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WTO AND IT’S IMPACT ON INDIAN AGRICULTURE

Speaker- Avikal KumarI.D. No- 31997

INTRODUCTION OF WTO

WTO was formed on 1st Jan , 1995

It took over GATT (general agreement on tariffsand trade). In 8th round of GATT, popularlyknown as Uruguay round, members nation ofGATT decided to set up a new organization,‘World Trade Organization’ in place of GATT.

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World Trade Organisation

Established on 1.1.1995

160 members

97% of world trade

Geneva Switzerland

Decision making body – (Ministerial Conference)

General council

Trade Policy review body

Dispute settlement body Council for Trade in Goods

Council for Trade in services

Council for TRIPS

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WTO Vs GATT5

GATT WTOIT WAS AD HOC AND

PROVISIONAL

IT IS PERMANENT, MORE

AUTHORITY THAN GATT

IT HAS NO PROVISION FOR

CREATING AN ORGANIZATION.

IT HAS LEGAL BASIS BECAUSE

MEMBER NATIONS HAVE

VERIFIED THE WTO

AGREEMENTS

IT ALLOW CONTRADICTION IN

LOCAL LAW AND GATT

AGREEMENTS.

IT DOSEN’T ALLOW ANY

CONTRADICTION IN LOCAL LAW.

DEALS WITH TRADE IN GOODS DEALS IN TRADE IN SERVICES

AND INTELLECTUAL PROPERTY

AS WELL

DISPUTE SETTLEMENT LESS

EFFICIENT

FASTER AND MORE AUTOMATIC

OBJECTIVES OF

WTO

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to implement the new world

trade agreement.

promote multilateral trade

improve the level of living and

speed up economic

development

promote free trade

enhance competitiveness

increase the level of

production and productivity

with employment

expand and utilize world

resources

development of poorest

nation

Functions of

WTO

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Scope of WTO

Trade in goods

Trade related investments

Measures (TRIMs)

General Agreements on Trade in

Services (GATS)

Trade Related Intellectual

Property Right’s (TRIPs)

ARGUMENTS IN

FAVOUR OF WTO

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Increase in inflow of foreign investment

Increase in agricultural export

Increase in foreign trade

Benefits for clothing and textile industry

Improvement in services

Inflow of better technology and better products

WTO AGREEMENTS

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GATT11

It all began with trade in goods. From 1947 to 1944, GATTwas the forum for negotiation lower customs duty rates andother trade barriers, the text of general agreement spelt outimportant rules, particularly non-discrimination.

Since 1995, the updated GATT has become the WTO’sumbrella agreement for trade in goods.

It has annexes dealing with specific sectors such asagriculture and textiles, and with specific issues such asstate trading, product standards, subsidies and actionstaken against dumping.

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1• Cross–border supply

2• Consumption abroad

3• Commercial presence

4• Presence of natural person

Four modes of supply

Trade related investments measures

Measures prohibited by TRIM’S agreement

Local content requirement

Trade balancing requirement

Foreign exchange restriction

Export restriction

Exceptional provisions of TRIM’s agreement

Transitional period

Exception for developing countries

Equitable provisions

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TRIPs

The WTO’s intellectual property agreementamounts to rule for trade and investment inideas and creativity.

The rule state how copy rights, patents,trademarks, geographical names used toidentify products, industrial designs andundisclosed information such as trade secrets –”intellectual property” – should be protectedwhen trade is involved.

In nutshell, the TRIPs Agreement covers 7categories of intellectual property.

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Article27.3 :

Parties may exclude from patentability:

a)diagnostic, therapeutic and surgical methods for the treatment of

humans oranimals

b)plants and animals other than microorganisms, and essentially

biological processes for the production of plants or animals other

than non-biological and microbiological processes.

Parties shall provide for the protection of plant varieties either by

patents or by an effective sui generis system or by any combination

there of.

TRIPs

Dispute settlement system16

When Dispute Arises ?

Dispute settlement

The WTO’s procedure for resolving trade quarrelsunder the Dispute Settlement Understanding is vitalfor enforcing the rules and therefore for ensuringthat trade flows smoothly. Countries bring disputesto the WTO if they think there rights under theagreements are being in fringed. Judgments byspecially-appointed independent experts are basedon interpretations of the agreements and individualcountries commitments.

HOW ARE DISPUTE SETTLED ?

How long to settle a dispute? These approximate periods for each stage of a dispute settlement procedure are target figures — the agreement is flexible. In addition, the countries can settle their dispute themselves at any stage. Totals are also approximate.

60 days Consultations, mediation, etc

45 days Panel set up and panellists appointed

6 months Final panel report to parties

3 weeks Final panel report to WTO members

60 daysDispute Settlement Body adopts report (if no appeal)

Total = 1 year (without appeal)

60-90 days Appeals report

30 daysDispute Settlement Body adopts appeals report

Total = 1y 3m (with appeal)

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Source:Understanding the WTO: Settling Disputes - A unique contribution

WTO and Indian Agriculture18

Introduction

After over 7 years of negotiation the Uruguay

Round multilateral trade negotiations were

concluded on December 1993 and were

formally ratified in April 1994 at Marrakesh,

Morocco.

The WTO agreement on agriculture was one of

the main agreements which were negotiated

during the Uruguay round.

Agreement on Agriculture

The WTO Agreement on Agriculture

contains provisions in three broad areas

of agriculture

1. Market access.

2. Domestic support.

3. Export subsidies.

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Market access20

This includes tariffication, tariff reduction and access opportunities.

