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http://mrunal.org/2014/08/explained-wto-bali-summit-trade-facilitation-agreement-tfa-de-minimus-level-india-modi-objection.html
1. Prologue
2. WTO: Structure and functions
3. Tariff and Non-Tariff Barriers to Trade
4. WTO agreements
5. Agreement on Agriculture (AoA)
1. Green. Blue and Amber subsidies
2. Amber box: De Minimus limits
6. What is Bali summit and Peace clause?
7. What is Trade Facilitation Agreement?
8. Why Modi opposed Trade Facilitation Agreement
Prologue
Consider this a Fork of the Economic Survey chapter 9 on Agriculture and food production.
KEY IDEA
World
bank
IMF
GATT
WTO structure
Supreme Decision Making body
160 members, Latest member Yemen (Capital: Sanaa)
Meets once every two years,
deliberates on trade agreements
MinisterialConference
GeneralCouncil
Roberto Azevdo
Appointed by ministerial conference
Has four years term.
DirectorGeneral
WTO Functions
1. Ensure the developing countries benefit from world trade, especially the least Developed countries.
2. Reduce barriers to international trade both tariff barriers and non-tariff barriers.
3. Get the members Enter into multilateral trade agreements to achieve above objectives.
4. Provide forum for negotiation and dispute settlement for the members, if the agreements are violated.
5. Cooperate with UN, World and IMF for a global economic policy that improves livelihood, protects environment
and promotes sustainable Development.
NonTariff
Barrier
3. Other obstacles like not giving custom clearance quickly. Putting quota on each exporter country
and so on.
World Trade organization (WTO) aims to reduce such tariff and non-tariff barriers to international trade.
But what if China starts manufacturing cheap cars with poor breaks, bad steering and carcinogenic paint. Can
Obama ban such dangerous foreign products? Does WTO permit that?
Yes, WTO made two special agreements for safety:
Non-food products
Food Products
WTO agreements
1. copyrights
5. industrial designs
2. patents
3. trademarks
7. Trade secrets
4. Geographical indicators
T6: plurilateral
agreements
Periodically, WTO carries out audit/inspection/review of the trade policy of member states
and gives them constructive feedback.
~204 words
WTO has many other agreements but hard to memorize and fit into a 200 word answer anyways.
For exams in 2014-17, the important agreement is AoA. (Because itll stay in news due to 10% food subsidy issue)
1.Market access
2.export competition
3.domestic support
EXPORT SUBSIDIES
1. GREEN
2. BLUE
Developing: by 24%
subsidies
Subsidies that dont disrupt trade balance OR
Only cause minimum damage to trade balance.
E.g. agriculture research-development, extension services, farmer training programs, pest-disease
control program, flood/drought relief money paid to farmers etc.
WTO Limit: nothing. Governments can give as much as they want.
BLUE
AMBER
Subsidies that disturb trade balance like, subsidies on fertilizers, seeds, power and irrigation.
They distort trade balance because they encourage excessive production,therefore given
countrys product becomes cheaper than others, in the international market.
WTO limits: yes- explained below
De Minimus is the Minimal amounts of Amber box subsides permitted by WTO, even though they distort trade.
De minimus limits are calculated on the agriculture production of the given member state in 1986-88.
Country
Developed
Developing
10%
Least developed
Exempted.**
India fears itll have to cut down its food subsidy to comply with WTOs De-minimus level
1. In 1986: USA agriculture production was far ahead of India. So, their 5% De-minimus quota will be far bigger
than our 10% quota (in absolute figures).
2. Input costs have skyrocketed in these decades. But, De-minimus doesnt consider inflation factor.
3. So, if India has to limit its (Amber box) agro. subsides to a non-inflation adjusted 86s production, we cannot
continue the MSP to farmers or food security to poors.
4. These subsidized foodgrains are meant for feeding the poors only, they do not distort international trade.
~190 words
RE-2013
BE-2014
Food
92000
115000
Petroleum
85480
63427
Fertilizer
67971
72970
food stockholding
Exporters from Least developing countries, will get Duty free, quota free (DFQF)
access to markets in foreign countries.
as per the original Agreement on agriculture (AoA), the developed and developing countries have to keep their
Amber box subsidies within De-minimus level i.e. 5% and 10% of their agriculture production in 1986-88
respectively.
India opposed this base year and limits, because itd make impossible to implement the food security programs
for the poor and MSP for the farmers.
Therefore, as a measure of temporary relief, Bali summit enacted a peace clause for the AoA
Salient features of Peace Clause
No member, can drag any developing country to Dispute settlement mechanism of WTO.
for violation of De-minimus limits in AoA
Provided that the said developing country
1. is paying subsidies for staple foodcrops
for public stockholding program
For food security purpose.
2. is providing annual information of its food security Program to WTO.
3. Permanent solution will be taken no later than 11 th ministerial conference i.e. at December 2017.
~215 words.
Q. Write a note on the salient features of Trade facilitation agreement (200 words)
ORIGIN
AIM
INTERNATIONAL
Benefits of TFA:
A simplified customs clearance mechanism will boost international trade, and thereby it will
will increase in global GDP
21 million
2015
~280 words. But in exam, all points cant recalled so itll automatically FIT the 200 words limit!