EXECUTIVE SUMMARY

In 1947 agriculture was for the first time included in the GATT discussion and the discipline for agriculture was accorded a special status. The discipline for agriculture however different in at least two major respects for those in trade in manufactured goods. Wither quantitative restriction (QRS) non-export subsidies were forbidden However the special status accorded to agriculture resulted in high degree of protection by the developed countries specially the US & EC. Protectionist policies included both domestic support and export subsidy. In fact there was competitive export subsidization between the EC & the US, which then led to a conclusion that there was a need for some suitable action in the Uruguay round. Result was the Agreement on Agriculture (AOA) which was to be implemented over a period of 6 years 1995-2000. The implications of AOA centered on three major areas, which included market access commitments, domestic support and export subsidiary. It has been acknowledged that the Uruguay Round did not bring about trade liberalization in agriculture to the desired extent. There were no significant reductions in domestic support as well as export subsidies by the developed countries. Although the

Agreement on Agriculture achieved a great deal by defining rules for international trade. Its achievement in terms of immediate market opening has been limited. The anticipated gains from agricultural trade liberalization, have eluded the developing

countries till now.

OBJECTIVE
To study the WTO provisions on Indian agriculture and is impact on trading of Indian agricultural commodities.

RESEARCH METHODOLOGY
Data was collected mainly from secondary sources. Secondary Sources Newspapers (Business Standard, Economic times) Book named Implications of WTO provisions on Agriculture, CMIE Reports.

LIMITATIONS
Primary data could not be conducted.

INTRODUCTION
The basic objective of establishing the WTO in 1995 was to raise standards of living and income, ensuring full employment,

expanding production and trade and optimal use of the world's resources. When GATT was established on 1947, agriculture was not among the topics of discussion. But as time went on, it was noticed that a predominant feature of global agricultural transaction is not characterized by free trade. Rather, a large number of developed and developing countries were protecting their agricultural sector by domestic and export subsidy and high tariff wall. Many agricultural products were protected by ordinary tariffs, and the tariffs were bound for only 58% of the items in industrial countries and 17 percent in developing countries. 'Special status' was accorded to agriculture. The result was a distorted world price and the protective regime often shifted comparative advantage away from the low cost agricultural producers (who are usually

developing countries). The industrial countries, particularly OECD countries and the U.S. heavily used agricultural subsidies. In 1995, per capital transfer to US farmers amounted to $29000, which 100 times higher than a Philippine farmer's per capita income. Protectionism resulted in a great harm not only to Canada and Australia but also to most developing countries. Competitive export subsidization between European Counties and US however led to a consensus on the need for some suitable action to reduce, if not eliminate,

protectionism in agriculture and brought this sector under the rules and disciplines of WTO. The agreement on agriculture, as a package provides the following commitments: 1. Commitment on market access 2. Domestic support measures 3. Measure on reduction of direct export subsidies 4. Introduction of intellectual property rights 5. Sparing use of sanitary and phytosanitary import barriers The extent of the reduction in support will depend on the economic status of the country (i.e. developed or developing countries are granted certain favorable concessions regarding implementation of WTO set rules. Market access concession as contained in schedules relates to binding reductions of tariffs and other commitments. Domestic support is to be reduced by 20% over six years period while it is 14% over 10 years for developing countries and least developed countries are not required to make any such commitments. Agreements on export subsidy calls for a reduction over 6 years of at least 21% in volume of subsidized exports and of at least 36% in value of subsidies. For developing countries, it is 14% in volume and 24% in value over 10 years period. Least developed countries are exempted from this obligation.