Tariffication means that all non-tariff barriers such as….

1. Quotas

2. Variable levies

3. Minimum import prices

4. Discretionary licensing

5. State trading measures

AoA provisions on market

access

Prohibition of quantitative restriction on

import

Tariff binding and reduction

Bound versus Applied tariffs

Tariff Rate Quota

Special safeguard measures

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Domestic Support

WTO uses a traffic light analogy to

group program

Green box (non-trade distorting)

Blue box (production limiting)

Amber box (market distorting)

Prohibited(i.e. red box)

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Measure be placed in green box

1. It must be publicly funded govt. program and

does not involve transfers from consumers.

2. It must not have the effect of price support to

producer

Or it must comply to these criteria

A general service e.g. pest and disease control, training,

extension, advisory services, health, safety etc.

Stockholding of product for food security

Domestic food aid

Income insurance or income safety program

For natural disaster relief etc.

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Measure be placed in blue box◦ Be based on fixed area and yield

◦ Be made of 85% or less of the base level of production

◦ If livestock payments, be made on fixed no of head

Amber box◦ Product specific domestic support

◦ Non-product specific domestic support

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En export subsidy reduce the price paid by foreign importer, which mean domestic consumer pay more than foreign consumer

Export subsidy in Agricultural SectorDirect export subsidies contingent on export performance

Sale of non-commercial product on less prices than domestic market

Producer financed subsidy

Cost reduction measures

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Some of agricultural product under 23 product groups, such as wheat, coarse grain, sugar, beef, cheese and oilseeds.

Rates of cut◦ Developed countries

21% by volume

36% corresponding budgetary outlay

Over 6 years

◦ Developing countries

14% by volume

24% corresponding budgetary outlay

Over 10 years

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Year India's Total Annual Agri- Annual % share of Agri-

Exports (Rs. Growth exports Growth Exports in Total

Crore) Rate (%) (Rs. Crore) Rate (%) Exports

1990-91 32553 17.7 6317 16.5 19.4

1991-92 44041 35.3 7894 24.9 17.9

1992-93 53688 21.9 9082 15.0 16.9

1993-94 69751 29.9 12632 39.1 16.1

1994-95 82674 18.5 13269 5.0 16.0

1995-96 106353 28.6 20344 53.3 19.1

1996-97 118817 11.7 24362 19.8 20.5

1997-98 130100 9.5 24626 1.1 18.9

1998-99 139752 7.4 25387 3.1 18.1

2000-01 203571 27.6 27288 12.3 13.4

2001-02 209018 2.7 28144 3.1 13.4

2002-03 255137 22.1 32473 15.4 12.7

2003-04 293367 15.0 34615 6.6 11.7

2004-05 375340 27.9 38078 10.0 10.1

2005-06 456418 21.6 45220 18.8 0.9

2006-07 571779 25.3 57392 26.9 10.8

2007-08 655864 14.7 76006 32.4 11.5

2008-09 840755 28.2 80648 6.1 9.5

2009-10 845534 0.6 85211 5.6 10.0

2010-11 1142649 35.1 113116 32.7 9.8

TRENDS IN INDIA'S AGRICULTURAL EXPORTS DURING 1990-91 TO 2010-11

Source: 1. Govt. of India, Economic Survey- 2011-12, P. A 80.

2. Govt. of India, Ministry of Agriculture, Agricultural Statistics At a Glance- 2010.

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ANNUAL COMPOUND GROWTH RATES (ACGR) OF INDIA'S TOTAL

EXPORTS

AND AGRICULTURAL EXPORTS

INDIA'S % SHARE IN TOTAL WORLD AGRI- EXPORTS

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Trends in India's trade (1995-96 t0

2009-10) Rs. In crores

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HURDLES IN THE WAY OF

AGRICULTURAL EXPORT

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SUGGESTIONSBased on the above discussion the following steps may berelevant to boost the space of growth of Agri-exports fromIndia in near future.1. Lack of co- ordination among various department engaged

in the promotion of agricultural exports has created numberof problems. Hence, there is an urgent need to establishefficient co-ordination among these departments.

2. In the wake up new economic policy of liberalization andWTO rules special care should be taken by the governmentto protect the interest of exporting farmers.

3. It is also necessary to create the awareness among theexporting farmers with regards to sanitary and phyto-sanitary standards imposed by developed countries.

4. Agri-exports need to organize themselves untidily to faceglobal competition instead of each exporter trying to exportin small quantities in an unorganized manner.

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5.At present, new emerging markets like Eastern Europe, China, UAE,

African countries have a lot of potential for absorbing more Agri-

exports. Hence, the efforts should be made to tap the potential of

there markets

6. The apex marketing agency like APEDA should intensify and speed-

up the export procedure of quality agricultural product.

7. High rate of interest for export finance make India's exports non-

competitive. Therefore, the rate of interest changed by financial

intuitions is reasonable.

8. The government should come forward to invest on basic

infrastructure. In this regard a complete cold chain facility needs

to be created on urgent basis.

9. Sincere and dedicated efforts are also needed to increase the

quality of exportable fruits and vegetables because there is

immense scope for increasing exports of fruits and vegetables in

India.

10. The proper branding of agricultural products needs to be

promoted as the branded products gets higher prices in comparison

to unbranded items.

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Conclusion

India as a developing economy, has been benefitted being a founding member of World trade organization. The country at large has seen many significant changes which have taken place after the formation of WTO. There are some issues which are yet to be sorted out with the WTO and but by and large things are falling in shape for the Indian Economy.

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