NATIONAL LAW INSTITUTE UNIVERSITY

BHOPAL

PROJECT ON

“IMPACT OF WTO AGREEMENT ON INDIAN AGRICULTURE”

IX TRIMESTER

SUBMITTED TO: SUBMITTED BY:

[Link] SAUBHAGYA BHADKARIA IRISHANAND

2017BALLB40

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 TABLE OF CONTENTS

ACKNOWLEDGEMENT

The success and final outcome of this project required a lot of guidance and assistance from
many people and I am extremely fortunate to have got this all along the completion of my
synopsis work. Whatever I have done is only due to such guidance and assistance and I
would not forget to thank them.

I respect and thank my professor Saubhagya Bhadkaria mam for giving me an opportunity to
do the project work on “ Impact of WTO agreement on Indian Agriculture” and providing me
all support and guidance which made me complete the project on time. I am extremely
grateful to him for providing such a nice support and guidance though she had busy schedule
managing for completion of my project.

I am thankful to and fortunate enough to get constant encouragement, support and guidance
from my mother who helped me in successfully completing my project work.

Thank You

Irisha Anand

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HYPOTHESIS

In the following project my hypothesis is that WTO agreement has negatively impacted
Indian agriculture.

RESEARCH OBJECTIVES

To do analysis as to the impact of WTO agreement on Indian agriculture.

METHODOLOGY

The methodology of this paper is purely descriptive and required information are collected
from different secondary sources like renowned websites, journals, various news articles etc.

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 INTRODUCTION

Since India is an agricultural based economy before dwelling into the question as to how does
the WTO agreement has impacted Indian agriculture we should try to understand as to why
agriculture is a key issue for India in WTO. Agriculture has been the backbone of the Indian
economy for a long time as if we see criticality and sensitivity of Indian agriculture sector can
be gauged as the share of agriculture in the national GDP is a huge nearly up to 24% apart
from this nearly 66% of the population is dependent on rural economy for their livelihood ,
nearly 60% of the cultivable land , that is about 100 million hectares out of 167 million
hectares continues to be vulnerable to the vagaries of the monsoon . The yield of the crops
grown in India are still very low when compared with the yield of crops some of the other
countries . Agriculture and agro based industries in rural areas play an important role in
preventing the migration of the rural population to the urban areas and thereby reduce the
burden on the already over crowed cities these above issues indicates as to why agriculture is
such a key issue for India in WTO negotiation .

The plight of the farmers in developing countries like India is directly linked to the level and
kind of subsidy given to the farming sector in developed world, the distortions in the trade of
agricultural commodities , created through the high level of subsidies in the developed
countries , shut out the potentially more competitive agricultural products from developing
countries like India , this poses high risk to the very livelihood of more than 650 million
people in India , who are solely dependent on agriculture.

Now talking about WTO the members of wto have taken steps to reform the agricultural
sector and to address the subsidies and high trade barriers that distort agricultural trade . the

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over all aim is to establish a fairer trading system that will increase market access and
improve the livelihood of farmers around the world . The wto agreement on agriculture which
came into force in 1995 represents a significant towards reforming agricultural trade and
making it fairer and more competitive . the agricultural committee which oversees the
implementation of the agriculture agreement its key responsibility is to monitor how wto
members are complying with their commitments .members continue to conduct negotiations
for further reforms .

WTO AGRICULTURE AGREEMENT

The wto agriculture agreement provides a framework for long term reform of agricultural
trade and domestic policies , with the aim of leading to fairer competition and a less distorted
sector. The present rules and commitments on agriculture are often called the “Uruguay
round programme” they were negotiated in the Uruguay round .

The agreement covers:

 Market access- the use of trade restrictions , such as tariffs on imports . on the market
access side , the Uruguay round resulted in a key systematic change the switch from a
situation where myriad of non tariff measures impeded agricultural trade flows to a
regime of bound tariff only protection plus reduction commitments . the key aspect of
the fundamental change have been to stimulate investment, production and trade in
agriculture by making agricultural market access conditions more transparent ,
predictable ad competitive, establishing or strengthening the link between national
and international agricultural market and thus relying more prominently on the market
for guiding scarce resources into their most productive uses both within the
agricultural sector and economy wide.
 Domestic support- the use of subsidies and other support programmes that directly
stimulates production and distort trade. The agricultural package of the Uruguay
round has fundamentally changed the way domestic support in favour of agricultural
producers were treated under the GATT 1947. A key objective has been to discipline
and reduce domestic support while at the same time leaving great scope for
governments to design domestic agricultural policies in the face of and response to the

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 wide variety of the specific circumstances in individual countries and individual
agricultural sector. The approach agreed upon is also aimed at helping ensure that the
specific binding commitments in the area of market access and export competition are
not undermined through domestic support measures. The main conceptual
consideration is that there are basically two categories of domestic support – support
with no, or minimal , distortive effect on trade on the one hand often referred to as
Green box measures and trade distorting support on the other hand often referred to as
Amber box measures.

Export competition- the use of export subsidies and other government support programmes
that subsidize exports. The core of the programme on export subsidies are the commitments
to reduce subsidized export quantities , and the amount of money spent subsidizing exports .
the agriculture agreement also looks at anti circumvention questions .

Under the agreement , wto members agree to schedules or lists of commitments that set limits
on the tariffs they can apply to individual products and on levels of domestic support and
export subsidies .

