World Trade Organization (WTO)

INDEXCHAPTER 1 WORLD TRADE ORGANISATION

Introduction

What is the WTO and why is it important?Agricultural trade and the WTOThe WTO Committee on AgricultureDispute settlement and the WTOWTO Agreement on AgricultureCHAPTER 2 IMPORTANCE OF INDIAN AGRICULTURE WTO ON AGRICULTURE Impact on Indian AgricultureCHAPTER 3TRADE POLICY REFORMSCHAPTER 4THE AGREEMENT ON AGRICULTUREExport SubsidiesDispute Settlement

Agriculture export.

Other WTO Agreements Relevant to AgricultureAgriculture in the GATTCHAPTER 5 ATS AND AGRICULTURE

CHAPTER 6

TRIPs AND AGRICULTURECHAPTER 7CASE STUDYCHAPTER 8

IMPACT OF W.T.O ON INDIAN AGRICULTURAL SECTORCHAPTER 9

IMPLICATIONS OF AoA FOR INDIAN AGRICULTURECHAPTER 10

OBJECTIVES & HYPOTHESISCHAPTER 11

THE GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)

THE WORLD TRADE ORGANISATION (WTO)

INDIA AND WTOCHAPTER 12

SUGGESTIONSCONCLUSION

BIBLIOGRAPHY

CHAPTER 1

WORLD TRADE ORGANISATION

TheWorld Trade Organisation (WTO) is vital to the Australian Governments international efforts to push for substantial reductions in the trade distorting subsidies, tariffs and tariff quotas and export subsidies and protection used by other countries. A key objective ofDAFFis to contribute to these efforts and secure improved export opportunities for Australias primary producers.

INTRODUCTION

The advent of the World Trade Organization, a new International Economic Order for world trade, has shifted the locus of economic decision-making from central political and economic constructs to the New Integrated world. In India, agriculture is not a trade but a way of life. Nearly two-thirds of the population depends on agriculture and therefore there is no question of their freedom being restricted. Food security and food self-sufficiency are not matters that can be negotiated. But the new trade regime has encompassed the entire economic spectrum of all developed and developing nations. The results of the various negotiations are referred to as diplomatically engineered methodologies for creating frontiers of developmental thinking. This emerging developmental and integrated landscape demands creation and implementation of programs. Inclusion of agriculture trade in the GATT-WTO order stands out as a serious issue for a developing nation like India. The new scenario is characterized by several development initiatives in the agricultural sector and the changing role of the Indian government in providing necessary support (product-specific as well as general) to Indian farmers.What is the WTO and why is it important?

The WTO was established in 1995 as a successor to the General Agreement on Tariffs and Trade. 153 countriesare members of the WTO (as at 1 February 2012), with developing countries accounting for more than two-thirds of the membership. Around 30 countries are negotiating to join the WTO.

The WTO sets global rules for trade and provides a forum for trade negotiations and resolving trade disputes between member countries. WTO members as a whole make all major decisions, usually by consensus.

WTO rules cover trade in all goods and many services as well as a very broad range of trade issues, from quarantine and technical trade barriers to taxation, subsidies and intellectual property.

These rules help international trade flow as smoothly, predictably and freely as possible. WTO rules can provide secure trading conditions and reduce some of the risks associated with doing business overseas. Australia, like all other members, is required toabide by the rules.WORLD TRADE ORGANIZATION (WTO)

Until the end of 1994, there was no multilateral or international trade organization. Between 1947 and 1994, eight rounds of negotiations took place under the aegis of the General Agreement on Tariffs and Trade (GATT). The first seven rounds concentrated on tariff reductions and commodity agreements. The last round, the Uruguay Round, lasted over seven years from 1986-1994, and widened the ambit of discussions to cover subjects like tariffs, non-tariff measures, rules and services, intellectual property rights, dispute settlement, textiles and clothing, and agriculture. The Uruguay Round of trade negotiations ended with an agreement founding the World Trade Organization. In April 1994, 104 members became signatories to the agreement with minor changes in the original draft and the final Act came into force from January 1, 1995. At this stage, the WTO membership grew to 135 countries.

The formation of WTO has posed certain challenges such as reduction of tariff barriers and liberalization of traditional trade in goods and services, etc. The WTO is not a simple extension of GATT. It completely replaces GATT and has quite a different character. While GATT was applied on a provisional basis, WTO commitments are full and permanent. Secondly, GATT applied to trade in merchandise goods whereas WTO covers a whole range of trade-related issues. Finally, WTO is a permanent institution with its own Secretariat and its dispute settlement system. The multilateral trade negotiations at Uruguay covered 15 areas, which were subsequently regrouped into 7 areas.Agricultural trade and the WTO

Agricultural trade is the most distorted sector in the world. It is characterised by very high trade barriers, high levels of domestic support and export subsidies. For example, in 2010 government support payments accounted for an average of20 per cent of the gross income of farmers in the European Union,7 per cent for farmers in the United States and50 per cent for farmers in Japan and 45 per cent for farmers in the Republic of Korea.

TheWTO Agreement on Agriculture developed as part of the Uruguay Round of multilateral trade negotiations (1986-1994) was a major milestone for the global trading system. For the first time, international rules were established to address some of the major distortions in agricultural trade. The Agreement on Agriculture eliminated import quotas, bound all agricultural tariffs and imposed disciplines on domestic support measures (such as production subsidies) and export subsidies.

While the Uruguay Round outcomes on agriculture were an important first step, more far-reaching trade liberalisation is needed. In November 2001 WTO members commenced the Doha Round of trade negotiations to continue the reform process and build on the commitments made in the Uruguay Round.

A paper by ABARES outlines opportunities forAustralian farmers under global trade liberalisation(published in Australian Commodities)The WTO Committee on Agriculture

The WTO Committee on Agriculture oversees the implementation of theAgreement on Agriculture. It normally meets four times a year and is an important tool for Australia to ensure other WTO members are complying with their obligations on subsidies and market access.

In conjunction with the WTOTrade Policy Review Mechanism, the Committee on Agriculture helps to promote transparency in the global trading system and allows countries to scrutinise the trade policies and rural programs oftheir trading partners.

The WTO conducted its sixth Trade Policy Review of Australia in Geneva in April 2011. The review was positive with WTO Members congratulating Australia on being one of the most open economies in the world and applauding the transparency of our trade policy regime. During the review there wascriticism of Australias strict biosecurity measures.

Dispute settlement and the WTO

WTO rules apply equally to all members and are backed by an effective dispute settlement process.

