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STATE OF INDIAN AGRICULTURE IN THE CONTEXT OF

WORLD TRADE ORGANISATION (WTO)

- A Critical Evaluation

CONTENTS

Page No.

Introduction

Pre-emergence Scenario - GATT

World Trade Organisation ( WTO) - 37- 70 A Proile.

An Overvie! o "eneits and #isadvantages o WTO to Indian

Econom$.

Government Policies

Im%act o WTO on Indian Agriculture &'-'&

APTE+- I

APTE+- II

APTE+ - III

,&-&

&-

C*APTE+ - I

/&-0

C*APTE+ -

0/-&'

C*APTE+ - I



+eca%itulation1 Suggestive 2easures and 3uture Pros%ects.

BIBLIOGRAPHY

C*APTE+ - II

'&4-''5

''0-''



CHAPTER-I

INTRODUCTION

T*E P6ACE O3 AG+IC76T7+E IN T*E NATIONA6

ECONO289

Agriculture orms t:e ;ac<;one o t:e Indian econom$ and

des%ite concerted industrialisation in t:e last ive decades1

agriculture occu%ies a %lace o %ride. "eing t:e largest industr$ in

t:e countr$1 agriculture %rovides em%lo$ment to around %er cent

o t:e total !or< orce in t:e countr$. T:e signiicance o agriculture

in t:e national econom$ can ;e ;est e=%lained ;$ considering t:e

role o agriculture under dierent :eads.

i) S:are o Agriculture in t:e National Income.

TA"6E - &

S:are o Agricultural Sector in Total Gross #omestic Product

at 3actor Cost

(At &00-04 %rices) +s. Crores9

Year GDP at

actor cost

Agriculture 2as% of 1

1950-51 1,40,470 83,150 55.4

1970-71 2,9,280 1,42,580 44.5

1990-91 ,92,870 2,42,010 30.9

2003-04 14,24,500 3,15,800 22.1



!ote Agriculture i"clu#es agriculture, forestr$ a"#

fisi"g

&ource 'o()ile# *co"o(ic &ur+e$ 2003-04 ale 1.1



3igures %rovided ;$ t:e Central statistical Organisation (+eer ta;le &) reveal t:at

;et!een &0,-& to &0,-&1 t:e s:are o agriculture in G#P :as ;een in t:e

range o to ' %er cent1 t:oug: it !as declining ;ut as t:e %rocess o

industrialisation and economic gro!t: gat:ered mementum1 t:e s:are o

agriculture indicated a s:ar% decline and reac:ed a level o '' %er cent in ',,-

,4.

T!o im%ortant acts must ;e em%:asised :ere 9

a) Agriculture contri;utes even no! a ma>or s:are o t:e national income in

India.

;) T:e s:are o agriculture in national income1 :o!ever :as decreasing

continuousl$ and t:e s:ares o t:e manuacturing and service sectors are

increasing. In a ra%idl$ develo%ing countr$1 t:is is as it s:ould ;e.

Com%arison can ;e made ;et!een t:e %osition o agriculture in India !it: t:at in

t:e ot:er countries as regards t:e s:are o agriculture in national income. In t:e

7nited ?ingdom1 agriculture contri;utes onl$ ' %er cent o t:e national income@ in

7.S.A. it is %er cent1 in Canada it is 4 %er cent@ in Australia it is %er cent@ and

so on. T:e more develo%ed a countr$1 t:e smaller is t:e s:are o agriculture in

national out%ut. India :aving not $et reac:ed t:e stage o an advanced econom$1

:as an agriculture sector !:ic: is still t:e dominant one in t:e countr$.

(ii) Indian Agriculture and %attern o Em%lo$ment in t:e Countr$ 9

Agriculture dominates t:e econom$ to suc: an e=tent t:at a ver$ :ig:

%ro%ortion o !or<ing %o%ulation in India is engaged in agriculture



TABLE - 2

EMPLOYMENT OF MAIN WORKERS IN AGRICULTURE

(in million)

&0& ',,&

otal )o)ulatio" 3

1

1027

ural Po)ulatio" 29

9

/8.3 742 /72

'ulti+ators 70 /50 128 /32

Agriculture laourers 27 /20 107 /27

ter orers 43 /30 17 /41

otal ori"g

Po)ulatio"

140 /100 402 /100

!ote igures i" racets are )erce"tage to te.

&6'* Agriculture &tatistics at a Gla"ce /2002.

#ata %rovided ;$ t:e Census o India reveals t:at in a;solute terms1

agriculture %rovided em%lo$ment to 0/ million %ersons in &0&1 t:e num;er o %eo%le !or<ing on land (cultivators and agriculture la;ourers) increased to '.

million in ',,&. in terms o %ercentage1 :o!ever %eo%le !or<ing on land came

do!n rom /, to 0 (/ according to t:e Tent:



Plan) during t:e ive decades ;et!een &0& and ',,&. It is1 :o!ever1 reall$

distur;ing t:at t:e %ro%ortion o agricultural la;ourers :as increased rom ', to '/

%er cent ;et!een &0& and ',,& ;ut t:at o cultivators :as indicated a decline

rom , %er cent to ' %er cent.