UNDERSTANDING THE WTO

The original GATT did apply to agricultural trade , but it contained loopholes like it allowed
countries to use some non tariff measures such as import quotas and to subsidize.
Agricultural trade became highly distorted especially with the use of export subsidies which
would not normally have been allowed for industrial products . the Uruguay round produced
the first multilateral agreement dedicated to the sector . it was a significant first step towards
order, fair competition and a less distorted sector. It was implemented over six year period
and is still being implemented by developing countries under their 10 year period that begin
in 1995.

Now lets talk about agreement on agriculture.

AGREEMENT ON AGRICULTURE

The objective of the agriculture agreement is to reform trade in the sector and to make
policies more market oriented . This would improve predictability and security for importing
and exporting countries alike.

 Market access – various trade restrictions confronting imports

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  Domestic support – subsidies and other programmes including those that raise or
guarantee farm gate prices and farmers income
 Export subsidies and other methods used to make exports artificially competitive

The agreement does allow governments to support their rural economies , but preferably
through policies that cause less distortion to trade . It also allows some flexibility in the way
commitments are implemented . Developing countries do not have to cut their subsidies or
lower their tariffs as much as developed countries and they are given extra time to complete
their obligation. Least developed countries don’t have to do this at all. Special provisions deal
with the interests of countries that rely on imports for their food supplies , and the concerns of
least developed economies.

Market access

The new rule for market access in agricultural products is “tariffs only”. Before the Uruguay
Round, some agricultural imports were restricted by quotas and other non-tariff measures.
These have been replaced by tariffs that provide more-or-less equivalent levels of protection
The reductions in agricultural subsidies and protection agreed in the Uruguay Round. Only
the figures for cutting export subsidies appear in the agreement. Least developed countries do
not have to make commitments to reduce tariffs or subsidies. The base level for tariff cuts
was the bound rate before 1 January 1995; or, for unbound tariffs, the actual rate charged in
September 1986 when the Uruguay Round began. The other figures were targets used to
calculate countries’ legally-binding “schedules” of commitments.

The tariffication package contained more. It ensured that quantities imported before the
agreement took effect could continue to be imported, and it guaranteed that some new
quantities were charged duty rates that were not prohibitive. This was achieved by a system
of “tariff-quotas” — lower tariff rates for specified quantities, higher (sometimes much
higher) rates for quantities that exceed the quota.

Domestic support

The main complaint about policies which support domestic prices, or subsidize production in
some other way, is that they encourage over-production. This squeezes out imports or leads to

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export subsidies and low-priced dumping on world markets. The Agriculture Agreement
distinguishes between support programmes that stimulate production directly, and those that
are considered to have no direct effect.
Domestic policies that do have a direct effect on production and trade have to be cut back.
WTO members calculated how much support of this kind they were providing per year for
the agricultural sector (using calculations known as “total aggregate measurement of support”
or “Total AMS”) in the base years of 1986-88. Developed countries agreed to reduce these
figures by 20% over six years starting in 1995. Developing countries agreed to make 13%
cuts over 10 years. Least-developed countries do not need to make any cuts. (This category of
domestic support is sometimes called the “amber box”, a reference to the amber colour of
traffic lights, which means “slow down”.)
Measures with minimal impact on trade can be used freely — they are in a “green box”
(“green” as in traffic lights). They include government services such as research, disease
control, infrastructure and food security. They also include payments made directly to
farmers that do not stimulate production, such as certain forms of direct income support,
assistance to help farmers restructure agriculture, and direct payments under environmental
and regional assistance programmes.
Also permitted, are certain direct payments to farmers where the farmers are required to limit
production (sometimes called “blue box” measures), certain government assistance
programmes to encourage agricultural and rural development in developing countries, and
other support on a small scale (“de minimis”) when compared with the total value of the
product or products supported (5% or less in the case of developed countries and 10% or less
for developing countries).

Export subsidies

The Agriculture Agreement prohibits export subsidies on agricultural products unless the
subsidies are specified in a member’s lists of commitments. Where they are listed, the
agreement requires WTO members to cut both the amount of money they spend on export
subsidies and the quantities of exports that receive subsidies. Taking averages for 1986-90 as
the base level, developed countries agreed to cut the value of export subsidies by 36% over
the six years starting in 1995 (24% over 10 years for developing countries). Developed

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countries also agreed to reduce the quantities of subsidized exports by 21% over the six years
(14% over 10 years for developing countries). Least-developed countries do not need to make
any cuts.

During the six-year implementation period, developing countries are allowed under certain
conditions to use subsidies to reduce the costs of marketing and transporting exports.

Now after understanding about wto agriculture agreement along with its main components
here we move towards understanding the impact of wto agreement on Indian agriculture on
various facets.

