensive

developme

Page | 212


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nt oftheacce

pted

asitsagenda.

Theoretically,issueslike

productionandtradeofagriculture

products

alongwithdomesticsupportandsubsidyto it,complianceissues,intellectual

propertyright

s,speci

Page | 213


214/288

aldiscriminatory

practicesandmarketaccesswereto bediscussed.

Butsoonit

becameclearthatonthegrounddevelopedcountrieswerenotwillingtoyield

muchtothedevelopingcountriesfordeeper

market

Page | 214


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access.Bythe

termination ofthisround itwasclearthatissuerelate

d toagriculture

pushedotherissues tothe

background.

Forthedevelopingcountriessafeguardingtheinterestoftheirfarmingsecto

r isa

Page | 215


216/288

matterrelated to

theverysurvivalandsubstancesoftheir

populatio

n.Moreoverin arepresentativedemocracylikeoursitwould bea

politicalhara-kiriifthe

governmentignorestheinterestsoffarmers

andagric

Page | 216


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ultureunder

internationalcompulsions.

IntheDoharoun

d ofnegotiations,whilethedevelopedcountrieswere

mainlyconcernedaboutissueslikemarketaccessandIPR,thedevelopingcountrieswere

concerned

Page | 217


218/288

aboutfoodsecurity,

povertyeliminationandeconomicgrowthwith

respect tothe

process ofglobalization.It isalleged

bydevelopingcountiesthatthedeveloped

worldshowsonlyhypocriticalconcernabout

theseissue

Page | 218


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.

Inthe

farmbillintheUSAandthecollectivefarming

policy inEU,agatesupporthas

beenpromisedto

thefarmersthan

before.Sensing amajordeadlockinfuturerounds ofdiscussions onAoA,

theagric

Page | 219


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ultureministers

ofEUcountries

presentedareconciliatory

pack

ageinthelastweekofJune2003. Inthisthey

promisednottoofferanysubsidytotheir

farmerbutinsistedthatagriculturalincome

world

Page | 220


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stillbeprotected.

Thisis awilymoveas itreplacedatradedistorting

measurelikesubsidy

byprotectionofagricultureincomewhichwillnot

betreated as

tradedistortingandhencequalifiesto be

putin

theGRE

Page | 221


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ENBOX.

Itwould beamisnomertocallsuch

protection

asminimallytradedistorting

becauseitwill

influencetheallocationofrecoursesinthesincethatintheabsenceofsuch

protectionfewe

rresou

Page | 222


223/288

rceswould becom

mitted toagriculture

protectionwillserveasan

incentivenottomoveresourcesawayfromagricultureleadingtoover

productionthissurpl

usproducewill

beusedtodisallowimports

fromthe

Page | 223


224/288

developingworl

d orfordum

pingintheworldmarket.The

worstaspect ofthis

packagewasthatnotevenamentionofreducingexportsubsidyfoun

dplacein it.

TheministerialmeetatCancun

inMexi

Page | 224


225/288

coheldon10-

14sep.2003raisedquestionsontheworking

ofthewholeapparatusofWTO.

The

onlymajorachievementonthe

partofthedevelopingcountrieswasthattheydidnot

succumb

Page | 225


226/288

tothe

pressures

ofthedevelopedcountries.AsexpectedtheCanc

unmeettoowasfocusedonagriculture G-5grou

pcountrieswithIndia,china,Brazi

l,ArgentinaandSouthAfrica asitsmem

bers

emphasize

Page | 226


227/288

d theurgencyof

theneedtoreducefarmsubsidyinthedevel

opedcountriesespeciallyintheUSAandEUcountries.

Indiaplayed a

proactiveroleinthisinitiative.Itwashighlightedthatthecotto

nexpo

Page | 227


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rtdependentecon

omies oftheworldlikeChad,

benign,male

andBurkinaFasohavesufferedmassivelyduetothefarmsubsidythattheUSAgivesto its25,0

00cottongrowers.