WTO AGREEMENT ON AGRICULTURE: AT A GLANCE

The WTO Agreement on Agriculture was signed as part of the Uruguay Round Agreement in April 1994. The WTO Agreement on Agriculture came into fore with effect from 1 January 1995, It has a 10 year implementation period from 1995 to 2004, for developing countries India is under no obligation to reduce domestic support or subsidies currently extended to agriculture as the support being given is well below the permissible level of 10 per cent of the value of its agricultural output. Under the Agreement, there can be no restriction on farm trade except through tariffs i.e. non-tariff barriers such as

quantitative restrictions on imports through quotas, import licensing etc., are to be replaced by tariffs or duties on imports to provide the same level of protection to domestic agriculture and thereafter, tariff levels are to be progressively reduced. However, some developing countries like India were permitted to offer ceiling bindings instead of tariffication on account of the fact that India was maintaining QRs on Balance of Payment grounds. The Uruguay Round of Trade Negotiations did to bring about trade liberalization in agriculture, as expected. There has been no significant reduction in domestic as well as export subsidies given by the developed countries to their agriculture. The

anticipated increase in exports of agricultural products from developing countries, therefore, has not materialized. Continuation of high domestic support to agriculture in many developed countries is a cause of concern as it leads to low international prices for farm produce. Implementation of the WTO Agreement on Agriculture since 1995 has brought out the inadequacies inherent in the

Agreement. The ongoing negotiations in the WTO on the Agreement on Agriculture present an opportunity for us to rectify these inadequacies and inequalities. Government have taken a series of measures to safeguard our agriculture sector in the context of phase out of QRs - i.e.

import duties on a large number of agro and other items have been substantially increased and import of 131 products have been made subject to compliance of Indian quality standards as applicable to domestic goods; In the budget 2001-02, customs duty on tea, coffee, copra and coconut as well as desiccated coconut has been raised from 35% to 70%. Similarly, duty on refined edible oils except soyabean oil has been raised to a uniform level of 85% and on crude edible oil to 75%. Although maintenance of QRs on imports are not permitted, the government can, if the situation so warrants, raise the applied tariffs within the bound levels and also take measures such as anti-dumping action, safeguard action, levy of countervailing

duties under certain circumstances as permitted under the WTO Agreement. Government has consulted all stakeholders in preparing

proposals for the WTO negotiations on agriculture. Extensive consultations have been held with the State Governments, farmers organizations, political universities, stakeholders experts in and parties, NGOs, agricultural and all and other these

academicians the

formulating

proposals

consultations will be a continuing process. India has submitted its proposals to the WTO for the current negotiations on the Agreement on Agriculture in the areas of market access domestic support, export competition and food security. Food and livelihood security of our people, protection of the interest of domestic farmers and maximizing export

opportunities for Indian agricultural products are the guiding principles of India's proposals at the WTO negotiations on agriculture.

WTO PROVISIONS ON AGRICULTURE

Agriculture around the world has been characterised by high levels of government intervention and regulation. These interventions have markedly influenced the levels and location of agricultural production and consumption around the world, prices paid for agricultural products in both domestic and world markets and the level and the variability of world trade and world market prices. URUGUAY ROUND OUTCOME FOR AGRICULTURE Since 1947 when the GATT was signed, efforts have been made by the member countries to attain the benefits of economic growth through reciprocal arrangements to advance the production and exchange of goods. However, agriculture was largely excluded from the mainstream of trade reforms and liberalisation

internationally as a result of various waivers and exemptions from general provisions. Following a period of substantial increase in agricultural protection in the industrialized countries in the first half of 1980s (OECD, 1996, 1997), the world market for agricultural products became characterised by large surpluses and competitive export

subsidization between the European Union and the United States. In 1986, the Ministers of the GATT Contracting Parties

acknowledged that there was an urgent need to address problem of agriculture internationally 'including those related to structural surpluses, so as to reduce the uncertainty, imbalances and instability in world agricultural markets. The Uruguay Round that followed that declaration took approximately seven years to

complete. Agriculture was given a specific place in the negotiations and separate agreements were reached for agriculture and Sanitary and Phytosanitary arrangements and agriculture was brought more fully within the rules and disciplines of the GATT. The "Agreement on Agriculture" The WTO "Agreement on Agriculture" which was an outcome of Uruguay Round was progressively implemented over a period of six years from 1995-2000 inclusive for developed countries and over a period of ten years for developing countries (1995-2004). The Agreement was the beginning of agricultural liberalisation, establishing a new set of rules for the sector. The implications of the Agreement for the design and implementation of developing agricultural policies are clear when the three major areas in which negotiations were subsidies (IATRAC, 1994). The main elements of the WTO "Agreement on Agriculture" which are to be implemented by each member over the period mentioned above are: Market Access Commitments The main market accession provisions in the "Agreement