Where government support to industry is inconsistent with WTO obligations, or if a member is not complying with the rules, Australia has the right to challenge such actions through the WTO dispute system. Australia can also be subject to the same dispute processes.

DAFF plays a key role, in conjunction with other Australian Government agencies, in relevant disputes involving agricultural, food, fisheries or forest products.

More information about the dispute settlement system is available from theWTO website. Information regarding Australias involvement in WTO disputesis alsoavailable from theDFAT website.

Agriculture sector is central to the socio-economic life of the country and is a source of livelihood to two-thirds of countrys population.It alsoprovides food and fiber for one billion population of the country and is prime source raw materialfor itsagro based industries.Liberalization of world trade in agriculture with advent of WTO has thrown up challenges as also opened up new vistas for growth and diversification of agriculture and exports.Rapid changes in production technologies such as bio-technology, information technology and remote sensing technologies have also created opportunities for our goal of food and nutritional security and prosperity for the farming community.The Honble Prime Minister constituted a Task Force on Agriculture (TFA) on 12thSeptember, 2000 having the following composition with the Chairman given the status of a Cabinet Minister:i)Shri Sharad Joshi, Chairman, Shetkari SangathanChairmanii)Shri P.P. Prabhu, Former Secretary, Commerce,MemberGovernment of Indiaiii)Shri Abhijit Sen, Economist, Former Chairman,MemberCommission for Agriculture Costs and Pricesiv)Shri R.C.A. Jain, Additional SecretaryMember-SecyDepartment of Agri. & Coopn.,Government of IndiaThe Task Force was assigned the following Terms of Reference:a)To assess the impact of WTO commitments on Indian agriculture and to suggest steps to safeguard the interests of the sector, while exploiting the opportunities presented by this treaty;b)To make recommendations to integrate the use of information technology and other emerging technologies in the agricultural sector;c)To make recommendations for effective risk management in agriculture including in production systems, insurance, price mechanisms, future trading etc.The Task Force on Agriculture have given advertisement in national english newspapers and regional language newspapers through the Department of Advertisement and Visual Publicity in 53 newspapers to seek views/comments of interested associations/Farmers organisations/public etc. on the terms of reference of the Task Force on Agriculture.An interactive website has also been created for the Task Force for seeking suggestions from public and other interested organisations/persons.The Task Force considered inputs received from different sources in nine meetings during September 2000- April 2001.During these meetings the Task Force had the benefit of interacting with the representatives from Ministries/Departments of Agriculture, Commerce, Banking, Insurance as also from Soyabean Processors, Coffee Exchange, Solvent Extract Association, Forward Market Commission, Stakeholders of Plantation Sectors, Rubber Board, Coir Board, Spices Board, APEDA, MPEDA and several experts and academicians.Shri Madan Diwan, Coordinator, World Agriculture Forum, participated in the meetings of the Task Force at the invitation of the Chairman, pending notification concerning his nomination as a Member.The technology issues as also risk management issues in the areas of production, price, market are closely inter-linked in the process of modernising Indian agriculture and unleashing the productive forces and creative energies of the sector making it globally competitive. Considering the urgency of some of the issues of the contemporary importance, the Task Force decided to turn in its First Report on the agriculture trade reforms agenda.The full scope of the reforms agenda covering all the technology, risk management, investment, pricing, trading and institutional framework will be addressed in the final report to be submit by the Task Force by June 2001.

WTO AGREEMENT ON AGRICULTURE

For the first time, agriculture was brought under the world trading system in the Uruguay Round of negotiations, which concluded in Marrakesh in April 1994. The Agreement on Agriculture (AoA) was one of the many agreements that were negotiated during the Uruguay Round. Most assessments of the agreement hail it as a historic shift in the way it establishes new multilateral rules governing market access, domestic support and export subsidies for agriculture. In terms of future trade liberalization, its most important provisions may be those requiring the elimination of Quantitative Trade Restrictions and their conversion to sound tariffs. These sound tariffs, even though extremely high, can provide a starting point for future negotiations of tariff reduction.

The AoA hasthreebasic clauses:

A. Market Accesscommitment requires conversion of all non-tariff barriers into equivalent tariff barriers. Ordinary tariffs including those resulting from tariffication of non-tariff barriers are to be reduced by an average of 36% with minimum rate of reduction of 15% for each tariff item over a 6-year period. Developing countries are required to reduce tariffs by 24% in 10 years. Developing countries that were maintaining Quantitative Restrictions due to Balance of Payments problems were allowed to offer ceiling bindings instead of tariffication. It was also been stipulated that minimum access equal to 3% of domestic consumption in 1986-88 should be established by the year 1995 rising to 5% at the end of the implementation period.

B.Domestic Supportto agriculture was also to be reduced considerably in countries where the aggregate measure of support exceeded the level specified in the member schedule. The limit for developed and developing countries was fixed at 5% and 10% of the total value of agricultural output respectively. There are three categories of support measures that are not subject to reduction under the agreement, they are:

i.Green Box Measures:Policies that have minimum impact on the patterns of production and flow of trade.ii.Blue Box Measures: These measures include direct payment to the farmers for production limiting programme and are relevant only from the point of view of the developed countries.iii.Amber Box Measures:These are the most important measures from the point of view of producers in developing countries.The AoA demands commitment to reduce support to be achieved by first quantifying, and then progressively reducing domestic support, i.e. the Aggregate Measure of Support (AMS).

C.Export Subsidiesare also to be reduced. The Agreement contains provisions regarding members commitment to reduce export subsidies. Developed countries are required to reduce their export subsidy expenditure by 36 per cent and volume by 21 per cent in six years, in equal installments from 1986-1990 levels. For developing countries the corresponding cuts are 24 per cent and 14 per cent in equal annual installments spread over ten years. The least developed countries are not subject to any reduction commitments.CHAPTER 2

IMPORTANCE OF INDIAN AGRICULTURE

Agriculture forms the backbone of the Indian economy. This sector contributes to the Indian economy in a variety of ways: It provides direct employment to 65% of working people in the country and contributes about 29% of GDP of the country. In advanced nations like the US, agriculture accounts for a mere 2% of GDP, and employs 4% of the total labour force. The position is similar in other advanced countries. For example, agriculture contributed 2% of GDP in France with 6% share in labour force; in Germany the contribution of agriculture to GDP was 1% with 3% share in labour force. The corresponding figures for UK were 2% and 3% (World Bank 2000). Agriculture also provides the foodgrains to feed the large population of the country. Indian agriculture is an important source of supply of raw materials to industries in the country. Agriculture contributes a sizeable share in Indias exports. Besides, it provides fodder for the large cattle population. Being the largest source of employment and income to millions of people, it provides a vast market for our industrial products.