IMPACT OF WTO AGREEMENT ON INDIAN AGRICULTURE

Increase in terms of trade for the developing countries, as envisaged by the agricultural
reform process, are based on the assumption that in a perfectly competitive world, the
benefits of improved terms-of-trade will be passed on to the farmers completely. However,
circumstantial evidence suggests that the international agricultural markets are imperfectly
competitive in nature as reported by Gill and Brar (1996). The report shows that a few large
multinational companies and trading agencies dominate agricultural exports. Empirical
studies also suggest that multinational firms enjoy a certain degree of market power in the
agricultural export markets (Deodhar and Sheldon; 1995, 1996).1 Thus there may be many
countries importing and exporting agricultural commodities in the international market, but
what matters is the market structure and performance of each of these export markets. Trade
liberalisation achieves the removal of the tariff and non-tariff barriers to trade. However, it
does not guarantee perfectly competitive market structures. The existence of pronounced
economies of scale and scope as well as irreversibility of investments, may lead to imperfect
market structures even after liberalisation (WTO, 1997). The multinational firms and trading
agencies enjoy a unique position as oligopolists in the international agricultural markets.
Economic theory tells us that in the export market these oligopolists would charge a price
higher than the marginal cost and while sourcing the products from the developing countries,
these oligopsonists will pay a price much lower than what they would have paid under
perfectly competitive conditions. Moreover, the multinationals and trading agencies belong to
the Western Europe, the US and Japan. Therefore, rise in international prices due to
1
Deodhar Satish Y., ‘ WTO Agreements and Indian Agriculture: Retrospection and Prospects’, IIMA working
paper

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agricultural trade reforms, as predicted by many studies, may not pass-on fully to the farmers
or to the developing countries

THE IMPACT OF WTO AGREEMENTS ON INDIAN AGRICULTURE ON

DIFFERENT FACETS IS ENLISTED BELOW:

Impact of the Agreement on Agriculture’s(AOA) process of tariff application on the

agricultural imports by India
One of the primary features of the AoA(agreement on agriculture) is that all the
quantitative restrictions (QR’s) on agricultural commodities be replaced by an appropriate
amount of tariff, in order to promote greater transparency in the international trade. The
base period of 1986-88 was selected because the world prices of food grains and other
different agricultural commodities were fairly low and hence the difference between the
domestic and world prices would provide sufficient protection to the domestic products of
every country against the surge in imports. However, many countries used an
overestimated domestic price to get the advantage of a much higher level of protection
than the existing one. Also countries bound their tariffs arbitrarily, on a higher side, thus
defeating the very purpose of shifting over from QRs to tariffication. This process of
binding tariffs arbitrarily, on a higher side, is termed as ‘Dirty Tariffication’. As long as
the results of ‘dirty tariffication’ are not challenged during the verification process,
everything will remain fair and India like other countries can continue to protect her
sensitive agricultural products on account of the high tariff set. However, once this
irrational ‘dirty tariffication’ is challenged and verified, it will be difficult for India to
restrict agricultural imports. This could lead to a very challenging situation to the Indian
agriculture.2

2
Awasti Arvind and Misra Roli, “Agreement on Agriculture ”, Globalisation and Indian Agriculture edited by
[Link], Deep & Deep Publications (P) Ltd., New Delhi,

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 Impact on India’s farm sector due to tariff reduction

In order to facilitate greater international trade, there was a need to reduce the tariffs
imposed by countries. In this regard, as part of the AoA, the developed countries were
required to reduce the base period tariff by an un-weighted average of 36 per cent
subjected to a minimum of 15 per cent for each tariff line (i.e. each product) over the six-
year period from 1995-2000 and the developing countries by24 per cent, subject to a
minimum of 10 per cent for each tariff line over the ten year period from 1995-2004.
However, these reduction commitments were rendered of little consequence due to the
high base rate of duty established during the process of tariffication. Also countries
reduced the tariff of their sensitive products by a lesser percentage (subject to the
minimum requirement for each tariff line by 15 per cent for developed and 10 per cent for
developing countries) and those of products were there was little threat by other countries
by a greater percentage. For example: In case of a developing country, if there are five
goods, two of which are sensitive and three are non-sensitive, then a 10 per cent reduction
can be made on each of the three sensitive goods and a 45 per cent reduction on each of
the non sensitive goods, thereby brining the un-weighted average to (10+10+10+45+45)/5
= 120/5= 24 per cent. This reduction is on the increased base rate of duty established
during the process of tariffication.3 Hence the benefit that was to accrue to India’s farm
sector as a result of tariff reduction by developed countries has not been fully possible.
Similarly India too can protect its agricultural markets and indeed India has done so in
cases of some agricultural products.

Impact on India’s farm sector, due to imports, as a result of the minimum market
access provisions
Market access for agricultural products is to be governed by a ‘tariffs only’ regime,
which means that there can be no restrictions on farm trade except through tariffs.
This means that non-tariff barriers such as quantitative restrictions on imports i.e.
quotas, import restrictions through permits, import licensing etc. which were in
existence before the agreement came into being, were to be replaced by tariffs on
imports to provide the same level of protection and then were to be followed by
progressive reduction of tariff levels. India in its schedule filed in the WTO at the
time of signing the Uruguay Round had indicated that it was not under any obligation
3
Deodhar Satish Y., ‘ WTO Agreements and Indian Agriculture: Retrospection and Prospects’, IIMA working
paper