Agriculture" are: Market access for agricultural products is to be governed by tariffs only regime. This means that non-tariff barriers such as quantitative restrictions restrictions through on imports import (i.e. quotas, etc.) import as in

permits,

licensing

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 walls. Except for least developed countries, all other developing countries required to reduce new and existing, tariffs by 24 per cent on an average with a minimum reduction of 10 percent per tariff line versus 36 percent average reduction and 15 percent minimum reduction for developed countries. However, the required unweighted average reduction in tariffs allowed

differential treatment of commodities, e.g. a country could meet the commitment by reducing tariffs on less important products with little change in sensitive products. Minimum access opportunities will be established where imports have been very small or non-existent-initial minimum access will be 3 percent of consumption in the 1986-88 period, to rise to 5 percent over the implementation period. Special Safeguards (SSG) provisions for imports, which apply only to tariffied products, allow additional duties (upto one-third of normal duties) which may be levied only on imports in excess of the tariff quota quantities, if the volume of imports exceeds 105-125 percent of the average of the three preceding years. Alternatively, additional duties can be levied if import prices drop below a trigger price (3 % levy if the trigger price drops by 20 % of the average c.i.f. price in 1986-88; 9 % if t the price drops 40 %; 14 if it drops 50 %; etc.)

Uruguay Round Agreement on Agriculture Required Reductions (%)

Developed countries (1995-2000) Tariffs (Base period 1986-88) Average cut for all agricultural products Minimum cut per product Export subsidies (Base period 198690) Value of subsidies Subsidized quantities Domestic support (Base period 198688) Total agricultural support cut 20 36 21 36 15

Developing countries (1995-2000)

24 10

24 14

14

Different types of support WTO agreement envisages two kinds of support to agriculture, viz., and domestic support and export subsidies. The domestic support is further classified into five categories: (a) aggregate measure of support (AMS) which includes product specific and non-product specific support (b) green box support (c) blue box support (d) de minimum support and (e) special and differential (S&D) treatment box. Out of these, WTO agreement requires reduction only in AMS and export subsidies, whereas, support under all other heads is exempted. Export Subsidies

The WTO member countries also agreed to reduce expenditures on export subsidies and quantity of agricultural products exported with subsidies. The export subsidy provisions in the agreement are: Banning of new export subsidies Developing countries need to reduce the volumes of subsidized exports by 14 percent and values of export subsidies by 24 percent over 10 years from 1986-90 base (versus reductions of 21 percent in volume and 36 percent in value of export subsidies over six years for developed countries. Subsidies provided by developing countries to reduce marketing costs of agricultural exports and certain domestic transport costs are exempted. The schedules establish the level of export subsidies deemed to exist in the initial period and also maximum levels for each year during the implementation period. Export credit and credit guarantees are to be covered by a separate agreement yet to be negotiated. Domestic support The basic philosophy of the Agreement on domestic support entails two types of commitments; one qualitative and other quantitative. The qualitative commitment establishes a definition of domestic support policies, which are not subject to reduction commitments. In turn, the quantitative commitment establishes a detailed

schedule for reducing support under non-exempted policies.

The list of measures included in the Green Box as meeting these criteria includes the following: General services, including research, pest and disease control, training, extension, inspection, marketing and promotion

services, and infrastructure services. Direct payments to producers, including decouple income support, income retirement programmes schemes, and investment regional aids ,

environmental programmes;

assistance

Food security stocks; and Domestic food aid

Aggregate measure of support Aggregate Measure of Support includes (a) sum total of subsidies on inputs like fertilizer, water, credit, power etc and (b) market price support measured by calculating the difference between domestic administered market price and external reference price (world price) multiplied by quantity of production eligible to get applied administered price. If domestic prices are lower than the world reference price. if domestic prices are lower than the world reference rice, then (b) is negative, and if this negative component is higher than input subsidies then AMS turns out to be negative. The current AMS should be reduced from the base AMS, in equal annual installments starting in 1995, by 20 per cent for developed countries by the year 2000 and by 14 percent for developing countries by the year 2004. Reduction commitments refer to the total AMS, i.e. there are no commodity for policy-specific reduction commitments. Any modification to domestic support measures or introduction of any new measure that do not comply with agreement shall be included in the calculation of the current AMS. Least developed countries do not have to make any reduction to their AMS but cannot exceed their base AMS.