The country has made significant improvements in agricultural production, but the achievements have been mainly confined to a few areas. The major challenges for our agriculture system would always be increasing production and productivity to ensure food security for the rising population. Meeting this challenge means also ensuring food security and a better standard of living for the rural people. Indias performance in agriculture affects overall rural development and the extent of rural poverty. Therefore, the performance of the economy is crucially dependent upon that of agriculture.WTO ON AGRICULTURE(i)Impact on Indian AgricultureOne of the expectations from the Agreement on Agriculture was that with the reduction in domestic support and export subsidies in the developed countries the international prices would increase leading to substantial gains to the producers in developing countries.The experience of the implementation of AoA however reveals that the world prices of food products have been steadily declining threatening the livelihood of producers in many developing countries.India does not provide any product specific support other than market price support. Our total Product Specific AMS continues to be negative, and that too by a huge magnitude.The Non-Product specific AMS is also well within the de minimis level i.e. 4.85% in the base year 1986-88.As such, we have not undertaken any reduction commitment in our schedule filed in WTO with regard to domestic support. The non product specific subsidies being extended by India to its farmers include subsidies for research, extension, pests and disease control, as also for inputs like electricity, water, fertilizers, seeds etc. Most of these subsidies are permissible under Annex-2 or Article 6.2 of AoA.India does not provide any export subsidy except the permissible internal and international transport subsidies and handling and processing charges to reduce marketing costs of exports of agricultural produce.India is one of the six countries who has been maintaining quantitative restrictions (QRs) under the specific enabling provisions of GATT1947.India has, been dismantling QRs since early 1990s and the last of the QRs on remaining715 items including 147 agricultural products have been removed on 1st April, 2001.While the removal of QRs has not changed the overall rate of growth of imports or even their composition.The current bound levels committed by India in respect of primary agricultural products, processed foods and edible oils are 100%, 150% and 300% respectively with some exceptions (soyabean oil at 45%, rape seed at 75%) in respect of whichconcessions were committed by India in earlier rounds of GATT negotiations are generally considered to be adequate to provide effective protection todomestic production. In December 1999, India was able to negotiate under GATT Art.XXVIII duties bound at 0 or very low levels in respect of 15 commodities including SMP, rice, maize, wheat, sorghum to levels ranging from 50 to 80%.The surge in import of edible oil led to the revision of applied rates within the bound levels to protect the domestic producers on as many as four occasions during the last one year.Up to August 2000, the average applied rate on agricultural commodities in India has been 29% that is well below the bound rates.It is therefore, possible for India to revise the applied dutieswithin the bound rates to ensure that surge in imports of agricultural produce does not adversely affect domestic production. During the Uruguay round India has not undertaken any obligation for providing minimum market access opportunities to our trading partners.

CHAPTER 3TRADE POLICY REFORMSThe heart of the agriculture reforms lies in the market place.The biggest beneficiaries of the market reforms should be the major stakeholders in the agriculture business, the farmers.The reforms will also lead to all round improvement of efficiencies in all the links of the value added chain from production to processing to distribution and retailing. Substantial investment in infrastructure for markets, storage, post harvest handling, processing, transport, cold chains and redefining the role of Agricultural Produce Market Committee in a more competitive environment will ensure maximum share in the final price to the farmer for his produce.We could let the market work with a view to capitalise on the opportunities for exports.

The following are the most important goals for agricultural marketing.Increasing the degree of integration of existing agricultural markets.

Minimising instability in prices, both received by producers and paid by consumers.

Reducing the spread between prices received by farmers and the prices paid by consumers.

Another objective of any marketing reform is to remove as far as possible all barriers, whether natural or policy induced, which introduce inefficiencies and monopoly rents in the functioning of markets and to create institutions which permit as large a market participation as possible.The Essential Commodities Act 1954 which is an enabling legislation permitting States to issue orders restricting private storage and movement of foodstuff, was enacted to prevent artificial scarcity when shortages were endemic.With the exception of some remote regions and possibly certain border areas, there is now no justification to retain these provisions except for use only in emergencies such as natural disasters or other contingencies, which disrupt normal functioning of civil society. However, State governments are still reluctant to repeal these provisions although there are very few operative orders restricting movement and storage and even those which exist (for example levy orders on rice mills) are now almost vestigial. While repeal of unnecessary laws which impede private trade continues to be important, the more immediate priority is to remove price and tax distortions and give fiscal support for rural infrastructure and to institutions which can provide marketing strength to Indian farmers and protect them from price and income uncertainty.

Better integration across rural markets is necessary for price signals from abroad to be fully effective in generating comparative advantages. A danger posed by weak integration across rural markets is that the price depressing effects of potential imports can be quicker and affect more regions and farmers than the income enhancing effects of higher exports, which can remain confined to a few regions. To obtain the real benefits of trade, the direct impact of exports needs to be converted to the much larger potential impact that can follow if the higher income creates demand for agricultural produce of other regions within the country.