In t:e 7nited ?ingdom and 7nited States1 onl$ ' to %er cent o t:e !or<ing

%o%ulation is engaged in agriculture@ in 3rance1 t:e %ro%ortion is a;out / %er cent@

and in Australia1 t:is is a;out %er cent. It is onl$ in ;ac<!ard and less develo%ed

countries t:at t:e !or<ing %o%ulation engaged in agriculture is Buite :ig:. 3or

instance1 it is %er cent in Eg$%t1 0 %er cent in "anglades:1 , %er cent in

Indonesia and 5 %er cent in C:ina in &00/1 acording to t:e 3AO Production 8ear

;oo< (&00/).

iii) Im%ortance o Agriculture or Industrial #evelo%ment9

Indian agriculture :as ;een t:e source o su%%l$ o ra! materials to our

leading industries. Cotton and >ute te=tile industries1 suger1 vanas%ati and

%lantations1 all t:ese de%end on agriculture directl$. T:ere are man$ ot:er idustries

!:ic: de%end on agriculture in an indirect manner. 2an$ o our small scale and

cottage industries li<e :andloon !eaving1 oil crus:ing1 rice :us<ing etc1 de%end

u%on agriculture or t:eir ra! materials- toget:er t:e$ account or , %er cent o

income generated in t:e manuacturing sector in India.



"ut t:en1 in recent 8ears1 t:e signiicance o agriculture to industries is going

do!n as man$ more industries :ave come u% !:ic: are not de%endent on

agriculture. 7nder t:e 3ive 8ear Plans1 iron and steel industr$1 C:emicals1

mac:ine tools and engineering industries aircrat etc. :ave ;een started.

*o!ever1 in recent $ears1 t:e im%ortance o ood %rocessing industries is

;eing increasingl$ recognised ;ot: or generation o income and or generation o

em%lo$ment.

i)+ole o Agriculture in t:e 3ield o International

Trade 9

Im%ortance o Indian agricultural also aries rom t:e role it %la$s in Indias

trade1 agriculture %roducts-Tea1 Suger1 Oilseeds1 To;acco1 S%ices1 etc. constituted

t:e main items o e=%orts o India. "roadl$ s%ea<ing1 t:e %ro%ortion o

agricultural goods !:ic: !ere e=%orted came to , %er cent o our e=%orts1 and

manuactures !it: agriculture content (suc: goods as manuactured >ute clot: and

suger) contri;ute anot:er ', %er cent or so@ and total comes to /, %er cent o

Indias e=%orts. T:e Tent: %lan estimates t:at agriculture contri;utes &4./ %er cent

o total e=%ort earnings. T:is :as great signiicance or economic develo%ment.

3or increased e=%orts :el% t:e countr$ to %a$ or t:e increased im%orts o

mac:iner$ and ra! materials.



) +ole o Agicultural Sector in Economic Planning9

Im%ortance o agriculture in t:e national econom$ is indicated ;$ man$ acts.

3or e=am%le1 agriculture is t:e main

su%%ort or indias trans%ort s$stem1 since rail!a$s and road!a$s secure ;ul< o

t:eir ;usiness rom t:e movement o agricultural goods. Internal trade is mostl$ in

agricultural %roducts. 3urt:er1 good cro% im%l$ing large %urc:asing %o!er !it: t:e

armers lead to greater demand or manuactures and1 t:ereore1 ;etter %rices. In

ot:er !ords1 %ros%erit$ o t:e armers is also t:e %ros%erit$ o industries.

6i<e!ise1 ;ad cro% lead to a de%ression in ;usiness. Generall$1 it is t:e ailure in

t:e agricultural ront t:at :as led to ailure o economic %lanning in %articular

%eriods. Aricultural gro!t: :as direct im%act on %overt$ eradication. It is also an

im%ortant actor in containing inlation1 raising agricultural !ages and or

em%lo$ment generation.

It is clear1 t:ereore1 t:at agriculture is t:e ;ac< ;one o t:e Indian econom$

and %ros%erit$ o agriculture can also largel$ stand or t:e %ros%erit$ o t:e Indian

econom$. At t:e same time1 it is true t:at %er ca%ita %rocuctivit$ in agriculture is

less t:an in industr$. Naturall$1 most sc:olars o develo%ing economies o;serve

t:at t:is dominance o agriculture in Indias econom$ is res%onsi;le or t:e lo! %er



ca%ita income in t:e countr$. In t:eir o%inion1 so long as t:e Indian econom$

is dominated ;$ agricultural activit$1 %er ca%ita income !ill not rise to an e=tent

!:ic: is necessar$ and desira;le.

AG+IC76T7+A6 #EE6OP2ENT ESSENTIA6 3O+ ECONO2IC

G+OWT*9

T:e Signiicance o agriculture in India aries also rom t:e act t:at t:e

develo%ment in agriculture is an essential condition

or t:e develo%ment o t:e natinal econom$. +agnar Nur<se argues t:at t:e sur%lus

%o%ulation in agriculture s:ould ;e s:ited to t:e ne!l$ started industries. Nur<ses

t:esis is t:at agricultural %roductivit$ !ill ;e increased on t:e one :and and on t:e

ot:er ne! industrial units !ould ;e setu% !it: t:e use sur%lus la;our.

T:e Nur<sian t:esis1 t:oug: !idel$ !elcomed at one time1 :as ;een

Buestioned recentl$. 3irstl$1 industrialisation dose not consist onl$ o transerence

o !or<er orm agricuture to industries . Industrialisation reBuires a %articular set

o motives and values !:ic: an agriculture econom$ cannot su%%l$. A c:ange in

agriculture itsel is essential ;eore suc: motivations and values are evolved.