IMPLEMENTATION OF WTO PROVISIONS ON AGRICULTURE

Aggregate measure of support Among the selected countries, member nations of European Economic community (EC) and have notified highest level of commitments, which accounted 40 per cent of their total GDP from agriculture while Canada and USA rank third and fourth. In the next year, for which this information is available, Canada extend AMS upto 26 per cent of its GDP agriculture. Similarly, USA could use 12.6 per cent of GDP agriculture provide input subsidy and products specific support. Commitment level of aggregate measure of export to

agriculture as per cent of GDP agriculture Country Argentina Australia Brazil Canada EC Japan Thailand United States 1995 0.51 4.05 1.08 33.30 53.03 50.26 4.77 16.60 1996 0.50 4.09 1.03 32.22 49.25 42.67 4.48 15.47 1997 0.43 2.52 0.92 28.96 44.24 44.02 4.06 13.78 1998 0.34 2.94 1.60 26.30 42.14 43.45 2.98 12.60

Table: Aggregate measure of support actually given in relation to GDP agriculture by selected countries

Country Argentina Australia Brazil Canada EC Japan Thailand United States

1995 0.73 1.08 0.31 4.98 32.75 36.72 3.45 4.47

1996 0.50 1.07 0.36 3.97 32.89 30.65 2.69 4.09

1997 0.63 0.28 31.23 3.21 4.03

1998 0.69 2.34 -

Table:

Actual

level

of

AMS

agriculture

as

percent

of

commitment level, in selected countries Country Argentina Australia Brazil Canada EC Japan Thailand United States 1995 144 27 28 15 64 73 72 27 1996 100 26 35 12 67 72 60 26 1997 25 30 71 79 29 1998 23 78 -

In the case of wheat, EC had notified domestic support to the tune of Rs. 4.62/kg while Canada and USA notified Rs. 229 and Rs. 2.82. USA had notified domestic support of Rs. 28 and 7 per kg of

cotton and sugar. Actual support given to sugar by EC and USA ranges between Rs. 5 and 15, while in some of the years was higher than even international price of sugar. In contrast to this, domestic support for wheat, rice and cotton in India was negative in 1995. Export subsidy Export subsidy is quite common among European countries and in North America. In some of these countries domestic prices rule higher than international prices. In order to maintain this price level for agriculture in domestic economy and to encourage disposal of surplus in outside market, these countries provide huge export subsidy. As per the WTO commitment, developed countries are required to reduce expenditure on export subsidy by 36 percent and volume of subsidized export by 21 percent during 1995 to 2000. The committed and actual level of these subsidies is presented in Table. As per the commitment, EC could provide export subsidy of Rs. 232 to 333 on one kg of butter and butter oil and Rs 44 to 74 on skim milk powder and cheese. EC members could give per kg subsidy of Rs. 3 on wheat and wheat flour and Rs. 3.50 on sugar. Export subsidy commitments of USA and Canada on dairy products are particularly high. Actual export subsidy by EC in 1998, per kg of export, was Rs 74 on butter and butter oil, Rs 36 on skim milk powder and Rs 16 on cheese and close to Rs 5 on sugar. In the same year USA provided export subsidy of Rs 53 on skim milk powder.

Export subsidies provided by EEC constituted over 50 per cent of the export price earned by it on butter and butter oil and over 20 per cent in thee case of skimmed milk powder. USA too had given subsidies that formed over 50 percent of the export price earned on butter and butter oil and skimmed milk powder. These facts show that level of export subsidy provided by developed countries like North America and members of EC are so high that they cause serious trade distortions. Table: Commitment level of export subsidies on selected commodities by various countries (Rs per kg) Country/product Australia Butter & butter oil Skim milk powder Cheese Brazil Vegetable oils Sugar Canada Wheat and its Flour Vegetable oils Oil cakes Butter Skim Milk Powder Cheese EC 0.45 0.14 0.14 146.23 24.57 49.34 0.47 0.11 0.11 59.14 33.70 44.22 0.38 0.08 0.08 62.73 34.87 26.77 0.39 0.09 0.09 51.20 33.29 20.25 0.10 0.35 0.14 0.34 0.17 0.32 0.15 0.30 7.63 5.32 6.41 10.03 5.69 6.56 5.56 4.59 5.74 .02 4.32 4.31 1995 1996 1997 1998

