WTO

AGREEMENT ON AGRICULTURE

Overview
The Agreement on Agriculture is an international treaty of the World Trade Organization .  It was negotiated during the Uruguay Round of Trade, the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO on January 1, 1995.  Following the Uruguay Round negotiations, all agricultural products were brought under multilateral trade rules by the WTOs Agreement on Agriculture.


Uruguay Round 1986 94



The WTO s Agriculture Agreement was negotiated in the 1986 94 Uruguay Round and is a significant first step towards fairer competition and a less distorted sector. WTO member governments agreed to improve market access and reduce trade-distorting subsidies tradein agriculture. In general, these commitments were phased in over a six years from 1995 (10 years for developing countries). The Agriculture Committee oversees the agreement s implementation.

Pillars of agreement on agriculture

Three Pillars Domestic Support AMS reduction Green Box de minimis Market Access Tariffication Tariff reduction Minimum access Special Safeguard Export Subsidies Reduction Prohibition of new subsidies

Special and Differential (S&D) Treatment for DCs and LDCs Related Agreements, e.g. Marrakesh Decision Establishment of a Committee on Agriculture Continuation of the reform process

1. Domestic Support


The first pillar of the AoA is "domestic support". The WTO Agreement on Agriculture negotiated in (1986the Uruguay Round (1986-1994). All forms of domestic support are subject to rules. Provisions of the Agreement regarding domestic support have two main objectives first to identify acceptable measures that support farmers and second, to deny unacceptable, trade distorting support to the farmers. The WTO classifies domestic subsidies into three categories known as the Amber, Blue and Green Boxes.

Contd..

Domestic Support


 

All domestic support is quantified through the mechanism of total Aggregate Measurement of Support (AMS). AMS is a means of quantifying the aggregate value of domestic support or subsidy given to each category of agricultural product. Commitment made requires a 20% reduction in total AMS for developed countries over 6 years. For developing countries, this percentage is 13% and no reduction is required for the least developed countries.

2. Market access


"Market access" is the second pillar of the AoA, and nonrefers to the reduction of tariff (or non-tariff) barriers to trade by WTO member-states. memberAll countries are obliged to eliminate all their non-tariff nonbarriers like import ban, import quota or quantitative restrictions on imports, etc. and convert these to tariffs. This is called, in the WTO, tariffication. Least Developed Countries (LDCs) were exempted from tariff reductions, but either had to convert non non tariff barriers to tariffsa process called tariffication or tariffs "bind" their tariffs, creating a "ceiling" which could not be increased in future.

Market access


The 1995 AoA required tariff reductions of: 36% average reduction by developed countries, countries, with a minimum per tariff line reduction of 15% over six years. 24% average reduction by developing countries with a minimum per tariff line reduction of 10% over ten years.

3. Export Subsidies
  

"Export subsidies" is the third pillar of the AoA . subsidies" Export subsidies are special incentives provided by governments to encourage increased foreign sales. The 1995 AoA required developed countries to reduce export subsidies by at least 36% (by value) or by at least 21% (by volume) over the six years. In the case of developing country Members, the required cuts are 14% (by volume) and 24 % (by value) over 10 years.

List of Export Subsidies in the Agreement on Agriculture

Article 9 sets out the sort of export subsidies which WTO Members are obliged to reduce in accordance with their Country Schedules: direct export subsidies; Government exports of non-commercial stocks at a nonprice lower than comparable prices for such goods on the domestic market; Export payments financed by virtue of government action, including payments financed by a levy on the product;

 

Contd..


Subsidies to reduce the cost of marketing exports, including cost of handling, upgrading and other processing costs and, costs of international transport and freight; Internal transport and freight charges on terms more favorable than for domestic shipments, if provided or mandated by government and, Subsidies on agricultural products contingent on their incorporation in export products.

Articles of agreement on agriculture



Article 1 of the agreement contains definitions like AGGREGATE MEASURE OF SUPPORT (AMS), Basic Agricultural Products, Equivalent Measure of Support, Export Subsidies, Market Access Concessions. Article 2 : Regulatory framework applies to agricultural products specified in Annex 1 to the agreement. Article 3 : Incorporation of Concessions and Commitments. A Member shall not provide support in favour of domestic producers in excess of the commitment levels specified

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Article 4 : Market Access, tariffs are to be reduced by 36%, in case of developed countries and 24% in case of developing countries. No reductions are expected from least developed countries. Article 5 : Special Safeguard Provisions, enables members to take emergency measures like, levy of additional duty. Article 6 : Domestic Support Commitments, in favour of agricultural producers with the exception of domestic measures which are not subject to any reduction.

Contd..
 