Developing market integration, by providing reliable transportation and storage at reduced cost and through quick dissemination of market information, is, therefore, vital to realise the potential benefits from trade. However, a two-track approach might be necessary to start with. Since quality considerations and reliable time schedules are important for export trade, the type of infrastructure necessary specifically for this (quality control laboratories, cold chains, bulk and container movement etc.) is best developed selectively in regions of greatest potential where there is already private sector initiative and investment. Government support for this should be focussed, and mainly take the form of facilitation and simplification of procedures with financial support restricted to minimum subsidy on set-up costs. This should, however, be accompanied by a much larger public sector effort throughout the hinterland to strengthen and better network existing institutions using more affordable technology, with the priority on coverage and local participation.An immediate priority deriving from removal of quota restrictions and large world price fluctuations is that import tariff policy be used proactively to counter fluctuations in international prices. This is WTO-compatible so long as tariffs are varied within the existing bound rates which for most agricultural items are sufficiently high. However, it is important that the goal of this is clearly perceived to be price stabilisation and not permanently high tariff protection. For this, average tariff rates should be calibrated on the basis of average world prices and domestic costs of production, and actual tariffs varied around this average strictly on the basis of transparent formulae linked to the deviation of actual world prices from their long-run trends. For this purpose, a Statutory Agricultural Tariff Commission may be set up with full autonomy and authority to make recommendations, which by convention would be accepted by the Government.Simultaneously, export quotas should be removed and there should be a system of export tariffs on agricultural goods which should come into operation when the world price rise above a certain point and be varied with world price movements on the basis of transparent formulae.The existing system of open-ended purchase at pre-announced Minimum Support Prices (MSP) should also continue since weak market integration means that local gluts can continue to occur even if border prices are stabilised. In fact, MSP operations should be strengthened in regions and for crops where it is currently weak.Also, since MSP operations are in the nature of a guarantee provided by the Central government to farmers, State governments should be barred from imposing taxes, levies or cess on MSP purchases.The PDS based on physical supply at fair price shops should continue for the same reason as the MSP, i.e. to prevent local spikes which can occur with weak market integration even if national prices are stabilised. An upper limit needs to be set to the taxes and statutory levies that can be imposed by states on agricultural produce. Tax and fees on raw agricultural commodities should be rationalised.In principle, raw agricultural commodities should attract zero tax(including purchase tax, mandi tax commission of agents, and so on, which in Punjab today accounts for about 11 per cent on wheat).Allowing big grain companies to buy directly from farmers without going through commission agents can do this, and abolishing purchase/sales tax. The Acts governing existing regulated markets, and the Agricultural Produce Marketing Committees which manage these, should be amended to require that markets which do not provide certain minimum services will cease to be covered by the Act and, wherever such Acts prohibit trade outside regulated markets, there should be substantial relaxation of the procedures for establishment of new regulated markets.The system of negotiable warehouse receipts should be simplified and expanded and a scheme of certification of warehouses needs to be devised so that not only the quantity but also quality of the produce can be certified and banks should treat this as acceptable collateral for loans. Credit margin requirements for stocks of agricultural commodities should be reduced.Farmers should be extended credit against hypothecation of their stocks. The warehouse receipt system should be made negotiable instrument by introducing enabling legislative amendments soon.A powerful tool to improve market integration is electronic access toprice and other market information. For this, it is necessary that all regulated markets be networked and that eventually online facilities exist in each market to obtain real-time quotations in other markets. In order to provide even wider access to this data, it should be available in summary form on the internet and internet access extended as widely as possible in the form of e-kiosks. These could be served through existing telephone lines and STD booths, or better still, ride on high speed (V-Sat or similar) networks being developed by a number of agencies such as the post office, railways and commercial banks which have large rural presence.With improved access to reliable market information it may be expected that the functioning of other risk management institutions such as future markets can improve. But, although this can improve price discovery and help trade to hedge risks, not much should be expected from this in terms of reduction in either spot price variability or income risk to farmers on the basis of international evidence. The latter would continue to depend on spot markets for sale and on existing financial institutions for consumption smoothing, supplemented by whatever the government can offer in terms of crop insurance and employment schemes to cope with natural adversity.A basic principle in bringing marketing strength and security to Indian farmers quickly and most cost effectively should therefore be to involve, strengthen and draw synergy from all existing institutions which exist at the village level. An important place in this exists for panchayati raj and co-operative institutions in organising local infrastructure, finance, information and even direct storage, transportation and marketing.Most importantly. It should be clearly understood that all efforts at improving market structures at higher levels are unlikely to fructify fully unless the immediate village infrastructure and its physical connectivity is improved. Also, risk management efforts will remain vacuous unless this involves a definite framework for providing income generation schemes at times of adversity. A beginning on this requires to be made immediately by accelerating the Prime Ministers Gram Sarak Yojna, dovetailing this with the Employment Assurance Scheme and the Public Distribution System to utilise excess food stocks without insisting on targeting to the poor, at least in drought affected regions and most backward blocks.Futures markets should be introduced in all agricultural commodities. The measures suggested above will help introduction of futures market.This would help in containing wide fluctuations in commodity prices as also cut down their costs of marketing by hedging their risk.

Policies for the oilseeds processing sector should review to permit economies of scale and for similar reason the policy relating to farm implement manufacture need to be revamped.The WTO has opened a new horizon of opportunities for increased access for which domestic production system has to gear itself for deriving maximum benefits.Since our commitments of domestic support are well within the limits, there is ample scope for increasing the support for enhancing our comparative advantage.Concurrently, incidence of surge in imports of edible oils and sugar in the recent years highlight the urgent need to put in place an effective system of international trade monitoring and response.The policy framework has outlined in the National Agriculture Policy for triggering a sustainable growth.Due thrust need to be given to revitalise the sector to enable it to face the challenges of economic liberalization and globalization.The regional and sub-regional level programmes need to be charted out to attain this objective in a specific time frame.Indian agriculture continues to need protection and support through creation of infrastructure, watershed development, increased availability of subsidized inputs and greater thrust on research, extension and risk management. Simultaneously, the alternatives to on going product specific support through minimum price support mechanism, may have to be evolved so that the advantage of provisions in the Annexure-2 of AoA can be availed off.The competitiveness of the Indian agriculture have to be enhanced to realise new market access opportunities.The development of product specific regions linked to export channels, tapping the potential of organic farming and development of value addition chain and post harvest infrastructure in tune with global needs will go a long way in establishing India in the international trade scenario.Concurrently, the domestic market reforms also have to be speeded up to unshackle Indian agriculture from restrictions of movement, storage, sale, purchase and exports.In this process, the issue of quality of produce and its standardization as per international standards needs high priority.Besides the production, the quality issues should also cover the subsequent value addition chain.The quality consciousness has to percolate to the grass root levels.Indias initial negotiating proposals seek to protect the interest of Indian agriculture especially on its concerns for food and livelihood security, demanding more flexibility for protection from surge in imports and for acquiring greater market access.These negotiating proposals with matching efforts of protection, support and market-friendly domestic policy regime will take Indian farming to higher levels of growth and prosperity.Agriculture has traditionally benefited from special arrangements which

sheltered it from the full impact of GATT disciplines. Even today, in the WTO

agricultural policies are covered by a separate agreement that, to a degree,

still shelters it from generally applicable rules.

A variety of political, social, economic and cultural arguments are used to

justify this special treatment. The main justification is the need to guarantee,

over time, stable food supplies in a world of fluctuating harvests and potential

famines.

The scope of the traditional agricultural exception was to some extent limited

by the Uruguay Round agreements; WTO Members agreed upon a set of

principles and disciplines that were designed to help liberalize international

trade in agricultural products.

The Uruguay Round achieved two things in relation to agriculture. It introduced

specific disciplines on market access, domestic support and export subsidies.

At the same time it took away the fig leaf behind which agriculture had been

hiding from the full force of general GATT disciplines.

The Agreement on Agriculture seeks to reduce restrictions on trade in

agricultural products by introducing disciplines to:

increase market access;

reduce domestic support measures;

reduce subsidized exports.

This Module examines each of the three disciplines in turn and the other

provisions of the Agreement on Agriculture.