EvenAustraliaand

New

Zealand

Page | 228


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supportedthestand

takenbytheG-21grou

p ofthedevelopingcount

ries.Thereviseddraft

presentedfornegotiationswasheavilytiltedinfavour ofthedeveloped

countries.Itrequiredthedevelopingcountries

likeIndia

Page | 229


230/288

toreducefarm

subsidy

by70%whileEUmem

bersandtheUSA

wererequiredtoreduce it

by41%and36%respectively.Thereviseddraftwasa big

blowto

theheightenedexpectation ofthedevelopingcount

ries.

Page | 230


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Atcocoonthe

developedcountriesdidnotyieldmuchtotheoutst

andingdemandofthedevelopingworld

butcleverlyincludedissueslikeinvestmen

t,competition,tradefacilityandgovernment

procurem

Page | 231


232/288

entto

buildpress

ureonthedevelopingcountries.

Honk

Kongministerialconferenceended inthesamemanner.

Thedevelopingcountries,led

byG-5opposedthe

proposalsofUSandEuro

peanUnion on

thegrou

Page | 232


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ndthattheywere

againsttheinterestsofthe

poorcountries.Doha

roundtalksareatthemomentfloundering

becauseoftheuncompromisingstands

adoptedbyplayerssuchasEU,USandG-5.

The

Page | 233


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interesting

part

ofthewholethingisnotonecan

besaid

to bethemainculprits

becauseeveryGovernmentinvolvement intheWTOnegotiations issquar

elyaccountableandanswerable toitsconstitutio

nand

Page | 234


235/288

population

back

home,whichmeansamongotherthings,

thatnocommitmentcan

bemadewhichwillleadtoweakeningofthedomesticsupport

basebeyond a

point.

Politicallytheissueof

AoAis so

Page | 235


236/288

sensitivethatno

government,whetherinthedevelopedorthe

developingcountries,is ina

positiontocompromisewiththeinterestsoffarmersin

thenameofcollectivism.

Nowthequestion

arises

Page | 236


237/288

thatwhatshould be

Indiansstrategy?Asthingsstandat

present,

theprovisionsofAoAdonotappear tohaveathreateningimpact ondomesticsupportand

exportsubsidyunderAoA.Thenon-

product

specific

Page | 237


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supportamounts

to7.5%ofthevalueofagriculture

productio

n inIndia.

Sinceproductspecificsupport

isnegative,theAggregatemeasureofsupporttoIndianagriculture isstill

belowthe

demonetis

Page | 238


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e of10

percent in

termsoftheUruguayroundstipulations.India

hasalreadysuggestedthatAMS

becalculatedasthesumofthe

productspecificandnon-

productspecificsupport(WTO2001). Asthe

inputsubsi

Page | 239


240/288

destoresource-

poorfarmersareexem

ptfromreductioncommitm

entsunderWTO(thesecomeundernon

productspecificsupport),sotheoverall

levelofsupportgiventoIndianAgriculture is

lessthan

Page | 240


241/288

theminimumof

10%assetunderWTOstipulations.

Agriculturesector inIndiahasresponded

positively

tothelaunchingofmacroeconomicreformsin1991.Withliberalizationofexchange

rate,the

Page | 241


242/288

termsoftradefor

agriculturehaveshown asignificantimprovem

ent.Privateinvestment inagricultureregisteredastepriseinthe

post-reform

period.

ForthefirsttimesinceindependenceIndiahas

beco

me anet

Page | 242


243/288

exporteroffood

grain.

Thefearthatliberalizationofimpo

rtswouldleadtomassiveinflux ofagricultur

eimportstoohas

beenfound to

bemisplaced.Quantitativerestrictions onimportshave

been

liftedsince

Page | 243


244/288

April2000.Thou

ghimportlikefruits,ketchupandmeat

prod

uctshaveincreased,theystillaccountfor aminisculeoftotalagriculturalimports.

Thoughthereisclearly aneedto beconstantlyvigilantand

workin

Page | 244


245/288

leaguewithother

developingcountriesandremovaloftariffand

non-tariff

barriers,themajorchallenges thedevelopedcountriesatWTO,weneedtotake

measureswhichmakeIndianagriculturemore

competitiv

Page | 245


246/288

e.