Wheat and wheat flour Rice Sugar Butter and butter oil Skim milk powder Cheese Hungry Apple Turkey Apples USA Wheat Rice Vegetable oil Butter and butter oil Skim milk powder Cheese

8.02 2.82 3.95 315.58 44.50 45.87

2.97 1.75 4.73 333.11 74.02 46.84

2.96 1.33 3.57 232.57 49.41 41.69

2.82 1.54 3.53 290.89 65.12 48.17

10.81

5.74

10.84

0.00

5.30

2.79

3.30

7.05

0.73 0.17 3.81 22.68 23.94 5.41

0.89 0.17 1.74 78.17 125.51 4.94

0.78 0.16 0.97 78.82 32.79 4.21

0.76 0.10 1.14 186.81 38.86 1.48

Export subsidies actually given by various countries (Rs per kg) Country/product Canada Butter Skim Milk Powder EEC 50.03 20.48 5.63 2.08 1995 1996 1997 1998

Wheat and wheat flour Rice Sugar Butter and butteroil Skim milk powder Cheese Hungry Apple Turkey Apples USA Butter and butteroil Skim milk powder Cheese

0.41 1.57 2.04 58.08 15.43 33.79

0.45 2.48 3.62 141.03 33.12 23.38

0.28 0.91 4.35 59.47 16.25 14.88

0.83 0.90 4.73 73.83 38.06 16.23

0.87

0.09

0.35

0.00

1.77

1.82

1.34

0.00 3.32 2.08

37.44 103.80 2.47

17.86 27.56 3.53

2.33 52.89 1.42

CURRENT ASSESSMENT OF IMPLEMENTATION OF AGREEMENT ON AGRICULTURE It has been acknowledged that the Uruguay Round did not bring about trade liberalization in agriculture to the desired extent. The developed countries have acknowledged the need for reduction in the protectionism, support and subsidies. Although the Agreement on Agriculture achieved a great deal by defining rules for international trade. The anticipated gains from agricultural trade liberalization, have eluded the developing countries till now. During the Uruguay Round, it was expected that following the Agreement, distortions in agricultural trade would be reduced and

scope for exports of products from developing countries would increase. The anticipated increase in exports of agricultural products from developing countries has not been realized. It was also expected that the contemplated fair trading regime would help the sufficient producers in realizing higher prices for their products. On the contrary, prices of most agricultural commodities are declining in the world markets. It was anticipated that due to the reduction in domestic support in developing countries. Empirical evidence, however, shows that there has not been much change in the pattern of world cereal production and exports. A number of developed countries have continued to provide high domestic support to their agricultural sectors. At best, shifting the support from one "box" to another has only cosmetically altered the policies in many developed countries. The continuation of the high domestic support to agriculture in many developed countries is a cause of concern as they encourage over production in these countries leading to low levels of international prices. Export subsidies of the kind listed in the Agreement on Agriculture, which attracts reduction commitments, is not extended in India. Also, developing countries are free to provide certain subsidies, such as subsidizing of export marketing costs, internal and international transport and freight charges etc. India is making use of these subsidies in certain schemes of Agricultural and

Processed Food Products Export Development Authority (APEDA), especially for facilitating export of horticulture products. It is obvious, therefore, that benefits to developing countries in terms of increasing their exports will only occur after complete

elimination of export subsidies and substantial reduction in domestic support in the developed countries has been effected. Market their maintaining high also hampers Access in the

developed countries tariffs on products of interest to developing countries besides a plethora of non tariff barriers. In a recent study of 14 countries, Food and Agricultural Organization (FAO)

concluded that there was little change in the volume exported or in diversification of products and destination. Tariff peaks continue to block exports from developing countries to the developed world. Tariffs still remain very high in certain sectors, specially, in cereals, sugar and dairy products. Tariff escalation (increase in tariff with successive stages of processing) block exports of value added products from developing countries to the developed countries. Stringent Sanitary and Phytosanitary (SPS) measures continue to be a major barrier in diversifying exports in horticulture and meat items.