Other WTO agreements also discipline trade in agricultural products. Those

with the biggest impact on trade in agricultural products are: the GATT 1994;

the Agreement on Safeguards or the Safeguards Agreement; the Agreement

on Import Licensing Procedures or the Import Licensing Agreement; the

Agreement on the Application of Sanitary and Phytosanitary Measures or

the SPS Agreement; the Agreement on Technical Barriers to Trade or the

TBT Agreement and, the Agreement on Trade Related Aspects of Intellectual

Property Rights or the TRIPs Agreement.

These agreements, along with the Agreement on Subsidies and Countervailing

Measures or the SCM Agreement and the Agreement on Implementation of

the GATT 1994 or the Antidumping Agreement are also briefly

Examined.CHAPTER 4

THE AGREEMENT ON AGRICULTURE

On completion of this section, the reader should be able to describe

the main disciplines that were introduced by the Agreement on

Agriculture on trade in agricultural products and, in particular, the

provisions of the Agreement on Agriculture on market access, domestic

support and export subsidies.

Export Subsidies

Agricultural Export Subsidies

Export subsidies are special incentives provided by governments to encourage

increased foreign sales.

These subsidies, which are contingent on export performance, may take the

form of:

Cash payments;

Disposal of government stocks at below-market prices;

Subsidies financed by producers or processors as a result of

government actions such as assessments;

Marketing subsidies;

Transportation and freight subsidies; and

Subsidies for commodities contingent on their incorporation in

exported products.

The GATT 1994 Article XVI on subsidies allowed the GATT contracting

parties to subsidize the export of primary agricultural products if they did not

result in the exporting country having more than an equitable share of world

trade.

The WTO Agreement on Subsidies and Countervailing Measures

or the SCM Agreement now prohibits all subsidies on exports of agricultural

products except as provided for in the Agreement on Agriculture.

The Agreement on Agriculture does not contain any definition of the term

subsidy.

To determine whether an export support measure does in fact constitute a

subsidy subject to the disciplines of the Agreement on Agriculture, the

Appellate Body, in its report in the Canada - Dairy case,

referred to the definition of a subsidy contained in Part I of the SCM Agreement.

Appellate Body Report, Canada Measures Affecting the Importation of Dairy Products (Canada

Dairy), WT/DS103/AB/R and Corr.1, WT/DS/113/AB/R and Corr.1, adopted 27 October 1999,

Dispute Settlement

Under the Agreement on Subsidies and Countervailing Measures a subsidy

exists if:

There is a financial contribution by a government or any public

body within the territory of a Member;

There is any form of income or price support in the sense of Article

XVI of the GATT 1994;

A benefit is thereby conferred.In the Canada - Dairy report, the Appellate Body confirmed that to determine

whether a subsidy exists within the meaning of the Agreement on Agriculture,

it must be shown that all the constituent components of a subsidy as defined

by the SCM Agreement exist of the SCM Agreement, arises where the grantor makes a financial contribution which confers a benefit on the recipient, as compared with

what would have been otherwise available to the recipient in the marketplace.49

The same approach can be found in the US - FSC Panel Report of the SCM Agreement, which defines the term subsidy for the purposes of the SCM Agreement, represents highly relevant context for the interpretation of the word subsidy within the meaning of the Agreement on Agriculture, as it is the only article in the WTO Agreement that provides a definition of that term. This is not of course to say that the definition of

subsidy in the SCM Agreement, which applies [f]or the purpose of this

[i.e., the SCM] Agreement, is directly applicable to the Agreement on

Agriculture.However, care should be taken in relation to that part of the definition of

subsidies which refers to a financial contribution by a government. Firstly a

financial contribution does not necessarily mean a payment of monies. It covers

a wide variety of benefits. Secondly a subsidy can exist even where the benefit

is granted not directly by the government but by virtue of government action.

In the Canada - Dairy dispute the Appellate Body in its third report found

that milk farmers were subsidizing milk exports by selling milk at a low price

as their main costs were covered by the domestic milk support system which

was imposed by virtue of a government action.

It falls now to consider the role of the Canadian government in financing

payments made on the sale of CEM [the unsubsidised, freely sold, milk for

of the SCM Agreement. Appellate Body Report, Canada Dairy Panel Report, United States Tax Treatment for Foreign Sales Corporations (US FSC),

WT/DS108/R, adopted 20 March 2000, as modified by the Appellate Body Report, WT/DS108/AB/R.Agriculture export. We have agreed with the Panel that a significant percentage of

producers are likely to finance sales of CEM at below the costs of production

as a result of the participation in the domestic market. Canadian government

action controls virtually every aspect of domestic milk supply and

management. In particular, government agencies fix the price of domestic

milk that renders it highly remunerative to producers. Government action

also controls the supply of domestic milk through quota, thereby protecting

the administered price. The imposition by government of financial penalties

that divert CEM into the domestic market is another element of the government

control over the supply of milk. Further, the degree of government control

over the domestic market is emphasised by the fact that government pools,

allocates and distributes revenues to producers from all domestic sales. Finally

governmental action also protects the domestic market from import competition

through tariffs.

In our view, the effect of these different governmental actions is to secure a

highly remunerative price for sales of domestic milk by producers. In turn, it

is due to this price that a significant proportion of producers covers

their fixed costs in the domestic market and, as a result, has the resources

profitably to sell export milk at prices that are below the costs of production.

Accordingly, we agree with the Panel that government action in the domestic

market plays a critical part in the financing of payments made by a

significant percentage of producers on the sale of CEM. As such, we agree

with the Panel that payments made through the supply of CEM at below the

COP [cost of production] standard are financed by virtue of government

action. We also agree with the Panel that Canada failed to establish the

contrary, pursuant to the Agreement on Agriculture. The Agreement on Agriculture prohibits WTO Members from granting export subsidies that do not conform with the Agreement on Agriculture and the commitments in their Schedules.

OTHER WTO AGREEMENTS RELEVANT TO

AGRICULTURE

On completion of this section, the reader will be able:

To identify other WTO Agreements relevant to Agriculture;

To analyse the importance of their provisions for trade in agricultural

products.

Agriculture in the GATT

Agricultural products are goods for the purposes of the GATT 1994. There

is therefore no a priori exclusion of agriculture from the GATT 1994.

Other than the country schedules established within the GATT 1994. The basic principles of the GATT 1994 of most relevance to agriculture are:

The General Most-Favoured-Nation Treatment; The General Elimination of Quantitative Restrictions;

The Non-discriminatory Administration of Quantitative Restrictions and General.ExceptionsThis section, examines the GATT 1994 provisions relevant to trade in

agricultural commodities of the GATT 1994 on the Most-Favoured Nation Treatment

The Contracting Parties of the GATT 1947 were bound to accord to the

products of other contracting parties treatment no less favourable than that

accorded to products of any other country.