Thefortu

nesofIndianagriculturewhichnowacco

untsforabout20%oftheGDPand

providesempl

oyment toabout60%oflabourforcecruciallydependupongreaterinvestment,

bothprivate

andpubli

Page | 246


247/288

c, inirrigation

powe

r,roadsandtheability ofagriculturiststoacces

s themoderntechnologyspeciallytheyieldaugmentingtechnology.Conditionsneedto becreat

edforwidespreaddiffusionandapplication of

thistechn

Page | 247


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ology bythefarm

sector.

Toconclude,itcan

besaidthat

WTO

provisions

posenorealthreat toIndian

agriculturethoughaspectsrelated toIPR,removaloftariffandnon-tariff

barriersandmark

etacces

Page | 248


249/288

sneedto bedealt

withconstantvigilandsuita

bleexpertise.Relevant

institutionalandlegalchanges(likein

patenting)needto be

broughtaboutEquallyimport isthe

needtorestructure,modifyandrevampour

agricultur

Page | 249


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esector sothat

itcanriseuptothechallengesthrown

bygrowingintegrationwiththerestoftheworld.Theneedofthetimeis tomakeit

moreefficient,moderndiversifiedandcompetitive.

Thetime

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toengineer aseco

ndGreenrevolutionhasarrived.

Due to the Agreement on Agriculture (AOA), India can no longer remain aloof from the restof the world. It had to join the WTO. This AOA has established a number of generallyapplicable rules with regard to agriculture and trade related matters. Most of the developedcountries are providing huge subsidies to the agricultural sector. In these countries not morethan 10% of the population is dependent on agriculture. The below table gives theinformation about the subsidies that are being given to agriculture by different countries andthe percentage of the population depending on agricultureIndia provides only 2.33% subsidy to agriculture. It is very small when compared with othercountries. The Aggregate Measure of Support (AMS) to agriculture will be 10 percent in

India as against 5% in the developed world. The total subsidy on agriculture in the developedworld works out to $150 billion and in the developing world $19 Billion. If the AMSexceeds 10 percent in any country, it has to reduce by 13% by 2004. According to the WTOthe AMS in India, product subsidies is 7.5% and subsidy on non-product is minus 38.5%. Sothere is no question of losing any thing in our agriculture by accepting the AOA.

SUBSIDIES TO AGRICULTURE:

Country

EECUSA

Japan

China

South Africa

India

TARIFFS:

The tariff on agricultural commodities have been consider-ably restructured to comply withWTO requirements. India is committed to reduce tariffs on 686 agricultural products. The

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average tariff on agricultural commodities was 115% before the agreement. After theagreement it has been reduced to 35%. Along with 686 commodities the tariff on 587 othercommodities is on an average 50% less than the negotiated tariff. Only on 10 commodities isthe tariff rate more than the negotiated tariff rate.We must recall, in this context that two decades ago India agreed at an international meeting

to reduce the tariff either to zero or to a minimum level on the import of dairy products. Inother words, India had accepted in principle the import of agricultural products many yearsago. In the case of edible oils we agreed (binding) to impose a tariff of up to 150 percent

but the bounded duty at present is 0. With a duty reduction on edible oils as low as 25%,hundreds of oil mills have closed down, groundnut farmers are unable to get a minimum

price and even compelled to dispose of their product at huge losses. Pulses were importedunder OGL (Open General License) at zero interest rates. In July 1999 the Government ofIndia sought to renegotiate the tariff on pulses. But the international community has notyielded.

Investment: Indian agriculture needs a lot of investment to have large-scale production. By

this we can reduce production costs. But the problem is that large scale agriculture

displaces persons who are dependent on agriculture. Instead of criticizing WTO we have

to think of an alternative system. Corporatization of agriculture is seen to be inimical to

social justice. Redistribution of land to the landless poor through the various land ceiling

acts leads to fragmentation which will be a hurdle to improved production as well asproductivity.

Patent System: Plants such as neem, turmeric and products such as Basmati (scented rice)

are patented or about to be patented by American companies. It is strange that in Indiathese have been household plants used in cooking and for medicinal purposes sinceancient times. The system of Ayurveda has existed since times immemorial. All medicinal

products based on plants and plant products must be patented by Indian companies.Conceding the patent rights to an American based company is ridiculous and we have totake this up with the WTOs Dispute Settlement Board (DSB) at Geneva.