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to provide minimum market access, on account of it being under Balance Of
Payments problem (BOP). Even in the event of removal of Quantitative Restrictions
(QRs), which were maintained on Balance of Payment grounds, during the
implementation period (195-2004) India would not be obliged to provide any
minimum market access. However, now as India is comfortably placed on the BOP
issue, it has to adhere to the market access norm. The market access provision is
divided into two parts viz. minimum access and current access.
Minimum Access: The minimum access requirement is implemented on the
basis of the ‘tariff rate quota’ (TRQ) whereby a certain quota of imports is
permitted to enter in a country at below the normal tariff rate or at a nominal
rate according to most favoured nation (MFN) principle. It is 3 per cent of the
average demand during the three years base period from 1986 to 1988, at the
start of the implementation period in 1995 and increased to 5 per cent by the
end of the implementation period in 2004.
Current Access: It is the amount of the exports to a particular country under
bilateral trade agreement at preferential rates. The AoA protects the existing
current access.
The two provisions of minimum access and current access can exist side by
side and are not cumulative. Countries are also exempted from providing
market access for those agri commodities, which constitute their staple, diet.
For example, In India’s case, rice and wheat are classified as staple diet and
we need not provide any market access on these commodities. India has stated
its bound levels of imports tariff rate at 100% for primary agricultural
products, 150% for processed agricultural products and 300% for edible oils,
except for certain items comprising about 119 tariff lines. These would be
prohibitive and make imports an extremely unviable proposition. Out of the
low bound 119 tariff lines, bindings on 15 tariff lines which included
skimmed milk powder, spelt wheat, com, paddy, rice, maize, millet, sorghum,
rape, colza and mustard oil, fresh grapes etc. were successfully negotiated
under GATT Article XXVIII in December 1999 and the binding levels were
suitably revised upward to provide adequate protection to the domestic
producers. For example, for milk and milk products India had committed
itself to zero percent tariff, which was subsequently renegotiated to 100 per
cent. For sugar, the bound rate is 150 %, but at present the applied rate of
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 import duty is 60 %. Though India was not entitled to use the Special
Safeguard Mechanism of the Agreement, which can be used only by
countries, which had tariffied, yet it can take safeguard action under the WTO
Agreement on Safeguards if there is a surge in imports causing serious injury
or if there is a threat of serious injury to the domestic producers.

Impact of WTO agreement on India’s Public Distribution System (PDS)

The operations of the PDS in India are not subsidies to the farmer or to the producer,
but these are consumer subsidies meant for the rural and urban poor to meet their food
requirements. Such consumer subsidies are exempt from WTO discipline and this is
clearly written in the agreement. India has also stated in its schedule of commitments
in WTO that concessional sales of food grains through the PDS and other schemes
with the objective of meeting the basic food requirements as a social safety net are in
conformity with the provisions of the agreement. The schedule has been verified and
accepted by our trading partners. Also India is not a signatory of the plurilateral
agreement of which government procurement is a part, therefore the apprehension that
WTO agreement will affect our Public Distribution System (PDS) is baseless. Annex
2 of the Agreement on Agriculture contains provisions pertaining to public stock
holding for food security purposes, permitting governmental stock holding
programmes for food security purposes in developing countries whose operation is
transparent and conducted in accordance with officially published objective criteria or
guidelines, shall be considered to be in conformity with the provisions of the
Agreement provided that the difference between the acquisition price and the external
reference price is accounted for in the AMS. Thus, there is no constraint on the
operation of our public distribution system under the Agreement on Agriculture.

Impact of WTO agreement on India’s ability to follow her own agricultural policies and
programmes
All our developmental schemes can be continued under the WTO Agreement on
Agriculture. These include our subsidies for research, pest and disease control,
marketing and promotion services, infrastructural services, including capital

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 expenditure for electricity, roads and other means of transport, marketing and port
facilities, irrigation facilities, drainage systems and dams etc.4 For a developing
country like India, there are some agricultural subsidies, which are also permissible
and need not be reduced. These are investment subsidies, which are generally
available to low income and resource poor farmers. The types of subsidies mentioned
above account for the bulk of the agricultural subsidies provided in India, for
example, in 2001-02 the Government announced the National Policy in Agriculture
which had had been designed to stimulate growth, to encourage better management of
food economy, removal of constraints on the movement of food grains within the
country, enhanced credit flow to farm sector through institutional channels special
initiatives like the credit linked subsidy scheme for construction of cold storages and
rural godowns, reduction of rate of interest for funding the storage of crops In the
2008 budget the finance minister announced a loan waiver for farm loan, totalling
Rupees one lakh crore. Thus the agreement does not constrain from following
developmental policy with regard to agriculture.

Impact of WTO Agreement on Agriculture on domestic support

According to the Agreement on Agriculture, domestic support measures are meant to
identify acceptable measures of support to farmers and curtailing unacceptable trade
distorting support to farmers. These measures are targeted largely at developed
countries where the levels of domestic agricultural support had risen to extremely
high levels. Domestic support is divided into two categories viz.5,
i. Support with no, or minimal, distorting effect on trade which is often referred
to as “Green Box” and “Blue Box” measures and
ii. Trade distorting support, which is often referred to as “Amber Box”
measures.
The trade distorting domestic support is measured in terms of what is called
the "Total Aggregate Measurement of Support" (Total AMS), which is
expressed as a percentage of the total value of agricultural output and includes
both product specific and non-product specific support. The Agreement on
Agriculture stipulates a reduction commitment of total AMS by 20 per cent
for developed countries in 6 years (1995-2000) and by 13.33 per cent by

4
[Link]
5
[Link]

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developing countries in 10 years (1995-2004), taking 1986-88 as the base
period. However, domestic support given to the agricultural sector upto 10%
of the total value of agricultural produce in developing countries and 5% in
developed countries is allowed. In other words, AMS within this limit is not
subject to any reduction commitment There has been a general concern that
subsidy for Indian fanners will no longer be possible under WTO Agreement
on Agriculture. The concern is misplaced because India is under no obligation
under the WTO Agreement on Agriculture to reduce any of the subsidies
given to our farmers. This is because the total aggregate value of subsidies
given to farmers namely, subsidies on fertilizers, electricity, seeds, pesticides
and cost of credit available to all crops as well as agricultural commodities is
well below the ceiling prescribed in the Uruguay Round agreement. Some sort
of support, both product-specific and non-product-specific, is in fact needed
to achieve the objective of food security and to be self-sufficient in food
production. Hence the agreement would impose no obligation whatsoever on
us to make any reduction in the present levels of agricultural subsidies.
Developing countries have also been provided three additional exemptions,
viz
i. Investment subsidies, which are generally available to agriculture
ii. Agricultural input subsidies generally available to low-income or
resource poor producers.
iii. Domestic support to producers to encourage diversification from
growing illicit narcotic crops.