Secondl$1 t:e mar<eta;le agricultural sur%lus !ill :ave to ;e increased

considera;l$ to eed t:e gro!ing ur;an %o%ulation and to %rovide ra! materials to

industries. T:irdl$1 t:e ne! industries and t:e ast gro!ing services sector

:o!ever1 ast t:e$ ma$ develo%1 !ill not ;e a;le to %rovide adeBuate em%lo$ment

or t:e ever gro!ing millions in India. T:ere is a limit to t:e ca%acit$ o

em%lo$ment in



industries in t:e s:ort %eriod. Necessaril$1 t:ereore1 increased em%lo$ment !ill

:ave to ;e ound1 not in t:e ne! industries1 ;ut in agriculture or in rural industries

T:is !ill1 t:en1 necessitate in%rovement in agriculture.

In ot:er !ords general economic develo%ment !ill reBuire rai%d agricultural

develo%ment eit:er to %recede or to go :and in :and !it: it. Indian %lanners learnt

a ;itter lesson during t:e Second and T:ird 3ive 8ear Plan %eriods and in recent

$ears.

during ',,'-,1 or e=am%le1 !:en ailure o t:e agricultural sector s%elt disaster

to t:e entire %lanning %rocess.

T:us1 an$ c:ange in t:e agriculture sector -%ositive or negative- :as a multi%lier

eect on t:e entire econom$. T:e agricultural sector acts as a ;ul!ar< in

maintaining ood securit$ and in t:e %rocess1 national securit$ as !ell. To maintain

t:e ecological ;alance T:ere is need or sustaina;le and ;alanced develo%ment o

t:e agriculture and allied sectors. +ecognising t:e crucial role %la$ed ;$ t:is

sector in ena;ling t:e !idest dis%ersal o economic ;eneits1 t:e Tent: Plan :as

em%:asised t:at agricultural develo%ment is central to ra%id economic

develo%ment o t:e countr$.

WTO (World Trade Organisation)9

T:e WTO came into e=istence to re%lace General Agreement on Taris and Trade

(GATT) !:ic: !as in e=istence rom &045 to &004. India along !it: ' countries



!as ounder mem;er o t:e GATT. It !as aimed at res:a%ing t:e !orld econom$

!:ic: !as s:attered ;$ t:e World War II. Over a %eriod o our decades1 t:e

GATT %rovided a orum or international ;argaining on reducing t:e ;arriers and

remove unnecessar$ controls restrictions to multilateral trade. 7nder t:e GATT

agreement1 it !as e=%ected rom t:e mem;er countries to regard t:e trade

%rovisions so t:at %romotion o multilateral trading s$stem could ;e encouraged.

7nortunatel$1 some o t:e develo%ed countries did not ollo! t:e %rovisions and

started

violation ;$ %roviding su;sides to t:eir e=%orts and domestic su%%ort to

agricultural trade !it:out <ee%ing in vie! t:e interest o t:e develo%ing and %oor

countries.

Suc: discriminator$ and trade distorting measure not onl$ %revented t:e gro!t: o

small economies ;ut multilateral trade among countries also. ConseBuentl$1 t:e

need !as elt to initiate negotiations or organiDing rule- ;ased World Trade

%romoting non discriminator$ multilateral trading s$stem !:ic: could %rovide an

integrated %redicta;le mar<et access.



2ultilateral trade negotiation !ere going on even ater t:e creation o t:e GATT.

2an$ suc: rounds remained successul. T:e last 5t: round !:ic: is %o%ularl$

<no!s as t:e 7rugua$ +ound too< %lace in &05/ at 2ara<es: %aved !a$ or t:e

esta;lis:ment o WTO. It re%laced t:e GATT and started unctioning rom anuar$

&1&00 in order to ena;le t:e mem;ers to %artici%ate in international

com%etitiveness in a ree and air trading s$stem. It aimed at strict ad:erence to

2ost 3avored Nations (23Ns) clause1 certain concessions during transition %eriod

and ree access to mar<et. T:e WTO is e=%ected to dismantle t:e Trade distortions

in t:e international



OB!ECTI"E OF THE STUDY #

T:e main %ur%ose o t:e %resent stud$ entitled FSTATE O3 IN#IAN

AG+IC76T7+E IN T*E CONTET O3 WO+6# T+A#E O+GANISATION

(WTO) - A C+ITICA6 EA67ATIONF

is to anal$se t:e li<el$ im%act o trade 6i;eralisation and t:e WTO Agreement on

Indian agriculture. T:e stud$ is a modest attem%t to understand t:e im%lications o

multilatural trade li;eralisation on Indian agriculture and to careull$ assess t:e

li<el$ costs and ;eneits o glo;alisation to t:e consumers and t:e %roducers in

India. In %articular1 t:e ocus o t:e stud$ is to e=amine in !:at !a$ t:e

esta;lis:ment o a ree and li;eralised trade regime under t:e WTO !ould aect

t:e living standards and t:e ortunes o t:e Indian 3armer.

T:e stud$ :as t:e ollo!ing o;>ectives in mind 9

* To stud$ t:e %re-emergence scenario o t:e WTO.

* To anal$se t:e structure and unctions o t:e World Trade organiDation.

* To evaluate t:e agenda o WTO and e=amine its im%act on various sectors o

Indian econom$ suc: as industrial

sector service sector1 researc: and develo%ment1 issues related !it:environment1 tec:nolog$ and <no!ledge ;ased industr$ and issues related

!it: la;our standards.

i) To closel$ e=amine t:e im%act o WTO agreement on Indian agriculture. T:is

segment s:all ;e divided into various sections suc: as issues related !it:



-T+IPs1 Buantitative restrictions1 taris1 mar<et access1 armers rig:ts1 e=%ort

su;sidies1 e=%ort com%etitiveness1 reduction in A2S1 domestic su%%ort1

sanitar$ and %:$tosanitar$ measures.

ii) To understand t:e :idden motives o develo%ed countries in t:e ;ac<ground

o WTO %rovisions.

iii)To suggest some !a$s and means to %rotect our econom$ rom t:e ne!

situation arose ater t:e esta;lis:ment o WTO.