The challenges before Indian agriculture are immense. India is not where it should havebeen in the world market for agricultural products despite being one of the top producers.The country needs to put greater emphasis on cultivation of international varieties. UntilIndia takes some steps in this direction, it will continue to produce more only to earnless. The major challenges for Indian agriculture system would always be increasing

production and productivity to ensure food security for the raising population.

Rigid quality control is a major challenge for Indian agriculture. The global agricultural

market is influenced to a great extent by the quality of products, especially whenexporting to developed nations. Indian agricultural exports have to face tough competition,which is a matter of serious concern. The right type of technology for growing and

processing must be adopted so that there is good quality production at lower costs, whichin turn will reduce the prices and place India in a better position to compete globally.

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Indian producers produce agricultural goods at competitive prices. Yet low global pricesresulting from subsidies by the developed nations mainly the European Union and UnitedStates, deprives India of any advantage on the price front. The US is exporting wheat at

prices 40 per cent lower than production costs. In the case of soybean, the pricedifference has been increasing steadily over the last four years and is currently at 30 per

cent while for maize it is 25-30 per cent. In 2001, cotton was being sold in theinternational markets at a price 57 per cent lower than its production cost, while the pricedifference for rice has stabilized at 20 per cent. As a result of these prices, the US Is theworlds largest exporter of wheat, corn, cotton and soybean, and the second largest in rice.

While agricultural trade liberalization was justified on the grounds that Northernagricultural markets would open to India, Indias exports to Europe have actually declinedfrom 13 to 6 per cent. This is because the North still maintains high subsidies and trade

barriers. The WTO regime has become a challenge because it has shown that agriculturetrade liberalization has become a unidirectional phenomenon that opens markets in the

South for Northern business corporations but closes markets in the North for trade fromSouth. Such trade will destroy livelihood opportunities for resource-poor farming familiesand agricultural labour.

Global forces are now playing an important role in determination of cropping patterns,investment levels, price structures, quality of production and level of international trade.Indian farmers are facing multiple challenges. Firstly, they are being asked to provide agreater variety of better quality products at lower cost, and in a safer manner than everdemanded before. Secondly, they are being asked to produce this abundance on ashrinking natural resources base that is often subject to government regulations.

As far as India is concerned there are some danger signals. Population growth rate andhigher per capita income suggest that demand for food grains is growing. But there aredoubts about the supply response. In terms of acreage, area under food grains has notincreased. Yield growth rates of food grains are also stagnating in most parts of thecountry. The productivity of soil has also started declining. The underground water tablein most Indian states is getting rapidly depleted. Based on these facts, various studies have

pointed out that India will be a net importer of rice in the near future.

FISHING IN INDIAN WATERS:

There is another problem that has arisen as a result of our accepting WTO norms. Everycountry has to allow fishermen of other countries to catch fish in its territorial waters. Indiaexports special grade fish (Tuna and Prawns) to other countries and earns substantial foreignexchange. Around 10 lakhs people are dependent on fishing. Deep sea fishing leads toexhausting not only fish resources, but also displacement of our people in fish catching,

processing industries etc. This too is an issue that needs to be discussed at the appropriateWTO forum.

BENEFITING THE CONSUMER:

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Given that exports from India are already very low, we will be put to greater disadvantage if

new hurdles are put in the way of our exports. There are still larger issues of public good at

stake in such decisions. If producers from other countries were able to offer better

commodities at far cheaper prices, it would be unjust and unfair to the Indian consumers torestrict or ban such imports indefinitely. Expecting such protection as a time bound measure

may be reasonable, if during that limited time span, we make determined efforts to increase

productivity in agriculture, improve the infrastructure and upgrade the efficiency of Indian

industry to face global competition. We, the farmers of India are confident that with judicious

measures of protection during the brief transition period of 4-5 years, we will be able to

successfully face international competition by building world class agriculture, provided the

government gets off our backs and stops putting new hurdles in our way.