However, noted economist, Yoginder K. Alagh (Globalisation and

Agricultural Crisis in India, 2003) states that the WTO relies on the
Brettonwoods institutions like IMF, World Bank, since it does not have any
independent machinery, to make assessments and revision of the AMS
norms. This may have serious repercussions for the Indian agriculture as the
government may have to reduce subsidies to the already beleaguered Indian
agriculture, if the subsidies cross the ten per cent level for developing
countries as stated above. Hence Indian negotiators at the ministerial
conferences have to be better prepared with the IMF- World Bank database

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 for future negotiations. The Indian government too will have to provide
subsidies that are permissible under the green box measures.

Impact of WTO Agreement on Agriculture on export subsidies

Disciplines in the area of export subsidies required developed countries to reduce, over a
period of 6 years, the base period (1986-88) volume of subsidised exports by 21 per cent and
the corresponding budgetary outlays/ expenditures for export subsidies by 36 per cent. 6For
developing countries these reductions are 14 per cent in volume terms and 24 per cent in
budgetary outlays over a period of 10 years. Export subsidies of the kind listed in the
Agreement on Agriculture, which attract reduction commitments, are not extended in India.
Also, developing countries were free to provide certain subsidies, such as subsiding of export
marketing costs, internal and international transport and freight charges etc during the
implementation period only. India made use of these subsidies in certain schemes of
Agricultural and Processed Food Products Export Development Authority (APEDA),
especially for facilitating export of horticulture products. In 2007 the government of India has
compensated sugar exporters to the extent of Rs. 1350 per ton of sugar in coastal states and
Rs. 1450 per ton for other states, which has been contested by some sugar exporting countries
like Australia and Brazil. The government has remained cautious in usage of the words for
extending the sop lest the move should attract WTO provisions against subsidy. The
government says it is only “defraying” the transport cost, which should not be treated as
subsidy. News article from the daily, “ The Hindu”, dated 25-11-2007 titled, “Australia,
Thailand approach WTO on India’s sugar export sops”

6
[Link]

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AGRICULTURE NEGOTIATIONS (SOME RECENT DEVELOPMENTS)

WTO members continue to conduct negotiations to reform agricultural trade. These talks
began in early 2000 under the original mandate of the Agriculture Agreement and became
part of the Doha Round at the 2001 Doha Ministerial Conference. At the 2013 Bali
Ministerial Conference, ministers adopted important decisions on agriculture. More recently,
at the 2015 Nairobi Ministerial Conference, WTO members agreed on a historic decision to
eliminate agricultural export subsidies, the most important reform of international trade rules
in agriculture since the WTO was established.7

The negotiations take place in special sessions of the Agriculture Committee.

NAIROBI PACKAGE

At the 2015 WTO Nairobi Ministerial Conference, WTO members adopted a historic

decision to eliminate agricultural export subsidies and to set disciplines on export measures
with equivalent effect. Under this decision, export subsidies will be eliminated by developed
countries immediately, except for a handful of agriculture products, while developing
countries have longer periods to do so.

By eliminating export subsidies, WTO members delivered a key target of the Sustainable
Development Goal on Zero Hunger. It will help to level the playing field for farmers around
the world, particularly those in poor countries which cannot compete with rich countries that
artificially boost their exports through subsidies

7
[Link]

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WTO members agreed to engage constructively in finding a permanent solution to
developing countries' use of public stockholding programmes for food security purposes.

Ministers also agreed to continue negotiations on a special safeguard mechanism that would

allow developing countries to temporarily raise tariffs on agriculture products in cases of
import surges or price falls.

The Nairobi Ministerial decision contains provisions on improving market access for least-

developed countries, reforming domestic support and eliminating export subsidies. It also
underlines the importance of effective assistance to support the cotton sector in developing
countries.

In Nairobi, ministers declared that “there remains a strong commitment of all members to
advance negotiations on the remaining Doha issues. This includes advancing work in all three
pillars of agriculture, namely domestic support, market access and export competition”

BALI PACKAGE

At the 2013 Ministerial Conference in Bali, Indonesia, ministers agreed on a package of

issues, including four decisions on agriculture:

 an agreement to negotiate a permanent solution to public stockholding for food

security purposes, and to refrain from challenging breaches of domestic support
commitments resulting from developing countries public stockholding programmes
for food security provided certain conditions are met8
  a call for more transparency in tariff (or tariff-rate) quota administration –
whereby quantities inside a quota are charged lower import duty rates - and for
governments not to create trade barriers by how they distribute quotas among
importers
  an expansion of the list of "General Services" - to include spending on land use,
land reform, water management, and other poverty-reduction programmes -that
qualify for Green Box support (i.e. domestic support that is allowed without limits
because it does not distort trade, or at most causes minimal distortion).