+ESEA+C* 2ET*O#O6OG89

Wit: t:e introduction o researc: %ro;lem1 no! t:e researc:er ma$ devote :is

attention to t:e researc: met:odolog$ !:ic: consists o ma<ing decision !it:

res%ect to t:e nature o t:e stud$1 t$%e o data needed1 su;>ect matter o t:e stud$1

t$%e o matereial needed and tec:niBues o gat:ering data to ;e ado%ted. As

alread$ discussed in t:e %receding lines1 t:e %resent stud$ is a;out emergence o

t:e WTO and its im%act on Indian Econom$. So seeing t:e !ide range and

e=tensive nature o t:e %ro;lem1 t:is stud$ !ill mainl$ cover t:e state o Indian

Agriculture in t:e conte=t o WTO.

Secondar$ data :as ;een used or researc: !or< !:ic:

:as ;en e=tracted rom Agriculture and %rocessed. 3ood %roduct E=%ort

#evelo%ment Aut:orit$ (APE#A)1 Conederation o Indian Industr$ (C2)1



3ederation o Indian C:am;er o Commerce and Industr$ (3ICCI)1 Association o

C:am;er o Commerce and Industr$ (ASSOC*A2)1 7nited Nations Conerence

on Trade and #evelo%ment (7NCTA#)1 WTO1 3ood and Agricultural

Organisation (3AO)1 International "an< or +econstruction and #evelo%ment

(I"+#)1 Common!ealt: Secretariat etc. Im%ortant and necessar$ acts :ave ;en

e=tracted ;$ stud$ in dierent t$%es o ;oo<s1 magaDines1 ne!s%a%ers1 re%orts etc.

W:ic: :ave ;een included in researc: !or<.

T:e Precious <no!ledge availa;le in dierent li;raries :as also ;een used

!:ile <ee%ing in mind t:e contents and nature o researc: !or< various ta;les and

c:arts are also used in researc: !or<. So t:at t:e researc: !or< s:ould :as t:escientiic and more eective ;ase.

In t:e ield o <no!ledge and science t:e internet :as an im%ortant role ;$

using it various t$%e o inormation and data can ;e ac:ieved easil$ ;$ stud$ing

various !e;site related to researc: !or< t:is is Ascertained t:at latter material and

data is included in researc: !or<.

To ulil all t:e o;>ective o researc: !or< t:e researc:er visited variousgovernment H non-government organiDation H tried to collect all t:e inormation

H acts.



C*APTE+-II

P+E-E2E+GENCE SCE+IA+IO-GATT

2uc: o t:e :istor$ o t:ose 4/ $ears !as !ritten in Geneva. "ut it also

traces a >ourne$ t:at s%anned t:e continents1 rom t:at :esitant start in &045 in

*avana (Cu;a)1 via Annec$ (3rance)1 TorBua$ (7?)1 To<$o (a%an)1 Punta del

Este (7rugua$)1 2ontreal (Canada)1 "russels ("elgium) and inall$ to 2arr<es:

(2orocco) in &004. #uring t:at %eriod1 t:e trading s$stem came under GATT1

salvaged rom t:e a;orted attem%t to create t:e ITO. GATT :el%ed esta;lis: astrong and %ros%erous multilateral trading s$stem t:at ;ecame more and more

li;eral t:roug: rounds o trade negotiations. "ut ;$ t:e &05,s t:e s$stem needed a

t:oroug: over:aul. T:is led to t:e 7rugua$ +ound1 and ultimatel$ to t:e WTO.

GATT 9 P+OISIONA6 3O+ A62OST *A63 A CENT7+89

3rom &045 to &0041 t:e General Agreement on Taris and Trade (GATT) %rovided t:e rules or muc: o !orld trade



and %resided over %eriods t:at sa! some o t:e :ig:est gro!t: rates in

international commerce. It seemed !ell- esta;lis:ed1 ;ut t:roug:out t:ose 4/

$ears1 it !as a %rovisional agreement and organiDation.

T:e original intention !as to create a t:ird institution to :andle t:e trade side o

international economic coo%eration1 >oining t:e t!oF "retton WoodsF institutions1

t:e World "an< and t:e International 2onetar$ 3und. Over , countries

%artici%ated in negotiations to create an International Trade OrganiDation (ITO) as

a s%ecialiDed agenc$ o t:e 7nited Nations. T:e drat ITO C:arter !as am;itous.

It e=tended ;e$ond !orld trade disci%lines1 to include rules on em%lo$ment1

commodit$

agreements1 restrictive ;usiness %ractices1 international investment1 and

services. T:e aim !as to create t:e ITO at a 7N Conerence on Trade and

Em%lo$ment in *avana1 Cu;a in &04/.

2ean!:ile1 & countries :ad ;egun tal<s in #ecem;er &04 to reduce and

;ind customs taris. Wit: t:e Second World War onl$ recentl$ ended1 t:e$ !anted

to give an earl$ ;oost to trade li;eraliDation1 and to ;egin to correct t:e legac$ o

%rotectionist measures !:ic: remained in %lace rom t:e earl$ &0,s.