WTO Members have entered into similar commitments, under the GATT 1994

(Article I) for trade in goods. It consists of the commitment by a WTO Member

to accord immediately and unconditionally to any other WTO Member all

the advantages it would accord to any other country.

The Most-Favoured-Nation clause applies to:

Any advantage, favour, privilege or immunity accorded by a

WTO Member to a product originating in or destined for any other

country;

Products, whether or not subject to a tariff binding during trade

negotiations;

Imports and exports, and in connexion with imports or exports

and international transfers of funds (current payments).

Objectives

CHAPTER 5

ATS and Agriculture

Introduction

Somewhat surprisingly, the General Agreement on Trade in Services can also

apply to the trade in agricultural goods. This is the conclusion on the basis of

the findings of the Appellate Body in the EC Bananas III case.In EC Bananas III the European Communities argued that the GATS did

not apply to the EC import licensing procedures because they were not

measures affecting trade in services within the meaning of the

GATS.The Panel found that there is no legal basis for an a priori exclusion

of measures within the EC banana import licensing regime from the scope of

the GATS.Korea Measures Affecting Imports of Fresh, Chilled and Frozen Beef (Korea Various Measures

on Beef), WT/DS161/R and WT/DS169/R adopted 31 July 2000, WT/DS161/AB/R and WT/DS169/

AB/R, adopted 11 December 2000.

EC Regime for the Importation, Sale, and Distribution of Bananas (EC Bananas III) WT/DS27/R/ECU, WT/DS27/R/MEX, WT/DS27/R/USA, adopted 22 May 1997, WT/DS27/AB/R, adopted

9 September 1997.

Appellate Body Report, European Communities Regime for the Importation, Sale, and Distribution of Bananas (EC Bananas III), WT/DS27/AB/R, adopted 25 September 1997.

Panel Report, European Communities Regime for the Importation, Sale, and Distribution of Bananas Complaint by Ecuador (EC Bananas III (Ecuador)), WT/DS27/ECU, adopted 25 September 1997, as modified by the Appellate Body Report.CHAPTER 6TRIPs and Agriculture

The TRIPs Agreement includes three elements relating to agriculture:

Geographical indications;

Patent protection of agricultural chemical products; Plant variety protection.Market access for agricultural products is closely linked to the issues of product

differentiation and food specificity.

Product differentiation is an important feature of market competition. It benefits

consumers because they are offered more choice and more information on

product quality. It also benefits producers, who are able to develop quality

products and are free from unfair or misleading competition in markets that

import their products.

Food specificity can be determined by reference to geographical indications.

Historically, products from particular places were more marketable than similar

products from other places because of a particular quality trait. The quality

difference was a result of either natural geographical advantages, such as climate

and geology, or processing techniques peculiar to the specific place. With

time, these geographical place names became associated with particular

products or types of product.

The WTO Agreement on Trade Related Aspects of Intellectual Property Rights

(the TRIPs Agreement)provides for the protection of geographical indications.

Geographical indications are defined in of the TRIPs Agreement

As Agriculture indications which identify a good as originating in the territory of a

Member, or a region or locality in that territory, where a given quality,

reputation or other characteristic of the good is essentially attributable to its

geographical origin.

Under the TRIPs Agreement, for a geographical indication to be protected as

such, it needs only to be an indication, not necessarily the name of a

geographical place on earth. This indication has to identify goods as

originating in the territory of a particular WTO Member, whether the name of

the country itself, a region or a locality of that territory.

Under the TRIPs Agreement, all geographical indications concerning all goods

must be protected against misuse such as to mislead the public or constitute

an act of unfair competition. For wines and spirits the level of protection is

higher and is not conditional on whether the public is misled or if their use

constitutes unfair competition of the TRIPs Agreement establishes a minimum standard of protection for all geographical indications states that WTO Members shall provide the legal means for interested parties to prevent:

a) The use of any means in the designation or presentation of a good,that

indicates or suggests that the good originates in a geographical area,

other than the true place of origin in a manner which misleads the public

as to the geographical origin of the good;117

b) Any use which constitute an act of unfair competition within the meaning

of Article 10bis of the Paris Convention (1967).

The TRIPs Agreement does not specify the legal means to protect geographical

indications. Each WTO Members is free to chose the most appropriate method.

The additional protection for wines and spirits encompasses three main

elements:

Providing the legal means for interested parties to prevent the use

of a geographical indication identifying wine and spirits not

originating in the place indicated by the geographical indication;

Refusing or invalidating the registration of a trademark for wines

or spirits which contains or consists of a geographical indication.However, the requirement to exercise due restraint should be taken into account. See also section Peace Clause of this Module.

TRIPs Protection of geographical indications.

TRIPs Additional protection for geographical indications for wines and spirits.

For example, the use of symbols such as the Eiffel Tower or the Statue of Liberty to infer an association of origin would fall within this prohibition. Dispute Settlement

identifying wines or spirits, respectively at the request of an

interested party;

Calling WTO Members for negotiations aimed at increasing

protection for individual geographical indications for wines and

spirits.The use of a geographical indication identifying a wine or

spirit not originating in the place indicated by the geographical indication is

prohibited, even where the true origin of the wine or spirit is indicated or the

geographical indication is used in a translation or accompanied by expressions

such as kind, type, style, imitation or the like. It is not necessary to

show that the public might be misled or that the use constitutes an act of

unfair competition. In the case of wines and spirits, protection becomes

objective and automatic. Thus, these provisions give geographical indications

for wines and spirits stronger protection than that provided for all products.

According the TRIPs Agreement, geographical indications for wines have an extra-additional protection. This extra-additional protection has two components:

T he need to accord protection for each geographical indication for

wines in the case of homonymous indications; and

The establishment of a multilateral system of notification and

registration of geographical indications for wines eligible for

protection in the jurisdictions of those WTO Members participating

in the system.CHAPTER 7

CASE STUDYBefore 1 January 1995, most dairy products were subject to a range of

restrictions on their entry into Joyland. These restrictions ranged from tariff

rate quotas (TRQs), to voluntary restraint agreements, to a number of safeguard

measures, to high tariffs or to particularly burdensome inspection procedures.