IMPLICATIONS OF 'AGREEMENT ON AGRICULTURE' FOR INDIA

As stated earlier the Agreement on agriculture contains provisions in 3 board areas of trade and agriculture policies: markets access, export subsidies and domestic support. Market Access Market access for agricultural products to be governed by a 'tariffs only' regime. Tariffs resulting from the "tariffication process" as well as other tariffs are to be reduced by a simple average of 36 percent over 6 years in the case of developed countries and 24 percent over 10 years in the case of developing countries. However, developing countries like India who had not converted their quantitative restrictions into tariffs, were allowed to have ceiling bindings, which were not subjected to these reduction commitments. India had bound its tariffs at 100% for primary products, 150% for processed products and 300% for edible oils, except for certain items (comprising about 119 tariff lines), which were historically bound at a lower level in the earlier negotiations. Out of these low bound tariff lines, bindings on 15 tariff lines which included skimmed milk powder, spelt wheat, corn, 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. India has also not taken any commitment to provide minimum market access

opportunities which other countries who had tariffied their QRs had to undertake to the extent of 3% of its domestic consumption going upto 5%, at the end of the implementation period. Though India is not entitled to use the Special Safeguard Mechanism of the Agreement, which can be used only by countries which had tariffed , yet it can take safeguard action under 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. Import data for the period April-October 2000 it is seen that the import of wheat, rice, coffee, fresh fruits, millets, sugarcane individually have not been more than Rs. 15 crore, which is insignificant compared to the total domestic production of these items. Increase in imports of certain agricultural commodities like edible oil, areca nut, skimmed milk powder was noticed recently. In case of edible oils (crude and refined), the duties have been regularly revised to check the growth in imports. Similarly, import duty on skimmed milk powder and areca nut has also been increased. The increase in duty on skimmed milk powder has been very effective and the imports have come down heavily. The total import of these item, which stood at Rs. 101 Crore during the year 1999-2000, has come down to less than Rs. 3 Crores during the first seven months of the financial year, 2000-01. An analysis of he import data reveals that there has been no significant surge Agriculture that commenced in the year 2000. Regional consultations with state governments, farmers

organizations and NGOs were held at Ahmedabad, Kolkata, Cochin

and New Delhi on 31 January 2000, 27 March 2000, 7 April 2000 and 10 June 2000 respectively. Agricultural Products Onions Mango pulp Cashew nuts Walnuts Coffee Tea Pepper Groundnuts Rice castor oil and its fractinsseasaneum seeds Psylium husk Guar

The major markets of Indian agricultural exports are: S. No Product 1 Destination

Meat of Bovine Malaysia, US, Philippines, Oman, Mauritius products

2 3

Onion Mango Pulp

US, Malaysia, Singapore Saudi Arabia US, Netherlands, UK, Germany, Saudi

Arabia, Kuwait 4 Cashewnuts US, Netherlands, UK, Japan, Australia,

Hong Kong, Singapore 5 6 7 8 9 10 Coffee Tea Pepper Groundnut Rice Russia, Italy, US, Japan, Germany Russia, US, Germany, UK, Japan US, Russia, Canada, UK, France UK, Singapore, Philippines, Netherlands Gulf Countries, US, EU

Unmanufactured US, Russia, Japan, UK, Germany Tobacco

11

Fish

and

Fish Japan, US, Singapore, Hong Kong

Products

The developed countries have not yet allowed the requisite market access to other countries by maintaining high tariffs, especially on the products of interest to developing countries. Besides, the principle of "tariff-only" has not been observed by many nations. The incidents of non-tariff barriers affecting Indian agricultural exports are countless. For instance, the lack of uniform quality norms and assessment systems constitutes a major technical barrier to spice exports. The quarantine and Phytosanitary

requirements in several countries, including the US and the EU, have often proved a virtual ban on perishable fruits and

vegetables, meat and marine products. Products like litchi and grapes have at times been Many countries, including developing ones, have discriminatory quality standards. Indonesia, for