T:is irst round o negotiations resulted in a %ac<age o trade rules and

41,,, trai concessions aecting&, ;illion o trade1 a;out one it: o t:e



!orlds total. T:e grou% :ad e=%anded to ' ;$ t:e time t:e deal !as signed on ,

Octo;er &04/. T:e tari concessions came into eect ;$ , une &045

t:roug: a FProtocol o Provisional A%%licationF. And so t:e ne! General

Agreement on Taris and Trade !as ;orn1 !it: ' ounding mem;ers (oiciall$

Fcontracting %artiesF).

T:e ' !ere also %art o t:e larger grou% negotiating t:e ITO C:arter. One o

t:e %rovisions o GATT sa$s t:at t:e$ s:ould acce%t some o t:e trade rules o t:e

drat. T:is1 t:e$ ;elieved1 s:ould ;e done s!itl$ and F%rovisionall$F in order to

%rotect t:e value o t:e tari concessions t:e$ :ad negotiated. T:e$ s%elt out :o!

t:e$ envisaged t:e relations:i% ;et!een GATT and t:e ITO C:arter1 ;ut t:e$ also

allo!ed or t:e %ossi;ilit$ t:at t:e ITO mig:t not ;e created. T:e$ !ere rig:t.

T:e *avana conerence ;egan on '& Novem;er &04/1 less t:an a mont: ater

GATT !as signed. T:e ITO C:arter !as inall$ agreed in *avana in 2arc: &0451

;ut ratiication in some national legislatures %roved im%ossi;le. T:e most serious

o%%osition !as in t:e 7S Congress1 even t:oug: t:e

7S government :ad ;een one o t:e driving orces. In &0,1 t:e 7nited states

government announced t:at it !ould not see< Congressional ratiication o t:e

*avana C:arter1 and t:e ITO !as eectivel$ dead. So1 t:e GATT ;ecame t:e onl$

multilateral instrument governing international trade rom &045 until t:e WTO

!as esta;lis:ed in &00.



3or almost :al a centur$1 t:e GATTs ;asic legal %rinci%les remained muc:

as t:e$ !ere in &045. T:ere !ere additions in t:e orm o a section on

develo%ment added in t:e &0,s and F%lurilateralF agreements (i.e. !it: voluntar$

mem;ers:i%) in t:e &0/,s1 and eorts to reduce taris urt:er continued. 2uc: o

t:is !as ac:ieved t:roug: a series o multilateral negotiations <no!n as Ftrade

roundsF-t:e ;iggest lea%s or!ard in international trade li;eraliDation :ave come

t:roug: t:ese rounds !:ic: !ere :eld under GATTs aus%ices.

In t:e earl$ $ears1 t:e GATT trade rounds concentrated on urt:er reducing taris.

T:an 1 t:e ?enned$ +ound in t:e mid-si=ties ;roug:t a;out a GATT Anti-

#um%ing Agreement and a section on develo%ment. T:e To<$o +ound during t:e

seventies !as t:e irst ma>or attem%t to tac<le trade ;arriers t:at do not ta<e t:e

orm o taris1 and to im%rove t:e s$stem. T:e eig:t:1 t:e 7rugua$ +ound o

&05-041 !as t:e last and most e=tensive o all. It led to t:e WTO and a ne! set o

agreements.



T*E TO?8O +O7N# 9 A 3I+ST T+8 TO +E3O+2 T*E S8STE29

T:e To<$o +ound lasted rom &0/ to &0/01 !it: &,' countries %artici%ating.

It continued GATTs eorts to %rogressivel$ reduce taris. T:e results included an

average one-t:ird cut in customs duties in t:e !orlds nine ma>or industrial

mar<ets1 ;ringing t:e average tari on industrial %roducts do!n to 4./. T:e tari

reductions1 %:ased in over a %eriod o eig:t $ears1 involved an element o

F:armoniDationF- t:e :ig:er t:e tari1 t:e larger t:e cut1 %ro%ortionall$.

In ot:er issues1 t:e To<$o +ound :ad mi=ed results. It ailed to come to gri%s

!it: t:e undamental %ro;lems aecting arm trade and also sto%%ed s:ort o

%roviding a modiied agreement on FsaeguardsF (emergenc$ im%ort measures).

Nevert:eless1 a series o agreements on non- tari ;arries did emerge rom t:e

negotiations1 in some cases inter%reting e=isting GATT rules1 in ot:ers ;rea<ing

entirel$ ne! ground. In most cases1 onl$ a relativel$ small num;er o

(mainl$ industrialiDed) GATT mem;ers su;scri;ed to t:ese agreements and

arrangements. "ecause t:e$ !ere not acce%ted ;$ t:e ull GATT mem;ers:i%1 t:e$

!ere oten inormall$ called FcodesF.

T:e$ !ere not multilateral1 ;ut t:e$ !ere a ;eginning. Several codes !ere

eventuall$ amended in t:e 7rugua$ +ound and turned into multilateral

commitments acce%ted ;$ all WTO mem;ers. Onl$ our remainedF %lurilateralF-

t:ose on government %rocurement1 ;ovine meat1 civil aircrat and dair$ %roducts.

In &00/ WTO mem;ers agreed to terminate t:e ;ovine meat and dair$ agreements1

leaving onl$ t!o.



