Business Environment Lecture by Dr. Ho Cao Viet

1. WTO – AGRICULTURE
WTO & AGRICULTURE

2. Members (152)
Applied Countries
(28)
WTO Members

3. WTO-AoA NEGOTIATIONS
CREATING WEALTH FROM
FARM GATE TO FOOD PLATE

4. GENESIS
• WTO Came into existence on 1-1-1995 with the
conclusion of Uruguay Round Multilateral Trade
Negotiations at Marrakesh on 15th April 1994, to :
– Provide common institutional framework for
conduct of trade relations among members
– Facilitate the implementation, administration and
operation of Multilateral Trade Agreements
– Lay down Rules and Procedures Governing
Dispute Settlement
– Provide Trade Policy Review Mechanism

5. Agreement on
Agriculture (AoA)
• To establish a fair and market
oriented agricultural trading system
through substantial progressive
reduction in agricultural support
and protection resulting in
correcting and preventing
restrictions and distortions in world
agricultural markets

6. AREAS OF
COMMITMENTS
• Domestic Support
• Market Access
• Export subsidies

7. Export Subsidies
• Cut in value of subsidies
– Developed countries - 36 % (1995 - 2000)
– Developing countries - 24 % (1995 - 2004)
• Cut in subsidized quantities
Developed countries - 21 % (1995 - 2000)
Developing countries - 14 % (1995 - 2004)
(Base Period : (1986 - 1990)
To develop internationally agreed
disciplines to govern export credits,
guarantees or insurance programmes

8. Domestic Support
In WTO terminology, subsidies in general are identified by
“boxes” which are given the colours of traffic lights: Green
(permitted), Blue (slow down - i.e. be reduced),
Amber ( Forbidden)
• Green Box - Research,
Extension, PDS, Decoupled
Payments etc;
• Blue Box - Production
Limiting Subsidies ;
• Amber Box - subject to
reduction commitments .
– Product specific
– Non product specific (input
subsidies-fertilizer, power,
irrigation)

9. Anomaly in WTO Provision
• Developed countries still continue to heavily
subsidize their agriculture.
• As per the WTO provision these countries were
required to reduce their subsidy considerably, so
that the developing countries could get a chance
to export their products to these countries.

10. RESULTS OF THESE ANOMALIES
There were three problems
1. It ignored the realities of global agricultural markets,
2. It reinforced industrial agriculture at the expense of
sustainable agriculture, and
3. It failed to acknowledge the widely differing needs of
countries at different levels of development.

11. Agricultural Subsidies
Source: OECD
•Agricultural subsidies have affected developing country farmers both by
denying access to rich markets and allowing farmers from advanced countries
to sell to developing countries at suppressed prices.
•This is particularly relevant to India because agricultural products account
for nearly 20% of Indian exports.
Agricultural Support in the US ($US million)
1998 1999 2000 2001 2002
Totalvalueofproduction(atfarmgate) 190,082 185,258 189,318 197,037 200,903
ProducerSupportEstimate(PSE) 48,272 55,932 49,673 51,683 39,559
Percentage ofgovernmentsupport 25.4 30.2 26.2 26.2 19.7

12. INDIAN’S LESSON
• Protecting food and livelihood security by having sufficient
flexibility for domestic policy measures.
• Protecting domestic producers from the surge in imports or
significant decline in import prices.
• Substantial reduction in export subsidies and domestic
support to agriculture in the developed countries for greater
market access to products of developing countries.
• Finally, a more equitable & fair trading framework for
agricultural commodities
MARKET ACCESS ISSUES CAN NOT BE SEEN IN ISOLATION TO
SUBSIDY REGIME

13. Domestic support in India
•The negotiations on domestic support should include the following
elements:
•Substantial reductions in all forms of domestic support should be
undertaken by the developed countries.
•Subsidies excluded from the discipline introduced by the AoA, i.e.
those appearing in the “Blue Box” and the “Green Box”, need to be
re-assessed, particularly from the point of view of their influence on
production.
• The Peace Clause “Article 13 (a) and 13 (b)” shall not be extended
beyond implementation period.

14. Export Subsidies in India
The negotiations on export subsidies should include the following
issues:
Countries using export subsides should phase out this form of
farm support within two years of implementation of the
revised disciplines to be followed by countries in the
agricultural sector.
Export subsidies discipline should include all forms of
spending that enhances the capacities of exporters to
increase trade, e.g. export credit, guarantees and
insurance programmes.
The Peace Clause “Article 13 (c)” shall not be extended
beyond implementation period.

15. Present stage of negotiations
• The Cancun Ministerial failed to arrive at any
agreement on modality for agriculture.
• There was no willingness on part of developed
countries to recognize the genuine concerns of
the developing countries, especially in
agriculture
• The US & EU attempted to drive their own
agenda, at the expense of Doha Declaration
• The concerns of the developing countries were
expressed by a group viz. G-20 at Cancun.

16. Why much of the focus must be on
agriculture…
• Even though it provides less than 4% of global GDP and 9% of int’l
merchandise trade
• OECD manufacturing tariffs have fallen by 9/10ths
over the past 60 years to <4%, while agricultural protection has risen,
Agric. applied (bound) tariffs now average nearly 5 (10) times
manufactures tariffs globally
• Also, the vast majority of the world’s poor rely on farming for a
living, and may be hurt by agricultural protection policies of rich
countries

17. Why focus on agriculture
• True, the harm to some DC farmers from rich
country agricultural protection is reduced via non-
reciprocal preference schemes
• Those schemes contravene the core WTO rule of
non-discrimination
• In particular, they exclude numerous population
developing countries (e.g. Brazil, China, India,
Indonesia, Pakistan, Vietnam)
• May harm more poor farmers (through trade
diversion) than they help.

18. 0
5
10
15
20
25
30
Antal
SPS/TBT Agriculture Textiles TRIMS TRIPS GATS
Which agreements are subject to disputes?