instance, allows 25 per cent broken rice in import consignments

from Thailand, China, Vietnam, and others, but only 15 percent for Indian non-Basmati rice. Coir, though a natural product, has been included by the EU in the list of "very sensitive products". The allegation of child labour comes in the way of export of products of coir and even other natural fibers like cotton, jute and wool. List of NTBs imposed by EU on Indian primary products Nature of NTB GMO+ban on use Code HS of 02 Item specification Meat and edible meat offal

hormone+SPS measures + export subsidy +SRM ban Environmental standards + 030612 SPS measures Environmental standards+SPS measures Environmental standards + 030622 SPS measures Environmental standards + 030623 SPS measures GMO+ban on use of 04 Lobsters (homarus spp.) not frozen. Shrimps frozen Dairy products, birds' eggs, natural honey, edible products of animal origin 0506 Bones unworked, prepared and horn-cores, simply cut to and prawns not 030613 Lobsters frozen Shrimps and prawns frozen (homarus spp.)

hormone+SPS measures+export subsidy SRM ban

defatted, (but not

shape) treated with acid GMO GMO+preferential quota 0701 Potatoes, fresh or chilled

070895100 Mushrooms, fresh or chilled

GMO+Labeling

07102200

Beans, shelled or unshelled, frozen

GMO+Labeling GMO+preferential quota GMO+Imported restrictions

07104000 07123001 080300

Sweat, corn frozen Mushrooms (including morels) Bananas, including plantains, fresh or dried

GMO+Pesticide residue GMO+Pesticide residue GMO+Pesticide residue Pesticide residue

08045002 08045003 080600 090100

Mangoes fresh Mangoes sliced, dried Grapes, fresh or dried Coffee, roasted whether or or not

decaffeinated;

coffee husks and skins; coffee substitutes Pesticide residue Export subsidy GMO+Variable lavy Export subsidy SPS residue 090200 10010 10060 11010 Tea Wheat and meslin Rice Wheat or meslin flour Oilseeds and oleaginous

Measures+pesticide 12

fruits; miscellaneous grains, seeds and fruits etc.

GMO+ban

on

use

of 16

Preparations of meat, of fish or of crustaceans, mollusks or other aquatic invertebrates

hormone+SPS measures+export subsidy+SRM ban Preferential quota 17

Sugars confectionery

and

sugar

Pesticide residue

20081

Groundnuts,

prepared/preserved Pesticide residue 2401 Unmanufactured tobacco refuse Pesticide residue 2402 Cigars, cheroots, citarillos tobacco;

and cigarettes, of tobacco or of tobacco substitutes Pesticide residue 2403 Other manufactured tobacco and manufactured tobacco

substitutes

Domestic Support The Agreement on Agriculture stipulates a reduction commitment of total AMS by 20 per cent for developed countries in 6 years (19952000) and by 131/3 per cent by 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. In India the product specific support is negative, while the nonproduct specific support i.e. subsidies on agricultural inputs, such as, power, irrigation, fertilizers etc., is well below the permissible level of 10% of the value of agricultural output. Therefore, India is under no obligation to reduce domestic support currently extended to the agricultural sector.

Consequently, the share of agricultural exports from developing countries has not risen. Though the developing nations constitute over three-fourth of the WTO members, their share in global exports remains around 30 per cent. This is less than what it was 25 years ago. Among the developed regions, Western Europe is the most important for agricultural exports from the developing countries. But the share of total exports into this region, instead of rising, has marginally declined from 28.5 per cent in 1994 to 28 percent in 1998. The share of exports to Japan, another important market, has shrunk even more sharply from 14.5 percent to 11.5 percent in this period.