THE QUESTION OF SUBSIDIES:

Another important stipulation in the WTO Agreement on Agriculture is that Governments

direct support to agriculture i.e. non-product-specific. The Aggregate Measurement Support

(AMS) should not exceed 5% in the case of developed countries and 10% in the case of

developing countries. USA, Europe, S. Korea, Japan etc., support agriculture in various ways.

In rich countries, it has become necessary to ensure that agriculture continues and that some

people stay in agriculture. Besides, if the whole of the country becomes a forest of industries

and cement concrete, there is a risk of the environment being destroyed. For these reasons,

richer countries feel the need to keep agriculture operating and even flourishing. Subsidies and

income guarantees are given for producing as also for not producing. There is a subsidy for

producing a commodity and another subsidy for not producing the same commodity. There is

also a subsidy for keeping the land fallow. Apart from this, governments spend liberally on

research in agriculture; the development of underdeveloped areas; infra-structure, transport and

communication to mention a few. The situation in India is quite the contrary. In rich

countries 1 to 2% of the population depends on agriculture. In India, it is more than 70%.

98% of the population of developed countries can extend ample help to their 2% farmers. On

the other hand, 30% of Indias population cannot extend much help to 70% farmers; nor is

there the political will to do so. Therefore, the Indian farmer faces the continuing prospect of

being crushed under negative subsidy for decades to come.Some suggest that the Government should get included in the WTO Agreement, new ways and

means to support farmers. As of today, there isnt any condition in the WTO Agreement on

Agriculture (AoA), which stops the Indian government from helping farmers. Therefore, talking

of fresh provisions is pointless.

EXPORTING AGRICULTURAL PRODUCE:

Coming to ground realities, what are the prospects and scope for the export of Indian

agricultural produce? Potential exporters will face difficulties both in the domestic and foreign

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markets. The demand for Indian farm products (excluding some exceptions like Basmati Rice,

Darjeeling Tea etc.) is very low. The reason is that Indian products are of poor quality. India

lacks a system of grading and testing our produce. There is little awareness of regulations

that are accepted the world over as necessary for the protection of the health of a consumer.

Due to the license-permit system, Indian exporters have earned a bad name as unreliablesuppliers. Indian agricultural exports are limited to ethnic markets catered through cousin-to-

cousin channels.

The deficiencies in Indian agriculture pose severe problems in entering the world market.

Land in India, due to various land-related Acts and chronic penury, is fragmented. Efforts to

encourage the consolidation of land and production of quality-produce in viable volumes have

been ineffective. Besides, the infra-structure for storage, transport, processing, grading and

rating quality-standards are almost non-existent. Farmers fail to comprehend the sophistication

of global markets, as their experience is limited to primitive APMC operations.

THE PLIGHT OF INDIAN FARMERS:

Up to 1996-97, the prices of most agricultural commodities in the global markets were higher

than those in Indias domestic market and, therefore, there was a clear comparative advantage

in exports. At least at the farm gate, the Indian farmer was capable of competing with any

farmer in the world. By the time the produce reached the point of embarkation, poor

infrastructure wiped out most of the advantages. Even then, in some areas like organic farming

products, medicinal and aromatic plants, multiplication of hybrid seeds etc., India had an

advantage in global markets.

This situation has rapidly changed in the last 2-3 years. Modern technology has helped

improve agricultural productivity in many countries around the world. As a result, there is a

glut in the agricultural commodity market and a recession in prices. Therefore, the Indian

farmer is not able to export several agricultural products, as our domestic prices are higher

than those in global markets.

The condition of the Indian farmer is like that of a debilitated convalescent trying to face a

flood. Exploited by the white colonial rulers and now by our own brown rulers, our land hasbeen fragmented and depleted of fertility resulting in low production, capital evasion, lack of

new investment, poor infrastructure; the lack of storage and marketing facilities; inadequate

irrigation and electricity, the absence of roads and the insufferable burden of indebtedness. And

then one fine morning, our farmers in such a condition, see a surging flood of globalization

and revolution in biotechnology.