Article 7 (interalia) looks at the conformity of article (interalia) 6, with annex 2 of the agreement. Article 8 and 9 deals with export competition commitments and export subsidy commitments respectively. Article 9 details export subsidy programmes like, direct subsidies, sale for export by govt. of nonnoncommercial stocks of agri. products, payments of subsidies to reduce the cost of marketing the exports, favorable internal transport charges on export shipments

Contd
 

Article 10 deals with the circumvention (avoid) of export subsidy commitments. Article 11 Incorporated Products , In no case may the per-unit subsidy paid on an incorporated peragricultural primary product exceed the per-unit perexport subsidy that would be payable on exports of the primary product as such. Article 12 Disciplines on Export Prohibitions and Restrictions, export prohibition on food stuffs can be applied temporarily, to prevent critical shortages of food stuffs essential to the exporting countries.

Contd..


  

Article 13 (interalia) Due Restraint, states that (interalia) Domestic support measure of annex2 and article 6 of the agreement, shall; during the implementation of the period of the agreement be exempt from the provision of GATT 1994. Article 14 enjoins members to give effect to the agreement on sanitary and phytosanitary measures. Article 15 provides for special and differential treatment to the developing countries. Article 16 requires developed countries to take actions to prevent possible ve effect on LCDs.

Contd..
  

Article 17 provides for the establishment of committee on agriculture. Article 18 deals with the review of the implementation of the commitments. Article 19 deals with the consultation and dispute settlement under articles 12 and 13 of the GATT 1994. Article 20 calls for continuation of the reform process in the provisions of GATT 1994 and other multilateral agreements in annex 1. WTO shall apply subject to the provisions of this agreement.

Other Provisions


Export restrictions :
The Agreement on Agriculture requires Members which consider to institute new export restrictions on foodstuffs to give due consideration to the effects of such restrictions on importing Members' food security. This requirement - increased reliability of access to world market supply - is a corollary for the opening of markets which is required by the market access provisions of the Agreement and the related specific commitments undertaken by Members.

Other Provisions


Peace Clause : The Agreement in Agriculture contains a "due restraint" or "Peace Clause" which regulates the application of other WTO agreements to subsidies in respect of agricultural products (Article 13). This provision is valid during the implementation period specified in the Agreement on Agriculture (for the purposes of Article 13 the nine-year period ninecommencing in 1995 - until 1 January 2004).

Other Provisions


Resolving Disputes :
In the case of disputes involving provisions of the Agreement on Agriculture, the general WTO dispute settlement procedures apply. The provisions of Articles XXII and XXIII of the GATT 1994, as elaborated and applied by the Dispute Settlement Understanding, shall apply to consultations and the settlement of disputes under this Agreement. The Agreement on Agriculture also provides for certain mechanisms that can be used by WTO Members to address their concerns without recourse to the dispute settlement procedures.

The DOHA Round



 1. 2. 3. 4.

The Doha Round is the latest round of trade negotiations among the WTO membership. Its aim is to achieve major reform of the international trading system through the introduction of lower trade barriers and revised trade rules. The work programme covers about 20 areas of trade. And calls for continued negotiations aimed at , Substantial improvements in market access Reduction of all forms of export subsidies ( with the view of phasing out ). Substantial reduction in trade-distorting domestic support. tradeSpecial and Differential treatment for developing countries.

What s Next ?
Inside look after Doha Declaration 14 nov 2001
 I. II. III. 

Implementation related issues and concerns over. Food aid Technical and financial assistance to improve agricultural productivity. Financing normal levels of commercial imports of basic foodstuffs. Also includes the members to exercise restraints in challenging measures notified by developing countries under the Green Box to promote Rural Development and adequately address food security concerns.

FICCI s comment
 

Lack in clear direction and specific commitment to deal with the distortion in world agricultural market. Substantial reductions in trade related domestic products only, while production related domestic support provided by developed nations continue to distort agricultural trade. Draft did nothing about the harassment of Industrial Nation towards the provision of subsidies under the WTOs agreement on agri.

Contd..
As a result Indian Govt. continued to impost high tarrifs to safeguard Indian Farmers. 1. 100% on primary agricultural products . 2. 150% on processed products 3. 300% on edible oils


India s Stand


US filed complaints against India for imposing Quantitative restrictions on Agricultural, Textile and Industrial products. IMFs support to Indian BOP ( 1991 forex crisis) led to the negotiation of most of the QRs to be lifted by April 2000. Resulting of free imports of textile and agricultural commodities. Indian Agricultural sector opened to compete with cheap imports. Contd

Contd..
 

Govt. extend support to farmers in form of input subsidy and support prices. Subsidy to farmers directly transferred to farmers as direct income support, which is non discriminatory trade. Per capita income of less than $1000, which means PDS (public distribution system) can continue.