8
[Link]

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  a declaration to reduce all forms of export subsidies and to enhance transparency
and monitoring

Bali, ministers also agreed to enhance transparency and monitoring in the trading of cotton in
recognition of the importance of this sector to developing countries and to work towards the
reform of global trade in cotton.

MILESTONES IN THE NEGOTIATIONS

Article XX of the WTO Agriculture Agreement recognizes that the long-term objective of
substantial progressive reductions in support and protection in agriculture is an ongoing
process. It says agriculture negotiations should restart in 2000.

In November 2001, the agriculture talks became part of the "single undertaking" in the Doha
Round of trade negotiations.

In 2004, WTO members meeting as the General Council agreed on a set of decisions,
sometimes called the July 2004 package. The main section on agriculture contains
a framework which outlines what could be a final deal. Members were able to narrow their
difference at the Hong Kong Ministerial Conference in December 2005.

A draft agriculture text was circulated in 2006. This and later revisions contain proposed

formulas for cutting tariffs and subsidies, along with various new provisions that would be
included in the future agreement on agriculture.9

Much of 2007 and 2008 saw intensive negotiations, and numerous working papers were
developed.

In July 2008, a group of ministers went to Geneva to try to negotiate a breakthrough on key
issues. The consultations continued from September. Drawing on over a year of negotiations,
on 6 December 2008 the chair of the agriculture negotiations issued a fourth revision of the
draft (often called "Rev.4") to capture the progress and highlight the remaining gaps.

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[Link]

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From 2011 the talks resumed on trying to narrow the differences in members' position. At the
Ministerial Conference at the end of the year, ministers agreed that for the time being
members should concentrate on topics where progress was most likely to be made.

Both the 2013 Bali Ministerial Conference and 2015 Nairobi Ministerial Conference resulted
in significant outcomes in agriculture.

SOME NEWS REPORTS

CHAIR CONFIDENT OF MAKING PROGRESS ON AGRICULTURE TALKS

AHEAD OF MINISTERIAL CONFERENCE

At the first meeting in 2020 of agriculture negotiators, held on 30-31 January, the chair John
Deep Ford said the “very spirited and frank” discussion gave him confidence that progress
could be made between now and the WTO’s 12th Ministerial Conference (MC12) in Nur-
Sultan in June.10

The meeting took place shortly after 18 members of the Cairns Group of major agricultural
exporting countries released at the World Economic Forum meeting in Davos on 24 January a
blueprint outlining their negotiating proposal. The document states their readiness to at least
halve all forms of trade and production-distorting agricultural subsidy entitlements by 2030.
One member said it would not be acceptable if any agreement in MC12 does not include
agriculture and that an outcome on domestic support should be delivered.

The negotiating proposal was introduced at the meeting by 19 WTO members (mostly from
the Cairns Group). The proposal offered members new points for discussion on domestic
support, a priority in the agriculture talks for the majority of WTO members. The proposal
was supported by a new methodology paper submitted by Costa Rica. Other key objectives in
the proposal include improving market access and addressing "unfinished business" on export
competition. 

China said per capita domestic support should be used as an estimate of potential distortions
in farm trade and argued that looking at aggregate spending or entitlements would be
misleading. One member welcomed China's approach, which focused on comparing per

10
[Link]

20
capita subsidies among 18 major agriculture traders. Another member also said China’s
argument was “valid” but questions were raised by others as to how to evaluate the aggregate
impact of these subsidy programmes.

Six new submissions were tabled by members for review at the meeting, covering seven key
topics: domestic support, market access, export competition, export prohibitions and
restrictions, cotton, public stockholding (PSH) and the Special Safeguard Mechanism (SSM). 

The chair said he is preparing a negotiation framework paper which will be circulated in mid-
February. It does not have to be something agreed upon by everyone, he said, but "hopefully
by May, we will have something stabilized for Nur-Sultan".

The Russian Federation continued its efforts to push for enhanced transparency of applied
tariffs, organizing a roundtable immediately after the meeting to deepen discussion on this
topic.

NEW SUBMISSIONS

DOMESTIC SUPPORT
The new submission by 19 members, mostly from the Cairns Group, included a goal of
reducing the sum of trade-distorting domestic support entitlements by at least half by 2030 . 
The group called for reductions on all forms of trade-distorting domestic support, including
under Article VI of the Agreement on Agriculture (Domestic Support Commitments). The
proposal asks WTO members to take on commitments commensurate with the potential
impact of their subsidies on global markets.

In the same vein, Costa Rica's submission advocates the concept of "proportionality" to
address the trade-distorting potential of each member's domestic support and illustrates the
concept by looking at 135 members' shares of trade-distorting support under current de
minims entitlements.

EXPORT PROHIBITIONS/RESTRICTIONS
Following its submission in June 2019 , Japan presented a new paper on behalf of some
members of the Group of 10 . The paper looks at export-restrictive measures from 2013 to
2018 . Utilizing AMIS data (a trade database covering 28 countries and four main agriculture
commodities: rice, maize, wheat and soybeans), the paper notes that the average duration of
measures was longer in this period than in the 2007-2012 period,  while export restrictions

21
stipulated by Article XI:2(a) of the General Agreement on Tariffs and Trade (GATT) must be
temporary by nature. The paper also highlights the absence of notifications of export
restrictions from 2013 to 2018.