T*E 7+7G7A8 +O7N# 9 A +O7N# TO EN# A66 +O7N#S9

It too< seven and a :al $ears1 almost t!ice t:e original sc:edule. "$ t:e end1

&' countries !ere ta<ing %art. It covered almost all trade1 rom toot:;rus:es to

%leasure ;oats1 rom ;an<ing to telecommunication1 rom t:e genes o !ild rice to

AI#S treatments. It !as Buite sim%l$ t:e largest tradenegotiation ever1 and most

%ro;a;l$ t:e largest negotiation o an$ <ind in :istor$.

At times it seemed doomed to ail. "ut in t:e end1 t:e 7rugua$ +ound ;rog:t

a;out t:e ;iggest reorm o t:e !orlds trading s$stem since GATT !as created at

t:e end o t:e Second World War. And $et1 des%ite its trou;led %rogress1 t:e

7rugua$ +ound did see some earl$ results. Wit:in onl$ t!o $ears1 %artici%ants :ad

agreed on a %ac<age o cuts in im%ort duties on tro%ical %roducts -!:ic: are

mainl$ e=%orted ;$ develo%ing countries. T:e$ :ad also revised t:e rules or

settling dis%utes1 !it: some

measures im%lemented on t:e s%ot. And t:e$ called or regular re%orts on

GATT mem;ers trade %olicies1 a move considered im%ortant or ma<ing trade

regimes trans%arent around t:e !orld.

T:e seeds o t:e 7rugua$ +ound !ere so!n in Novem;er &05' at a

ministerial meeting o GATT mem;ers in Genava. Alt:oug: t:e ministers intended

to launc: a ma>or ne! negotiation1 t:e conerence stalled on agriculture and !as

!idel$ regarded as a ailure. In act1 t:e !or< %rogramme t:at t:e ministers agreed

ormed t:e ;asis or !:at !as to ;eome t:e 7rugua$ +ound negotiating agenda.



Navert:eless1 it too< our more $ears o e=%loring1 clari$ing issues and

%ainsta<ing consensus- ;uilding 1 ;eore ministers agreed to launc: t:e ne! round.

T:e$ did so in Se%tem;er &051 in Punta del Este1 7rugua$. T:e$ eventuall$

acce%ted a negotiating agenda t:at covered virtuall$ ever$ outstanding trade %olic$

issue. T:e tal<s !ere going to e=tend t:e trading s$stem into several ne! areas1

nota;l$ trade in services and intellectual %ro%eret$1 and to reorm trade in t:e

sensitive sectors o agriculture and te=tiles1 All t:e original GATT articles !ere u%

or revie!. It !as t:e ;iggest negotiating mandate on trade ever agreed1 and t:e

ministers gave t:emselves our $ears to com%lete it.

T!o $ears later1 in #ece;er &0551 ministers met again in 2ontreal1 Canada1

or !:at !as su%%osed to ;e an assessment o %rogress at t:e rounds :al-!a$

%oint. T:e %ur%ose !as to clari$ t:e agenda or t:e remaining t!o $ears1 ;ut t:e

tal<s ended in a deadloc< t:at !as not resolved until oicials met more Buietl$ in

Geneva t:e ollo!ing A%ril.

#es%ite t:e diicult$1 during t:e 2ontreal meeting1 ministers did agree a

%ac<age o earl$ results. T:ese included some concessions on mar<et access or

tro%ical %roducts- aimed at assisting develo%ing countries- as !ell as a streamlined

dis%ute settlement s$stem1 and t:eTrade Polic$ +evie! 2ec:anism !:ic:

%rovided or t:e irst com%re:ensive1 s$stematic and regular revie!s o national

trade %olicies and %ractices o GATT mem;ers. T:e round !as su%%osed to end

!:en ministers met once more in



"russels1 in #ecem;er &00,. "ut t:e$ disagreed on :o! to reorm agricultural

trade and decided to e=tend t:e tal<s. T:e 7rugua$ +ound entered its ;lea<est

%eriod.

#es%ite t:e %oor %olitical outloo< a considera;le amount o tec:nical !or<

continued1 leading to t:e irst drat o a inal legal agreement. T:is drat F3inal

ActF !as com%lied ;$ t:e t:en GATT director-general1 Art:ur #un<el1 !:o

c:aired t:e negotiations at oicials level. It !as %ut on t:e ta;le in Geneva in

#ecem;er &00&. T:e te=t ulilled ever$ %art o t:e %unta del Este mandate1 !it:

one e=ce%tion -it did not contain t:e %artici%ating countries list o commitments

or cutting im%ort duties and o%ening t:eir services mar<ets. T:e drat ;ecame t:e

;asis or t:e inal agreement.

Over t:e ollo!ing t!o $ears1 t:e negotiation lurc:ed ;et!een im%ending

ailure1 to %redictions o imminent success. Several deadlines came and !ent. Ne!

%oints o ma>or conlict emerged to >oin agriculture 9 services1 mar<et access1 anti-

dum%ing rules1 and t:e %ro%osed creations o a ne! institution. #ierences

;et!een t:e 7nited States and Euro%ean 7nion ;ecame central to :o%es or a inal1

successul conclusion.

In Nove;er &00'1 t:e 7S and E7 settled most o t:eir dierences on

agriculture in aa deal <no!n inormall$ as t:e F"lair *ouse accord.F "$ ul$

&001 t:e FJuadF (7S.E71 a%an and Canada) announced signiicant %rogress in

negotiations on taris and related su;>ects (Fmar<et accessF). It too< until &

#ecem;er &00 or ever$ issus to ;e inall$ resolved and or negotiations on



mar<et access or goods and services to ;e concluded (alt:oug: some inal touc:es

!ere com%leted in tal<s on mar<et

access a e! !ee<s later). On & A%irl&0041 t:e deal !as signed ;$ ministers

rom most o t:e &' %artici%ating governments at a meeting in 2arra<es:1

2orocco.