The basic objective of globalization is to improve the global Division of Labour with

reference to comparative advantage. Indian agriculture has the benefit of abundant sunlight,

ample water and a hardy peasantry. Ultimately, these elements will be decisive in global

competition. But while taking the such big leap from traditional agriculture to world-classcompetitive agriculture, some measures need to be taken that will be immensely useful and

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essential. These are:

Freeing Indian Agriculture from State Control

Unifying the Indian Market

Modernization of Market Networks

In India, agricultural commodities are sold mostly through Agricultural Produce Marketing

Committees (APMCs). At one time, these Committees helped to improve agricultural marketing.

But, today they do not provide even minimal facilities required for marketing, like shelter,godowns, facilities for processing, grading, sorting, quality evaluation, packaging, and

information on various commodity markets, etc. Commission agents and adatiyas dominate these

markets. If, instead of this system, another one like super-market networks so common in

many developed countries take over, farmers will feel comfortable entering global markets.

Information Network

Information regarding price, the demand and supply positions of commodities in different

markets all over the world, weather reports and forecasts and agricultural extension advice must

be easily accessible to farmers in the villages. Websites and portals providing such informationand services are available. Development of information and communication networks enabling

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farmers to have access to this information is necessary.

Warehousing Receipts

The present system for the purchase of cereals and other farm produce must be changed and

replaced by a system of storing farm produce in warehouses and extending to farmers credit tothe extent of 70% of the value of material kept in godowns, needs to be introduced. This can

easily be done by recognizing warehouse receipts under the Negotiable Instruments Act.

Corporatization with Land Equity

All these measures are beyond the ambit of the State. They are also beyond the capabilities of

co-operative establishments. For this, the efficiency of the company structure (joint stock

companies) and the sense of participation and involvement of co-operatives will have to be

brought together to forge new forms of economic institutions. Farmers could come together and

form companies with share holdings proportionate to their land. Joint Stock Companies should

take responsibility for finance, management, technology, and post-harvest work like

warehousing, storage, processing, sales and export. If this is achieved, Indian farmers will be

able to handle the challenge of global competition. After thousands of years of enslavement and

exploitation, with changes in the situation worldwide the chain that binds the hands and legs

of the farmers - are breaking. Opportunists would like us to believe that there is happiness in

living as slaves and that freedom is painful. Farmers cannot be deceived by such calumnies

and allow themselves to be diverted from their determination to live with self-respect and in

freedom. Editors Note: This extract has been edited to make for easier reading without in any

way changing the meaning or the thrust of this part of the Declaration.

Kerala farmers driven to death by falling produce prices Thiruvanathapuram, April 11

Incidences of farmers committing suicide following the fall in prices of agricultural commodities

have been reported in Kerala

A farmer in the northern district of Palakkad ended his life by consuming pesticides after he

was served notice from a bank for revenue recovery. The body of 38-year old Ganeshan, a

traditional paddy cultivator, was found in his fields last week.

Ganeshan, who owed Rs.2.75 lakhs to the Land Mortgage Bank by way of loan and interest,

had hidden the notice he received from his family members.

Farmers organizations say that the plight of a large number of farmers in the state is similar.

The steep fall in the prices of agricultural commodities like rubber, coffee, coconut and tea as a

result of globalization have pushed farmers to penury.

The Kerala farmers have suffered losses to the tune of Rs.6,650 crores in 2000-2001, according

to a recent study conducted by the Kerala Agricultural Prices Board for a workshop on World

Trade Organization.

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Board Chairman Dr. Thomas Varghese said that the per capita loss suffered by farmers in

Kerala would amount to Rs.12,000 per annum.

IMPLICATIONS OF AOA ON INDIAN AGRICULTURE:

The repercussions of the WTO Agreement and the removal of Quantitative Restrictions on

imports are quite alarming. The fall in the prices of agricultural goods and dumping of cheap

agriculture commodities from other countries is causing harm to the welfare of Indian farmers.

Developed countries have imposed heavy tariffs to minimize imports, whereas in India tariffs are

low. Due to this, various commodities are being dumped in India. The US is dumping five

primary farm commodities in global markets in clear violation of WTO Agriculture rules. It isexporting corn, soybean, wheat, rice and cotton at prices far below their production cost in an

effort to wipe out global competition.