The new WTO Agreement on Agriculture required that all non-tariff barriers,

in particular quotas and voluntary restraints, in existence in 1994 be changed

into their tariff equivalent by 1 January 1995. Joyland did this during the last

weeks of 1994. Included in the new Joyland tariffs was a tariff rate quota on

the importation of milk. This TRQ allows importation of 5,000 tons of foreign

milk at a 20 per cent ad valorem rate, with a prohibitive over-the-quota rate of

duty of 250 per cent. The Ministry of Agriculture of Joyland, whose officials

adopted this TRQ, has stated that this was reached by tariffying a previously

enforced quota set on foreign milk in 1991 by the Government of JoyLand

following a successful safeguard action. This safeguard measure was set for a

period of five years, subject to possible renewal, but due to the considerable

increase in Milklands prices a renewal would have been most improbable.

The Government of Milkland is worried and considers that Joyland has acted

illegally. Milkland is considering its legal recourses. On the other hand, Joyland

argues that its TRQ is WTO-consistent and that, in any event, it is specifically

mentioned in its Schedule of Concessions.

CHAPTER 8IMPACT OF W.T.O ON INDIAN AGRICULTURAL SECTORTrade is an engine of economic development. The establishment of W.T.O is an important landmark in the history of international trade. When developing countries were liberalizing their economies, they felt the need for better export opportunities. The W.T.O provides opportunities for countries to grow and realize their export potentials, with appropriate domestic policies in place. The issue of globalization in the Indian context has occurred in the patterns of trade and capital flow in recent years; unfortunately, so far we have not made much use of it. At one time a countrys trade pattern was determined by its natural resources and the productivity of its land. Leaving aside political and institutional factors, a countrys level of income was also largely determined by the global demand for its natural resources and its relative efficiency in exploiting them. The importance of land as a source of comparative advantage, however, changed dramatically after the industrial revolution. Today, it is almost insignificant. After the industrial revolution, the availability of capital became the most dominant source of comparative advantage.

India will be able to expand its exports of agricultural products in which it has tremendous comparative advantage. The provisions of W.T.O offered ample opportunities to India to expand its export market. Contrary to this, the price situation changed dramatically after 1996, which was the first year after implementation of Urguay Round Agreement and formation of W.T.O. International price of agricultural commodities have since then plummeted, because of which domestic price turned higher than international price, which made India an attractive market for import of most agricultural commodities. This situation resulted in a wide spread decline in agricultural export and had also pressure on domestic prices. The impact of W.T.O on agriculture was severely felt by India as cheap imports have frequently hit the Indian market, causing shock waves among the agriculture producers. The changes in agricultural exports reveal that during pre W.T.O period the increase was significantly remarkable than post W.T.O period and the rising export trend could not be sustained in the post W.T.O period whereas imports rose steadily. The agricultural products from India can be made competitive in international market and the prices of agricultural goods in the domestic market can be improved by taking serious steps of reform.

Globalize or Perish is now the buzzword synonymous to Do or Die which conveys that there is no alternative to globalization and everybody should learn to live with it. India, being a signatory to the agreement that led to W.T.O, can no way step backwards. This is not the time to curse the darkness but to work for making India emerge as a global market leader.

The global agriculture trade regime under the World Trade Organization(WTO), that came into force 10 years ago in 1995, has led to an increase inthe import of farm products into India rather than boosting exports.

Barring the first three years after the enforcement of the agreement,agriculture imports continued to grow faster than exports. Between 1998 and2000-01, the average annual import of farm products rose by about 64 percent, while exports declined by 7 per cent. Though the last two years haveseen some buoyancy in farm exports, imports have also continued to grow.

The impact of the WTO on India's agriculture has been studied by Dr RameshChand, acting director of the Delhi-based National Centre for AgriculturalEconomics and Policy Research (NCAP). He has found that the first threeyears, after the implementation of the WTO agreement, witnessed a majorspurt in agriculture exports.

The study estimates that the annual import of agriculture goods rose from$1,190 million in the three years preceding the WTO to $1,996 million in thefirst triennium after the WTO. In the same period, exports increased from$3,725 million to $6,530 million. But, this favourable trend in the initialyears of the WTO did not last long and the next three years witnessed awhopping rise in imports and a slight decline in exports.

The study attributes the slow-down on agro-exports and sharp rise in importsto the decline in global prices of almost all major agriculture commoditiesafter 1997.

This crash was due partly to the cyclical nature of international prices andpartly due to increased global competition in agro-export because ofliberalising trade. The situation was aggravated by an increase in thealready high farm subsidies in the developed countries.

The Indian non-Basmati rice and wheat could not face global competition. Theexport of oilmeal, the second biggest export item after marine products,also suffered a set back due to a decline in global prices.

The export earnings from traditional export commodities like tea, coffee,spice and tobacco suffered mainly due to a sharp fall in internationalprices, as the quantum of exports in most cases did not drop.

Exports of marine products, livestock and horticulture items maintained thetempo of growth that was build up in the pre-WTO period. This implies thatthe post-WTO situation was favourable for the export of high-value foodproducts.

In case of imports, liberalisation of trade in the initial years after theWTO did not result in any perceptible spurt because global prices were high.But subsequently, when global prices began to fall, India's imports startedrising. The level of imports nearly doubled in the three years between1996-97 and 1999-2000. This downturn in global prices continued even in thesubsequent years.

The international prices of cereals in the years 2000 and 2001 were almosthalf of what they were in the beginning of the WTO-era.

The composition of items in the import basket indicates that edible oilsaccounted for the bulk of the increase in total agro-imports. The otheritems clocking significant increase in imports include pulses, spices,cotton, wood and wood products.

The study has also revealed that the spurt in the imports vegetable oils,and wood and its products has depressed their domestic prices, adverselyimpacting indigenous production.

CHAPTER 9IMPLICATIONS OF AoA FOR 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 is exporting 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 result is 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 minimis level.

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 foodgrains.To conclude, it is feared that the Agreement is not favorable to India due to the following reasons:i. The country will be compelled to import at least 3% of the domestic demand for agricultural products.ii. The government will be forced to reduce subsidies to farmers.iii. The Public Distribution System and Public Procurement System will have to be abandoned.CHAPTER 10Objective & Hypothesis

Objective:1) To study the benefits of WTO & GATT on Indian Foreign Trade.2) Analysis of three sectors namely Agriculture, Textile & Service.Hypothesis(H0):Indian foreign trade unaffected by WTO Policies

Indian foreign trade: Indian economic policy after independence was influenced by the colonial experience, which was seen by Indian leaders as exploitative, and by those leaders exposure to democratic socialism as well as the progress achieved by the economy of the Soviet Union. Domestic policy tended towards protectionism, with a strong emphasis on import substitution, industrialization, state intervention, a large public sector, business regulation, and central planning, while trade and foreign investment policies were relatively liberal. Indias economy was mostly dependent on its large internal market with external trade accounting for just 20% of the countrys GDP. Until the liberalization of 1991, India was largely and intentionally isolated from the world markets, to protect its economy and to achieve self-reliance. Foreign trade was subject to import tariffs, export taxes and quantitative restrictions.