T:e dela$ :ad some merits1 it allo!ed some negotiations to %rogress urt:er

t:an !ould :ave ;een %ossi;le in &00,9 or e=am%le some as%ects o services and

intellectual %ro%ert$1 and t:e creation o t:e WTO itsel. "ut t:e tas< :ad ;een

immense1 and negotiation- atigue !as elt in trade ;ureaucracies around t:e

!orld. T:e diicult$ o rea:ing agreement on a com%lete %ac<age containing

almost t:e entire range o current trade issues led some to conclude t:at a

negotiation on t:is scale !ould never again ;e %ossi;le. 8et1 t:e 7rugua$ +ound

agreements contain timeta;les or ne! negotiations on a num;er o to%ics. And ;$

&001 some

countries !ere %oenl$ calling or a ne! round earl$ in t:e ne=t centur$. T:e

res%onse !as mi=ed@ ;ut t:e 2arra<es: agreement did alread$ include

commitments to reo%en negotiations on agriculture and services at t:e turn o t:e

centur$. T:ese ;egan in earl$ ',,, and !ere incor%orated into t:e #o:a

#evelo%ment Agenda in late ',,&.



W*AT *APPENE# TO GATT K

T:e WTO re%laced GATT as an international organiDation1 ;ut t:e General

Agreement still e=ists as t:e WTOs um;rella treat$ or trade in goods1 u%dated as

a result o t:e 7rugua$ +ound negotiations Trade la!$ers distinguis: ;et!een

GATT &0041 t:e u%dated %arts o GATT and GATT &04/1 t:e original agreement

!:ic: is still t:e :eart o GATT &004. ConusingK 3or most o us1 its enoug: to

reer sim%l$ to FGATTF.



#I# GATT S7CCEE# K

GATT !as %rovisional !it: a limited ield o action1 its success over 4/ $ears

in %romoting and securing t:e li;eraliDation o muc: o !orld trade is

incontesta;le. Continual reductions in taris alone :el%ed s%ur ver$ :ig: rates o

!orld

trade gro!t: during t:e &0,s and &0,s- around 5 a $ear on average. And t:e

momentum o trade li;eraliDation :el%ed ensure t:at trade gro!t: consistentl$ out-

%aced %roduction gro!t: t:roug:out t:e GATT era1 a measure o countries

increasing a;ilit$ to trade !it: eac: ot:er and to rea% t:e ;eneits o trade. T:e

rus: o ne! mem;ers during t:e 7rugua$ +ound demonstrated t:at t:e

multilateral trading s$stem !as recogniDed as an anc:or or develo%ment and an

instrument o economic and trade reorm.

"ut all !as not !ell. As time %assed ne! %ro;lems arose. T:e To<$o +ound

in t:e &0/,s !as an attem%t to tac<le some o t:ese ;ut its ac:ievements !ere

limited. T:is !as a sign o diicult times to come.

GATTs success in reducing taris to suc: a lo! lavel1 com;ined !it: a

series o economic recessions in t:e &0/,s and earl$ &05,s1 drove governments to

devise ot:er orms o %rotection or sectors acing increased oreign com%etition.

*ig: rates o unem%lo$ment and constant actor$ closures led government in

Western Euro%e and Nort: America to see< ;ilateral mar<et-s:aring arrangements



!it: com%etitors and to em;ar< on a su;sidies race to maintain t:eir :olds on

agricuutural trade. "ot: t:ese c:anges undermined GATTs credi;ilit$ and

eectiveness.

T:e %ro;lem !as not >ust a deteriorating trade %olic$ environment. "$ t:e

earl$ &05,s t:e General Agreement !as clearl$ no longer as relevant to t:e

realities o !orld trade as it :ad ;een in t:e &04,s. 3or

a start1 !orld trade :ad ;ecome ar more com%le= and im%ortant t:an 4,

$ears ;eore9 t:e glo;aliDation o t:e !orld econom$ !as under!a$1 trade in

services -not covered ;$ GATT rules- !as o ma>or interest to more and more

countries1 and international investment :ad e=%anded. T:e e=%ansion o services

trade !as also closel$ tied to urt:er increases in !orld merc:andise trade1 In ot:er

res%ects1 GATT :ad ;een ound !anting. 3or instance1 in agriculture1 loo%:oles in

t:e multilateral s$stem !ere :eavil$ e=%loited1 and eorts at li;eraliDing

agricultural trade met !it: little success. In t:e te=tiles and clot:ing setor1 an

e=ce%tion to GATTs nomal disci%lines !as negotiated in t:e &0,s and earl$

&0/,s1 leading to t:e 2ultii;re Arrangement. Even GATTs institutional structure

and its dis%ute settlement s$stem !ere causing concern.

T:ese and ot:er actors convinced GATT mem;ers t:at a ne! eort to

reinorce and e=tend t:e multilateral s$stem s:ould ;e attem%ted. T:at eort

resulted in t:e 7rugua$ +ound1 t:e 2arra<es: #eclaration1 and creation o t:e

WTO.



