INDIA and WTO

Dr Chandrika Subramaniyan MA MPHIL PHD LLB LLM MAICD Dip in MGMT and Training

Solicitor & Barrister

Supreme Court of NSW

High Court of Australia

Democracy and Dilemma

• Democracy

Governance

Contracting

• Dilemma

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GATT and WTO – differences….

• GATT - flexible

member countries can bargain, choose or avoid

- specific discipline.

• WTO – rigid

universally applied to all member countries

binding dispute settlement procedures.

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GATT and WTO - differences ……

• WTO - dispute settlement mechanism(power

to impose trade sanctions)

GATT - domestic legislation not permitted

• GATT - provisional legal agreement

WTO - permanent agreement

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GATT : objectives

1. Expansion of international trade

2. Increase of world production by

ensuring full employment in the

participating nations

3. Development and full utilisation of

world resources

4. Raising standard of living of the world

community as a whole

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WTO - objectives

• improve the standard of living - member

countries

• ensure full employment and increase in demand.

• enlarge production and trade of goods

• increase the trade of services

• ensure optimum utilization of world resources.

• protect the environment

• accept the concept of sustainable development

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WTO is directed towards

• Setting and enforcing rules for

international trade

• resolving disputes

• encouraging transparency

• further trade liberalisation, and

• help developing countries benefit fully

from the global trading system •

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India’s participation

• GATT -1948

• WTO -1995

• Uruguay Round 1986-1994

• Doha Round 2001

• Bali Package 2013

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Bali summit and India

• India's concern : two issues

a) food subsidies

b) stockpiling of food grains.

• G–33 proposal (Nov 2012) to amend

AoA to support developing nations

• India’s National Food Security Act, 2013

(“Right to Food Act”) - reflects the G-

33 proposal

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Agreement on Agriculture - 1995

discipline the following :

• increase market access

• reduce domestic support

measures

• reduce subsidised exports

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Three Pillars • 1) Market Access (AoA Article 4.1, 4.2, 5)

Encourages competitive relationship between imported and domestic

products; deals with rules related to import of goods.

• 2) Domestic Support (AoA Article 4.1)

Subsidies granted for the domestic production of agricultural goods.

These subsidies are granted for the benefit of products regardless of

exports.

• 3) Export Subsidies (AoA Article 8, 9.2 )

These are special incentives provided by governments on products

destined for foreign markets to encourage increased export

performance. 11

Domestic Support - Green box Subsidies

deals with livelihood and

environmental issues like agricultural

infrastructure and food security,

expenditure on research and

development, and disease control.

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Domestic Support - Blue Box Subsidies

provide direct income support to the

farmers under production limiting

programme mainly used the

European Union members and the

growth is enormous.

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Domestic Support - Amber Box Subsidies

deals with all domestic supports which are

not included in either green or blue boxes.

Unlike the other two, this is considered as

highly distortive of markets.

They include measures to support prices or

subsidies directly related to production

quantities.

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India and subsidies • India’s agricultural subsidies are classified under “Green Box”

(Article 6.2 of AoA)

• 98.97 per cent of Indian farm holdings are low-income,

resource-poor farmers

• agreements covered by WTO have to be clarified “in

accordance with customary rules of interpretation of public

international law(Article 3.2 :WTO )

• India is placed in a position to balance food security and

WTO rules

• India demanded against “cap” & for stockpiling and

subsiding be allowed for developing countries. 15

Export Subsidy

supports to meet the International

competition.

criticised – as they do not really promote the

domestic producer

AND

1.Subsidised exports can be countervailed by the

importing country.

2.The subsidy does not favour the small farmers.

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India’s stand on WTO….

• contradiction between the WTO rule and

United Nations’ Millennium Development

Goals to eradicate poverty and hunger

• in India, public stockholding is a livelihood

issue- not a matter for an external

organisation like WTO to Interfere

• human rights abuse????

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India’s stand on WTO ….

• The intersection of free trade and human

rights is a complex situation . This draws

the attention towards the social contract

discussed at the outset of this paper, the

foundation of the Indian democracy of

which foreign multinationals and external

bodies play no part.

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India’s position

• Initially India found that WTO agreements run

contrary to the Indian national interest.

• India was trying to protect a $12 billion annual

programme to feed its poor by subsidies,

contradicting WTO rules.

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India’s FSA criticised… • developed countries : ‘led to mountains of stored

grains, which critics argue could be dumped on global

markets’.

• “Food security comes first and trade policies should

be customised to guarantee it”

• compromise their peoples’ right to food security will

not only compromise basic human dignity of each of

their citizens but also violate international human

rights law in the name of “free trade

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India’s FSA criticised …..

• Some proponents believe that Indian

marketing, transportation, and

infrastructure subsidies “distort” the

market.

• ‘ignoring the right of poor people’

• overproduction and oversupply because they

encourage greater production of a specific

commodity and less domestic consumption.

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Researchers say • challenges and opportunities’ - existing in the

Indian agriculture market, suggest that ‘India

needs to adopt comprehensive [domestic]

agricultural reforms policy... The growth of

agriculture has remained laggard... To push

up this growth our agriculture sector needs

heavy investment, infrastructure

development, irrigation facility etc.

• improved training, skills, infrastructure,

transport, and work practices would increase

the productivity of Indian farmers 22

Finally agreed • Following G20 meeting in Brisbane (November

2014) , India and the U.S. reached an agreement

on the food-stockpiling program, enabling India

to ratify TFA

• U.S. agreed to give India more freedom to subsidise and

stockpile food to feed its people and support its farmers

• ‘Corporate Greed Trumps Needs of World's Poor and

Hungry.’ criticised

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Thank you Dr Chandrika Subramaniyan

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