MARKET ACCESS
Russia's paper notes that despite the adoption of the Bali Ministerial Decision in 2013 to
improve tariff rate quota (TRQ) utilization, TRQ fill rates declined in 2016. Russia called for
enhanced transparency with regard to the availability of unused quota amounts to improve
TRQ utilisation.

THEMATIC DISCUSSIONS

DOMESTIC SUPPORT
Several Cairns Group members said that their paper is balanced, representing the interests of
both developed and developing countries. Many WTO members expressed support for the
principle of "proportionality" in subsidy reduction commitments. Under this principle, "those
that have more potential to distort global markets would contribute more to the reform
process".

Explaining why all Article VI subsidies should be targeted, one Cairns Group member said
past experience has shown that a "cherry-picking" proposal is bound to fail and that no
elements should be excluded. Costa Rica said that the "proportionality" methodology in its
paper is only one possibility and welcomed other proposals. In conclusion, Costa Rica said it
would issue a new submission soon.  

Despite support for the paper issued by the group of 19 WTO members, a few members said
discussions should focus on the most trade-distorting subsidies stipulated by Article 6.3
(Aggregate Measurement of Support, or AMS) and Article 6.4 (de minimis support) of the
Agreement on Agriculture. The need to subsidize sensitive products for non-trade reasons
was also highlighted.

A developed country insisted that Green Box support should  not be touched and said it will
continue using this tool to "do good things" for its farmers. 

22
Another member questioned whether there is enough time to resolve differences on domestic
support issues. In its view, improving transparency remains a feasible outcome. It asked
members to engage on other “equally important” areas, such as market access.

A group of developing countries said the priority should be addressing AMS above de
minimis entitlements, which are more trade distorting than de minimis support. They
reiterated that subsidy reductions should not target Article VI (2),  which allows developing
countries additional flexibilities in providing domestic support.

A developing country expressed support for China's per capita proposal. It said that as
farmers with significant land in developed countries export most of their products, the
subsidies they receive from government constitute de facto export subsidies. One member
asked China to clarify its per capita proposal and argued against including it in new
disciplines. China flagged there should be no uniform rules applying to WTO members at
different stages of development.

MARKET ACCESS
A number of members supported Russia's call for enhanced transparency in the application of
TRQs, whereby imports within a quota are eligible for lower tariffs than those outside it.
Some members lent their support to the proposal in Russia's submission for the publication
and notification of unused tariff quota volumes. Others highlighted the existing channels used
to facilitate access to information on TRQs, including on unused quota volumes.  One
member expressed reservations about adding new transparency obligations.

Several members underlined the importance of introducing market access reforms; caution
was expressed by some about cherry-picking issues from the market access dossier. A
number of developing countries expressed support for tariff simplification. The chair
welcomed members' continuing engagement on market access.

EXPORT COMPETITION, EXPORT RESTRICTIONS, COTTON

A few members expressed their interest in looking at ways to strengthen transparency in
export competition. One member proposed focusing on improving the response rate and
quality of responses to the WTO's annual questionnaire on export competition.

Several members supported the need to enhance transparency in export restrictions, in line
with the new submission from Japan. One member indicated that it could only exempt from

23
export restrictions the purchases of food for humanitarian purposes by the World Food
Programme on a case-by-case basis due to domestic food security considerations.

In the absence of the Cotton-4 members (Benin, Burkina Faso, Chad and Mali) due to a
Cotton-4 ministerial meeting taking place at the same time in Burkina Faso, the chair noted
that consultations should continue in the coming weeks on this important topic.

TRANSPARENCY ON APPLIED TARIFFS

Russia organized a roundtable on the transparency of applied tariffs immediately after the
meeting of agriculture negotiators. It outlined the transparency challenge posed by frequent
alterations in applied tariffs and proposed ways of addressing the issue.

Russia highlighted the importance of enhanced transparency for applied tariffs as a way of
enabling more effective integration of micro, small and medium-sized enterprises (MSMEs)
into multilateral trade and global value chains. Participants in the roundtable included WTO
members and representatives of the International Grains Council, the International Trade
Centre and international chambers of commerce.

The chair said he was ¨very pleased¨ with the lively discussions and would intensify
consultations with WTO members. He would reflect the ideas put forward so far into his
upcoming report, which would aim at focusing the negotiations on more specific issues in the
run-up to MC12.

The next meeting of the Committee on Agriculture in special session is scheduled for 24-25
February 2020.

NEGOTIATIONS WTO MEMBERS CONTINUE EFFORTS TO ADVANCE

AGRICULTURE DESPITE COVID-19 CRISIS
WTO members continue exchanging views on various issues in the agriculture negotiations
and the possible options for a positive outcome through written communications while WTO
meetings are suspended in response to the COVID-19 outbreak.

In a communication dated 16 March, the chair of the agriculture negotiations, Ambassador

John Deep Ford (Guyana), invited WTO members to make the best possible use of their time
despite the unforeseen circumstances resulting from the pandemic11.

11
[Link]

24
The chair shared an updated assessment of the possible options in the agriculture
negotiations, building upon his report on the “Elements and processes for a possible outcome
in agriculture at MC12” circulated on 14 February 2020 and subsequent consultations held
with members. He urged members to table new submissions and asked them to express in
writing their views on his assessment as well as on all new submissions by 15 April 2020. All
the views expressed will be compiled and circulated to members, constituting inputs for
future talks.