T*E T+A#E C*IE3S9

T:e #irectors- general o GATT and WTO 9

GATT 9

Sir Eric !$nd:am W:ite (7?) &045-5

Olivier 6ong (S!itDerland) &05-5,

Art:ur #un<el (S!itDerland) &05,-0

Peter Sut:erland (Ireland) GATT &00-04@

WTO 9

+enato +uggiero (Ital$) &00-00

2il<e 2oore ( Ne! Lealand) &000-,'

Su%ac:ai Panitc:%a<di (T:ailand) ',,'-,

Pascal lam$ (3rance) ',,-

GATT TRADE ROUNDS#

8ear PlaceM name Su;>ects covered Countries



GATT SIGNATURES NATIONS#

Angola ,5 A%ril &004

Antigua and "ar;uda , 2arc: &05/

Argentina && Octo;er &0/

Australia ,& anuar$ &045

Austria &0 Octo;er &0&

"a:rain & #ecem;er &00

"anglades: & #ecem;er &0/'

"ar;ados & 3e;ruar$ &0/

"elgium ,& anuar$ &045

"eliDe ,/ Octo;er &05

"enin &' Se%tem;er &0

"olivia ,5 Se%tem;er &00,

"ots!ana '5 August &05/

"raDil , ul$ &045

"runei #arussalam ,0 #ecem;er &00

"ur<ina 3aso , 2a$ &0

"urundi & 2arc: &0

Cameroon , 2a$ &0

Canada ,& anuar$ &045



Central Arican +e%u;lic , 2a$ &0

C:ad &' ul$ &0

C:ile & 2arc: &040

Colom;ia , Octo;er &05&

Congo1 +e%u;lic o , 2a$ &0

costa +ica '4 Novem;er &00,

Cote dlvorire & #ecem;er &0

Cu;a ,& anuar$ &045C$%rus & ul$ &0

CDec: +e%u;lic & A%irl &00

#enmar< '5 2a$ &0,

#>i;outi & #ecem;er &004

#ominica ', A%irl &00

#ominican +e%u;lic &0 2a$ &0,

Eg$%t ,0 2a$ &0/,

El Salvador '' 2a$ &00&

3i>i & Novem;er &00

3inland ' 2a$ &0,

3rance ,& anuar$ &045

Ga;on , 2a$ &0

T:e Gam;ia '' 3e;ruar$ &0

German$ ,& Octo;er &0&

G:ana &/ Oco;er &0/



Greece ,& 2arc: &0,

Grenada ,0 3e;ruar$ &004

Guatemala &, Octo;er &00&

Guinea ,5 #ecem;er &004

Guinsa "issau &/ 2arc: &004

*aiti ,& anuar$ &0,

*onduras &, A%irl &004

*ong ?ong ' A%irl &05

*ungar$ ,5 Se%tem;er &0/

Iceland '& A%irl &05

India ,5ul$ &045

Indonesia '4 3e;ruar$ &0,

Ireland '' #ecem;er &0/

Israel , ul$ &0'

Ital$ , 2a$ &0,

amaica & #ecem;er &0

a%an &, Se%tem;er &0

?en$a , 3e;ruar$ &04

?orea1 +e%u;lic &4 A%irl &0/

?u!ait , 2a$ &0

6esot:o ,5 anuar$ &055

6iec:tenstein '0 2arc: &004

lu=em;ourg ,& anuar$ &045



2acao && anuar$ &00&

2adagascar , Se%tem;er &0

2ala!i '5 August &04

2ala$sia '4 Octo;er &0/

2aldives &0 A%ril1 &05

2ali && anuar$ &00

2auritania , Se%tem;er &0

2auritius ,' Se%tem;er &0/,

2e=ico '4 August &05

2orocco &/ une &05/

2aDam;iBue '/ ul$ &00'

2$anmar1 7nion o '0 ul$ &045

Nami;ia & Se%tem;er &00'

Net:erlands ,& anuar$ &045

Ne! Lealand , ul$ &045

Nicaragua '5 2a$ &0,

Niger & #ecem;er &0

Nigeria &5 Novem;er &0,

Nor!a$ &, ul$ &045

Pa<istan , ul$ &045

Pa%ua Ne! guinea & #ecem;er &004

Paragua$ , anuar$ &004

Peru ,/ Octo;er &0&



P:ili%%ines '/ #ecem;er &0/0

Poland &5 Octo;er &0/

Portugal , 2a$ &0'

Jatar ,/ A%irl &004

+omania &4 Novem;er &0/&

+!anda ,& anuar$ &0

Senegal '/ Se%tem;er &0

Sierra leone &0 2a$ &0&

Singa%ore ', August &0/

Slova< +e%u;lic & A%irl &00

Slovenia , Octo;er &004

Solomon Islands '5 #ecem;er &004

Sout: Arica & une &045

S%ain '0 August &0

Sri 6an<a '0 ul$ &045

Sain ?itts and Nevis '4 2arc: &004

Saint lucia & A%irl &00

Saint incent and t:e Grenadines &5 2a$ &00

Suriname '' 2arc: &0/5

S!aDiland1 ?ingdom ,5 3e;ruar$ &00

S!eden , A%irl &0,

S!itDerland ,& August &0

TanDania ,0 #ecem;er &0&



T:ailand ', Novem;er &05'

Togo ', 2arc:1 &04

Trinidad and To;ago ' Octo;er &0'

Tunisia '0 August &00,

Tur<e$ &/ Octo;er &0&

7ganda ' Octo;er &0'

7nited Ara; Emirates ,5 2arc:1 &004

7nited <ingdom ,& anuar$ &045

7nited States o America ,& anuar$ &045

7rugua$ , #ecem;er &0

eneDuela & August &00,

8ugoslavia ' August &0

Larie && Se%tem;er &0/&

Lam;ia &, 3e;ruar$ &05'

Lim;a;!e && ul$ &045

Documents

Shreya Research Txt