Indias exports were stagnant for the first 15 years after independence, due to the predominance of tea, jute and cotton manufactures, demand for which was generally inelastic. Imports in the same period consisted predominantly of machinery, equipment and raw materials, due to nascent industrialization. Since liberalization, the value of Indias international trade has increased sharply. Indias major trading partners are the European Union, China, the United State sand the United Arab Emirates.In 200910, major export commodities included engineering goods, petroleum products, chemicals and pharmaceuticals, gems and jewellery, textiles and garments, agricultural products, iron ore and other minerals. Major import commodities included crude oil and related products, machinery, electronic goods, gold and silver.Its September 2010 exports were reported to have increased 23% year-on-year to US $18.02bn, while its imports were up 26.1% at $27.14bn. At US$13.06bnAugusts trade gap was the highest in 23 months but the economy is well on the road to cross $200 billion mark in exports for the financial year 201011.

CHAPTER 11The General Agreement on Tariffs and Trade (GATT)

The General Agreement on Tariffs and Trade (typically abbreviated GATT) was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO).GATT was formed in 1948 and lasted until 1993, when it was replaced by the World Trade Organization in 1995. GATT and WTO trade rounds Name Start Duration Countries Subjects covered Achievements Signing of GATT, 45,000Geneva April 1947 7 months 23 Tariffs tariff concessions affecting $10 billion of trade Countries exchanged some Annecy April 1949 5 months 13 Tariffs 5,000 tariff concessions Countries exchanged some September 8,700 tariff concessions, Torquay 8 months 38 Tariffs 1950 cutting the 1948 tariff levels by 25%Geneva $2.5 billion in tariff January 1956 5 months 26 Tariffs, admission of Japan II reductions September Tariff concessions worthDillon 11 months 26 Tariffs 1960 $4.9 billion of world trade

Tariff concessions Kennedy May 1964 37 months 62 Tariffs, Anti-dumping worth $40 billion of world trade Tariffs, non-tariff Tariff reductions worth Tokyo September 1973 74 months 102 measures, "framework" more than $300 billion agreements dollars achieved The round led to the creation of WTO, and extended the range of trade negotiations, Tariffs, non-tariff leading to major measures, rules, reductions in tariffs services, intellectual (about 40%) and Uruguay September 1986 87 months 123 property, dispute agricultural subsidies, settlement, textiles, an agreement to allow agriculture, creation of full access WTO, etc for textiles and clothing from developing countries, and an extension of intellectual property rights. Tariffs, non-tariff measures, agriculture, labor standards, environment, The round is not yet Doha November 2001 ? 141 competition, concluded. investment, transparency, patents etc

The World Trade Organization (WTO): The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. The organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments. The WTO has 153 members representing more than 97% of total world trade and30 observers, most seeking membership. The WTO is governed by a ministerial conference, meeting every two years; a general council, which implements the conferences policy decisions and is responsible for day-to-day administration; and a director-general, who is appointed by the ministerial conference. The WTO headquarters is at the Centre William Rappard, Geneva, Switzerland.

INDIA AND WTO: India is one of the founding members of WTO along with 134 other countries .Indias participation in an increasingly rule based system in governance of International trade, would ultimately lead to better prosperity for the nation. Various trade disputes of India with other nations have been settled through WTO. India has also played an important part in the effective formulation of major trade policies. By being a member of WTO several countries are now trading with India, thus giving a boost to production, employment, standard of living and an opportunity to maximize the use of the world resources. According to the WTO Secretariat Report, along with the policy statement by the Government of India, India is expected to snatch most of the business deals that are presently catering the developed nations which includes major service based industries like telecom, financial services, infrastructure services such as transport and power. The increase in availability and reduction in tariffs has prompted many developed nations to go for business with India especially in IT and ITeS industry. If the trend continues then by 2025, India is expected to cater to the software and services demands of major giants of the business world.

CHAPTER 12SUGGESTIONS

The farmers have felt the heat of WTO and the challenges posed by international competitors in the last three years. Cases of suicides by farmers have been reported from many States. Agricultural prices are drastically falling. Farmers have been kept out of market by the pricing policies pursued by the government in terms of the minimum support prices of food grains and the issue prices in Public Distribution System. Apart from seeking better deals from WTO so as to support domestic measures adopted for poverty alleviation and rural employment, policy measures need to be taken to strengthen the agricultural sector to safeguard the interests of the farming community.Listed below are some suggestions to meet the challenges facing Indian agriculture

a. There is a need to formulate a consistent policy for exports of agricultural products and processed products in which the country has a comparative advantage.

b. Anti-dumping safeguard measures must be evoked in time to control imports of agricultural products, if so warrants.

c. Agriculture Research and Extension should be revamped so as to meet the challenges.

d. Crop rotation system should be promoted to increase the fertility of the soil and improve the cash flow of the farming community.

e. More investment in latest technology and rural infrastructure especially in irrigation system so as to utilize fully the already available irrigation potential.

f. Provide better incentives to farmers to increase the farm productivity and quality standards.

g. Ensure adequate credit support and crop insurance to the farmers.

h. To reduce the cost of production by cultivation of hybrids and adopting integrated pest management strategies.

i. Emphasis should be laid on imparting training to the farmers on increasing productivity and reducing cost.

j. Areas having potential for production of different agricultural commodities should be earmarked and their production and marketing should be encouraged there.

k. Special incentives should be given for encouraging export-oriented production with a view to improving market access for Indian agricultural products in world markets.CONCLUSION

Under the existing circumstances, the liberalization of world trade in agriculture will benefit developed countries more than developing countries. Given the conditions of high tariffs in the developed world and low or nil tariffs in developing countries, the removal of Quantitative Restrictions on agricultural commodities will tilt the balance of global trade in favour of the developed nations with detrimental effects on the producers in Third World countries. India must be alert to the implications of the WTO and its policies, and decide its own national priorities while taking policy decisions in the future. It is our duty not only to protect our national interest but also to promote it so as to take advantage of the situation. The situation is inescapable but there is scope to manipulate it in the national interest.BIBLIOGRAPHYGatt Secretariat (1994) The Results of the Uruguay Round of Multilateral Trade Negotiations, The Legal Texts,

Geneva: Gatt Secretariat.(2005c) World Trade Report 2005, Geneva: wto.