25
 CONCLUSION

In the post WTO period, India’s self-reliance in agriculture was negatively affected due to the
reduction in global prices caused by the pushing of exports by developed states. This
situation led to in an influx of cheap imports into India and caused a wide spread decline in
agricultural export while putting pressure on domestic prices. Fortunately, in the recent years,
with the attainment of independence in food grains and some other key agricultural products,
which used to account for huge share of import bill, total imports of agricultural products
have abruptly dropped. In today’s world economic order, direct competition from imported
goods cannot be prevented. India needs to develop its post-harvest technology and storage
facilities and build a modern infrastructure to facilitate agricultural exports. WTO’s main
focus was to work towards meeting the Trade Facilitation Agreement deadline while there
was uneven progress. India blocked the TFA because it wanted its concerns on food security
and public stockpiling to be addressed first by adoption of some concrete framework in that
direction. According to the WTO rules, member countries can subsidize agriculture up to a
maximum limit of ten percent of the country’s aggregate agricultural production. India will
most likely exceed this threshold limit in the process of implementation of its Food Security
Act, which involves offering support to the consumers, via the public distribution system and
also to the farmers in the form of minimum support price, etc. The TFA basically envisages
all developing countries to further decrease their import duties, a move which would favour
the export ready markets of the West. The agreement helps developed nations to push their
excessive produce/exports into developing & least developing nations with less red-
tape/bureaucracy. Though the other way is also possible, the developing countries where
domestic consumption is high and exports are less, it seems the developing states are not
positioned to use the clauses in their advantage. Also, if India starts to implement its food
security bill and thus increase the subsidies on agricultural produce, then Indian commodities
would be accessible at a comparatively reduced price in the global market and the products of

26
27
Developed countries will face increased competition. Hence there is pressure from the
developed nations over India to sign the agreement. With most developing countries finding
that their development aspirations are remaining unfulfilled in the WTO, their support for the
trade liberalization agenda of the larger economic powers has dwindled over time. More than
this discontent amongst members, the emergence of plurilateral forums involving the
developed countries poses a serious challenge to the future of WTO If India signs off the
TFA succumbing to the pressure of the developed countries, then there will be no influence
left to drive for an everlasting solution to food security and public stockholding concerns.
Overall for the developing countries, implementation of the TFA will require huge
investment in order to develop their ports and other export facilitating systems to make it on
par with that of the developed nations. This cost will nullify the gains made from their
increased exports . Also, since the domestic consumption is usually high in the developing
countries, the increase in their exports will be dwarfed by the surge in imports
Agriculture is the backbone of survival for the Indian population. We cannot give up
administrative prices especially in a country such as India where sixty percent of the
population depends on a relatively un-remunerative agricultural sector. This is one sure way
of procuring food for the Public Distribution System (PDS), which is the core pillar on which
our struggles to guarantee food security, rest. In countries where farming is largely rain fed,
public stockpiling is a mechanism used to ensure food security.
The world trade organization inspires a multi lateral trading system within its member states.
It initiates the free movement of goods and services worldwide and unbiased trade among
nations. India is being a founder member of WTO, it granted access to concessions and
treated as part of other developing countries. Due to this, there are several consequences for
India for the several agreements that are signed under the WTO Agreement. Amongst them,
Agreement for Agriculture for which India has recently protested for giving its consent as it
would impact its public distribution system meant for the poor. India is a nation known for
her villages. Today, even after 60 years of independence, agricultural sector is still the main
stay of the Indian economy. It provides employment to 115.5 million farm families,
contributes 18.56% of GDP. Some agricultural products are exported and hence a good
foreign exchange earner for our country (rice, tea, coffee, cashew, spices, tobacco, leather
etc.).
Agricultural sector also plays a vital role in forward and backward linkages, it sources raw
material for agro – based industries including sugar, textiles, processed food, food products,
paper, jute and provides market for capital goods like trackers, pump sets other machinery
28
and inputs like fertilizers, pesticides, insecticides and light consumer goods. India has been
investing huge resources in agricultural sector, in terms of investment subsidies and
minimum support prices. The technology resulted in investments in agriculture has made
India independent and a top producer of numerous agricultural products in the world. The
green revolution in crops, the yellow revolution in oil seeds, the white revolution in milk
production, the blue revolution in fish production and the golden revolution in horticultural
bears ample testimony to the contribution of agricultural research and development that took
place during the post-independence period.

29
Despite, all the contribution being one of the leading producers of variety of crops, the
productivity levels of agricultural sector is not commensurate and has remained much below
the international level The main contributors to this unbalanced growth are institutional and
technological factors. The lack of irrigation services, insufficient use of fertilizers, limited use
of highly productive seeds, inadequate plant production, improper harvesting techniques, and
lack of farm mechanization. As regards the institutional factors such as failure of land
reforms, fragmentation of land holdings, absentee landlordism, improper marketing facilities,
lack of financial and credit assistance for reinvestment in agriculture and cob-web of rural
indebtedness. These are some of the factors which still exist, and proliferate negative effect
on farm productivity.
In the present environment of WTO, India cannot take excuses in the name of its poor
population. Rather, India should come out with more policies that should be effectively
implemented, to reduce its poverty levels, to provide more jobs and to enable livelihood of
poor through creation of work opportunities instead of doling out huge subsidies; so that the
economic surplus is generated. The process can trickles down to the poorest of the poor
farmers and the much desired rate of growth in agriculture sector can be generated. Declaring
Agriculture Sector as the thrust sector, active involvement from NABARD, APEDA are some
of the steps taken by the government are in right direction to bring Indian farm sector on a
global level.

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