HIGHLIGHTS OF INDIAN PROPOSALS

India has submitted its initial negotiating proposals to the World Trade Organisation (WTO) for the mandated negotiations under the Agreement on Agriculture in the areas of market access, domestic support, export competition and food security with the objective of protecting its food and livelihood security and creating increased market access opportuniteis with a view to promoting its

agricultural exports. The Cabinet Committee on WTO matters approved these proposals. India may consider submitting additional proposals including by way of clarifications or expansion of existing proposals or new issues, depending on the developments in the ongoing negotiations in the WTO Committee on Agriculture. Indian proposals submitted to WTO on 15.1.2001 can broadly be classified into the following 2 categories: (i) Increasing the flexibility enjoyed by developing countries by creation of a Food Security Box for providing domestic support to the agriculture sector under the special and differential (S&D) provisions as also further strengthening of trade defence mechanisms with a view to ensuring the food security and to take care of livelihood concerns. (ii) Demanding of substantial and meaningful reductions in tariffs including elimination of peak tariff and tariff escalation, substantial reductions in domestic support and elimination of export subsidies by the developed countries so as to get meaningful market access opportunities.

The proposals in the first category include: Additional flexibility for providing subsidies to key farm inputs for agricultural and rural development. Exemption from any reduction commitments of measures taken by developing country members for alleviation of poverty, rural development rural employment and diversification of agriculture. Exclusion from AMS calculations of product specific support given to low income and resource poor farmers. Clarifications on certain implementation issues, such as,

offsetting of positive non product specific support with negative product specific support in stable currency to take care of inflation and depreciation. Rationalization of product coverage of AOA by inclusion of certain primary agricultural commodities such as rubber, jute, coir etc. Flexibility enjoyed by developing countries in taking certain measures in accordance with other WTO covered Agreements should not be constrained by the provisions of AOA. Maintenance of appropriate level of tariff bindings on

agricultural products in developing countries, keeping in mind their developmental needs and high distortions prevalent in the international markets with a view to protect livelihood of their farming population. Also linking the appropriate levels of tariffs in developing countries with trade distortions in the areas of market access domestic support and export competition.

Rationalisation of low tariff bindings in developing countries, which could not be rationalized in the earlier negotiations.

Separate safeguard mechanisms on the lines of SSG including a provision for imposition of QRs in the event of a surge in imports or a decline in international prices, as an S&D measure to protect Food Security and livelihood concerns.

No minimum market accesses commitments for developing countries.

The proposals in the second category include: Blue box and decoupled income support and direct payments in Green Box to be included in the Amber Box to be subjected to reduction commitments. Accelerated reduction in AMS so as to bring it below then minimizes by the developed countries in 3 years and by the developing countries in 5 years. Substantial reduction in tariff bindings including elimination of peak tariffs and tariff escalation in developed countries. Expansion and transparent administration of TRQs pending their eventual abolition Elimination through accelerated reduction in exports subsidies and disciplining of al forms of export subsidization etc. Abolition of Peace Clause for developed countries.

CONCLUSIONS
A number of developed countries like EU & YSA have continued to provide high domestic support to their agricultural sector. At best, the policies by shifting the support from one box to another. The continuation of the high domestic support to agriculture in may develop countries a cause of concern as they in courage overproduction in these countries leading to low levels of international price. Developing countries like Indian are still not able to a access the market of developed countries inspite of the fact that they have complied with the WTO provision and have reduced the subsidies. But EU countries still take various non-tariff measures like sanitary and Phytosanitary to restrict imports from these countries

especially horticulture and meat items. Also these developed countries have reduced the tariff wall in those commodities which are less important for developing countries like India but not in case of important commodities. (I.e., products of interest for developing countries) It is obvious therefore, that benefits to developing countries like India in terms of increasing their exports will only occur after complete elimination export subsidies and substantial reduction in domestic support in the developed countries has been effected.

REFERENCE
Non tariff Barrier in Indian Primary exports (Debashis

Chakraborty); RGCIS working paper series, Nov. 27, 2001 Book Named Implication of WTO Agreement on agriculture (AOA) by IIM Ahemdabad. Subsidies and support in world agriculture is WTO providing a level playing Field. National Centre for Agriculture Economic and Policy Research. Doha Farm Fare, B.S., Nov. 21, 2001.

Agreement on Agriculture WTO. Org.

CMIE Reports

Libraries consulted: CII (Confederation of Indian Industries) FICCI World Bank FIEO (Federation of Indian Export Organization)

ACKNOWLEDGEMENT
I would take the opportunity to thank Prof. Anupam Verma for assigning such a project which has helped us to know a lot of things. I would also take the opportunity to thank Dr. Lakshmi, Dean Academics.