WTO agricuture

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WTOWTO

AGREEMENT ON AGRICULTURE AGREEMENT ON AGRICULTURE



OverviewOverview

TheThe Agreement on AgricultureAgreement on Agriculture is anis aninternationalinternational treatytreaty of theof the World TradeWorld TradeOrganizationOrganization ..

It was negotiated during theIt was negotiated during the Uruguay RoundUruguay Round of of thethe General Agreement on Tariffs and TradeGeneral Agreement on Tariffs and Trade, and, andentered into force with the establishment of theentered into force with the establishment of theWTO on January 1, 1995.WTO on January 1, 1995.

Following the Uruguay Round negotiations, allFollowing the Uruguay Round negotiations, allagricultural products were brought under agricultural products were brought under multilateral trade rules by the WTO¶s Agreementmultilateral trade rules by the WTO¶s Agreementon Agriculture.on Agriculture.



Uruguay Round Uruguay Round 19861986 9494

The WTOs Agriculture Agreement was negotiated inThe WTOs Agriculture Agreement was negotiated inthe 1986the 1986 94 Uruguay Round and is a significant first 94 Uruguay Round and is a significant first step towards fairer competition and a less distortedstep towards fairer competition and a less distortedsector.sector.

WTO member governments agreed to improveWTO member governments agreed to improvemarket access and reduce trademarket access and reduce trade--distorting subsidiesdistorting subsidiesin agriculture. In general, these commitments werein agriculture. In general, these commitments werephased in over a six years from 1995 (10 years forphased in over a six years from 1995 (10 years for

developing countries).developing countries). TheThe Agriculture Committee Agriculture Committee oversees theoversees the

agreements implementation.agreements implementation.



Pillars of agreement on agriculturePillars of agreement on agriculture

Three Pillars Three Pillars

Domestic Support

AMS reduction Green Box

de minimis

MarketAccess

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 1. Domestic Support

The first pillar of the AoA is "domestic support". TheThe first pillar of the AoA is "domestic support". TheWTO Agreement on Agriculture negotiated inWTO Agreement on Agriculture negotiated inthethe Uruguay RoundUruguay Round (1986(1986--1994).1994).

All forms of domestic support are subject to rules.All forms of domestic support are subject to rules.Provisions of the Agreement regarding domesticsupport have two main objectives± first to identifyacceptable measures that support farmers and second,

to deny unacceptable, trade distorting support to thefarmers.

The WTO classifies domestic subsidies into threeThe WTO classifies domestic subsidies into three

categories known as the Amber, Blue and Greencategories known as the Amber, Blue and Green

Boxes.Boxes.



Contd..Contd..





Domestic Support Domestic Support

All domestic support is quantified through the

mechanism of total AggregateMeasurement 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 totalAMS 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 access2. Market access "Market access" is the second pillar of the AoA, and"Market access" is the second pillar of the AoA, and

refers to the reduction of refers to the reduction of tariff tariff (or non(or non--tariff) barriers totariff) barriers totrade by WTO member trade by WTO member--states.states.

All countries are obliged to eliminate all their nonAll countries are obliged to eliminate all their non--tariff tariff barriers like import ban, import quota or quantitative barriers like import ban, import quota or quantitativerestrictions on imports, etc. and convert these to tariffs.restrictions on imports, etc. and convert these to tariffs.This is called, in the WTO, ³tariffication.´This is called, in the WTO, ³tariffication.´

Least Developed CountriesLeast Developed Countries (LDCs) were exempted(LDCs) were exempted

from tariff reductions, but either had to convert nonfrom tariff reductions, but either had to convert non± ± tariff barriers to tariffstariff barriers to tariffs² ²a process calleda process called tarifficationtariffication or or "bind" their tariffs, creating a "ceiling" which could not"bind" their tariffs, creating a "ceiling" which could not be increased in future. be increased in future.



Market accessMarket access

The 1995 AoA required tariff reductions of:The 1995 AoA required tariff reductions of:

36% average reduction by36% average reduction by developed countriesdeveloped countries,,

with a minimum per tariff line reduction of 15% over with a minimum per tariff line reduction of 15% over

six years.six years.

24% average reduction by24% average reduction by developing countriesdeveloping countries withwith

a minimum per tariff line reduction of 10% over tena minimum per tariff line reduction of 10% over ten

years.years.



3. Export Subsidies3. Export Subsidies

""Export subsidiesExport subsidies" is the third pillar of the AoA ." is the third pillar of the AoA .

Export subsidies are special incentives provided byExport subsidies are special incentives provided by

governments to encourage increased foreign sales.governments to encourage increased foreign sales.

The 1995 AoA requiredThe 1995 AoA required developed countriesdeveloped countries toto

reduce export subsidies by at least 36% (by value) or reduce export subsidies by at least 36% (by value) or

by at least 21% (by volume) over the six years. In the by at least 21% (by volume) over the six years. In the

case of developing country Members, the requiredcase of developing country Members, the requiredcuts are 14% (by volume) and 24cuts are 14% (by volume) and 24 % (by value) over % (by value) over

10 years.10 years.