The continuation of high domestic support to agriculture in developed countries is a cause of

concern as they encourage overproduction in these countries leading to low levels of international

prices of agricultural products. At the same time the rich industrialized countries continue to

subsidize farmers by giving them direct payments which are exempt from any reductions

requirement and which essentially are cash handouts contingent on making adjustments in

production. These payments are neither affordable nor helpful in a developing country. The resultis that the industrialized countries continue to dominate world trade in agriculture while

preventing India and other developing countries from achieving self-sufficiency in food

production.

The AoAs requirement to reduce domestic support will prevent the Indian government from

providing the necessary support to farmers to compensate for shortage or overabundance caused

by climatic fluctuations in market prices or any other factors. In fact subsidies are essential for

Indian agriculture as 65 per cent of people are directly or indirectly dependent upon agriculture.

It is no longer the question of mere economics because the social and political implications of

developments in agriculture cannot be ignored.

The domestic support provision also affects Indias food security. The Agreement exempts

governmental expenditures relating to public stockholding for food security purposes from

reduction requirement if the operation of such a programme is transparent and follows officially

published objective criteria. This automatically subjects these programmes to external scrutiny. A

developing country may acquire and release foodstuffs at administered prices; however, the

difference between the international market price and the administered price will be included in

the calculation of AMS. Therefore, the public stockholding system will be subject to reduction

requirements if the AMS exceeds the de minimize level.

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The export commitment requirements, in turn, prevent India from providing subsidies to industry

that are necessary for it to expand its share of world export markets. This limitation will also

adversely affect the future of Indian agriculture.

The reduction in custom duties and non-tariff barriers as well as guaranteed minimum market

share for imports will force Indian farmers to compete against large Transnational Corporations

which have excessive financial power resulting from their oligopolistic control over world food

markets. Indian farmers cannot compete on equal terms against the enormous financial and

technological clout of the transnational giants of the rich countries, particularly when custom

duties and other import barriers are reduced, and these companies are guaranteed a share of

Indian market. Compliance with market access requirements will devastate domestic food

production and India will become dependent on foreign food grains.

To conclude, it is feared that the Agreement is not favorable to India due to the following

reasons:

The country will be compelled to import at least 3% of the domestic demand for agricultural

products.

The government will be forced to reduce subsidies to farmers.

The Public Distribution System and Public Procurement System will have to be abandoned.

Inclusion of new trade agenda issues in the next round is considered by some developingcountry negotiators as undesirable because it would distract attention from the market accessissues that are deemed to be of greater importance to them. However, inclusion would have theadvantage that more OECD non-agricultural groups would take part in the round which couldcounter-balance forces favoring agricultural (and other sectoral) protection. As well, better ruleson some of those new issues would reduce the risk of farm trade measures being replaced or

made ineffective by domestic agricultural measures and technical barriers to trade that may bealmost as trade distorting a risk that has grown considerably in the past year or so (Anderson1998b; Roberts, Josling and Orden 1999).

The new trade agenda issues are highly relevant to agriculture. Indeed, some of them figuredprominently in the Uruguay Round negotiations on agriculture. For example, progress was madein designing rules for the application of sanitary and phytosanitary standards, and in discipliningthe ability of governments to grant agricultural production subsidies. However, disciplines areweak, country-specific, or nonexistent in many other areas. These include competition-related

policy and regulation (the nexus of state-trading, export taxes and cartels, and intellectualproperty broadly defined to include indications of origin, breeders rights and seed varieties),

liberalization of ancillary services and input markets (distribution, marketing, use of newproduction technologies),and the extra-territorial application of production process standards.

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The UR Agreement on Sanitary and Phytosanitary (SPS) standards requires that SPS measures beimposed only to the extent necessary to ensure adequate food safety and animal and plant healthon the basis of scientific information, and are the least trade-restrictive measures15 available to achieve the risk reduction desired. Although there is substantial wiggle room in

the wording of disciplines, the dispute settlement evidence to date shows that exporting countriescan succeed in obtaining rulings against the most egregious cases of protectionist abuse ofstandards (Roberts 1998). As is generally the case, the SPS agreement was motiva

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