List of Export Subsidies in the AgreementList of Export Subsidies in the Agreement

on Agricultureon Agriculture

Article 9 sets out the sort of export subsidies whichArticle 9 sets out the sort of export subsidies whichWTO Members are obliged to reduce in accordanceWTO Members are obliged to reduce in accordancewith their Country Schedules:with their Country Schedules:

direct export subsidies;direct export subsidies; Government exports of nonGovernment exports of non--commercial stocks at acommercial stocks at a

price lower than comparable prices for such goods on price lower than comparable prices for such goods onthe domestic market;the domestic market;

Export payments financed by virtue of governmentExport payments financed by virtue of governmentaction, including payments financed by a levy on theaction, including payments financed by a levy on the product; product;



Contd..Contd..

Subsidies to reduce the cost of marketing exports,Subsidies to reduce the cost of marketing exports,

including cost of handling, upgrading and other including cost of handling, upgrading and other

processing costs and, costs of international transport processing costs and, costs of international transport

and freight;and freight; Internal transport and freight charges on terms moreInternal transport and freight charges on terms more

favorable than for domestic shipments, if provided or favorable than for domestic shipments, if provided or

mandated by government and,mandated by government and,

Subsidies on agricultural products contingent on their Subsidies on agricultural products contingent on their

incorporation in export products.incorporation in export products.



Articles of agreement on Articles of agreement on

agricultureagriculture Article 1 of the agreement contains definitions likeArticle 1 of the agreement contains definitions like

³³AGGR EGATE MEASUR E OF SUPPORTAGGR EGATE MEASUR E OF SUPPORT(AMS), Basic Agricultural Products, Equivalent(AMS), Basic Agricultural Products, Equivalent

Measure of Support,E

xport Subsidies,Measure of Support,E

xport Subsidies, MarketMarketAccess Concessions.Access Concessions.

Article 2 : Regulatory framework applies toArticle 2 : Regulatory framework applies toagricultural productsagricultural products specified in Annex 1 to thespecified in Annex 1 to theagreement.agreement.

Article 3 :Article 3 : Incorporation of Concessions andIncorporation of Concessions andCommitments. A Member shall not provide supportCommitments. A Member shall not provide supportin favour of domestic producers in excess of thein favour of domestic producers in excess of thecommitment levels specifiedcommitment levels specified



Contd..Contd..

Article 4 :Article 4 : Market Access,Market Access, tariffs are to be reducedtariffs are to be reduced by 36%, in case of developed countries and 24% in by 36%, in case of developed countries and 24% incase of developing countries. No reductions arecase of developing countries. No reductions are

expected from least developed countries.expected from least developed countries. Article 5 :Article 5 : Special Safeguard Provisions,Special Safeguard Provisions, enablesenables

members to take emergency measures like, levy of members to take emergency measures like, levy of additional duty.additional duty.

Article 6 :Article 6 : Domestic Support Commitments,Domestic Support Commitments, ininfavour of agricultural producers with the exception of favour of agricultural producers with the exception of domestic measures which are not subject to anydomestic measures which are not subject to anyreduction.reduction.



Contd..Contd..

Article 7 (Article 7 (interaliainteralia) looks at the conformity of article) looks at the conformity of article6, with annex 2 of the agreement.6, with annex 2 of the agreement.

Article 8 and 9 deals with export competitionArticle 8 and 9 deals with export competition

commitments and export subsidy commitmentscommitments and export subsidy commitmentsrespectively.respectively.

Article 9 details export subsidy programmes like,Article 9 details export subsidy programmes like,direct subsidies, sale for export by govt. of nondirect subsidies, sale for export by govt. of non--

commercial stocks of agri. products, payments of commercial stocks of agri. products, payments of subsidies to reduce the cost of marketing the exports,subsidies to reduce the cost of marketing the exports,favorable internal transport charges on exportfavorable internal transport charges on exportshipmentsshipments



ContdContd

Article 10 deals with the circumvention (avoid) of Article 10 deals with the circumvention (avoid) of export subsidy commitments.export subsidy commitments.

Article 11Article 11 Incorporated ProductsIncorporated Products , In no case may, In no case may

the per the per--unit subsidy paid on an incorporatedunit subsidy paid on an incorporatedagricultural primary product exceed the per agricultural primary product exceed the per--unitunitexport subsidy that would be payable on exports of export subsidy that would be payable on exports of the primary product as such.the primary product as such.

Article 12Article 12 Disciplines on Export Prohibitions andDisciplines on Export Prohibitions andR estrictions,R estrictions, export prohibition on food stuffs can beexport prohibition on food stuffs can beapplied temporarily, to prevent critical shortages of applied temporarily, to prevent critical shortages of food stuffs essential to the exporting countries.food stuffs essential to the exporting countries.



Contd..Contd..

Article 13 (Article 13 (interaliainteralia)) Due R estraint,Due R estraint, states thatstates that

Domestic support measure of annex2 and article 6 of Domestic support measure of annex2 and article 6 of

the agreement, shall; during the implementation of the agreement, shall; during the implementation of

the period of the agreement be exempt from thethe period of the agreement be exempt from the provision of GATT 1994. provision of GATT 1994.

Article 14 enjoins members to give effect to theArticle 14 enjoins members to give effect to the

agreement on sanitary and phytosanitary measures.agreement on sanitary and phytosanitary measures.

Article 15 provides for special and differentialArticle 15 provides for special and differential

treatment to the developing countries.treatment to the developing countries.

Article 16 requires developed countries to takeArticle 16 requires developed countries to take

actions to prevent possibleactions to prevent possible ± ±ve effect on LCDs.ve effect on LCDs.



Contd..Contd..

Article 17 provides for the establishment of Article 17 provides for the establishment of committee on agriculture.committee on agriculture.

Article 18 deals with the review of theArticle 18 deals with the review of the

implementation of the commitments.implementation of the commitments. Article 19 deals with the consultation and disputeArticle 19 deals with the consultation and dispute

settlement under articles 12 and 13 of the GATTsettlement under articles 12 and 13 of the GATT1994.1994.

Article 20 calls for continuation of the reform processArticle 20 calls for continuation of the reform processin the provisions of GATT 1994 and other in the provisions of GATT 1994 and other multilateral agreements in annex 1. WTO shall applymultilateral agreements in annex 1. WTO shall applysubject to the provisions of this agreement.subject to the provisions of this agreement.



Other ProvisionsOther Provisions

Export restrictionsExport restrictions ::

The Agreement on Agriculture requires MembersThe Agreement on Agriculture requires Members

which consider to institute new export restrictions onwhich consider to institute new export restrictions onfoodstuffs to give due consideration to the effects of foodstuffs to give due consideration to the effects of such restrictions on importing Members' foodsuch restrictions on importing Members' foodsecurity. This requirementsecurity. This requirement -- increased reliability of increased reliability of access to world market supplyaccess to world market supply -- is a corollary for theis a corollary for the

opening of markets which is required by the marketopening of markets which is required by the marketaccess provisions of the Agreement and the relatedaccess provisions of the Agreement and the relatedspecific commitments undertaken by Members.specific commitments undertaken by Members.



Other ProvisionsOther Provisions

Peace ClausePeace Clause ::

The Agreement in Agriculture contains a "dueThe Agreement in Agriculture contains a "due

restraint" or "Peace Clause" which regulates therestraint" or "Peace Clause" which regulates theapplication of other WTO agreements to subsidies inapplication of other WTO agreements to subsidies inrespect of agricultural products (Article 13).respect of agricultural products (Article 13).

This provision is valid during the implementationThis provision is valid during the implementation

period specified in the Agreement on Agriculture period specified in the Agreement on Agriculture(³for the purposes of Article 13 the nine(³for the purposes of Article 13 the nine--year periodyear periodcommencing in 1995´commencing in 1995´ -- until 1 January 2004).until 1 January 2004).



Other ProvisionsOther Provisions R esolving DisputesR esolving Disputes ::

In the case of disputes involving provisions of theIn the case of disputes involving provisions of theAgreement on Agriculture, the general WTO disputeAgreement on Agriculture, the general WTO dispute

settlement procedures apply. The provisions of settlement procedures apply. The provisions of Articles XXII and XXIII of the GATT 1994, asArticles XXII and XXIII of the GATT 1994, aselaborated and applied by the Dispute Settlementelaborated and applied by the Dispute SettlementUnderstanding, shall apply to consultations and theUnderstanding, shall apply to consultations and thesettlement of disputes under this Agreement. Thesettlement of disputes under this Agreement. The

Agreement on Agriculture also provides for certainAgreement on Agriculture also provides for certainmechanisms that can be used by WTO Members tomechanisms that can be used by WTO Members toaddress their concerns without recourse to the disputeaddress their concerns without recourse to the disputesettlement procedures.settlement procedures.



The DOHA RoundThe DOHA Round

The Doha Round is the latest round of trade negotiationsThe Doha Round is the latest round of trade negotiationsamong the WTO membership. Its aim is to achieve major among the WTO membership. Its aim is to achieve major

reform of the international trading system through thereform of the international trading system through the

introduction of lower trade barriers and revised trade rules.introduction of lower trade barriers and revised trade rules.

The work programme covers about 20 areas of trade. And callsThe work programme covers about 20 areas of trade. And callsfor continued negotiations aimed at ,for continued negotiations aimed at ,

1.1. Substantial improvements in market accessSubstantial improvements in market access

2.2. Reduction of all forms of export subsidies ( with the view of Reduction of all forms of export subsidies ( with the view of

phasing out ). phasing out ).

3.3. Substantial reduction in tradeSubstantial reduction in trade--distorting domestic support.distorting domestic support.

4.4. Special and Differential treatment for developing countries.Special and Differential treatment for developing countries.



Whats Next ?Whats Next ?Inside look after Doha DeclarationInside look after Doha Declaration 14 nov 2001 14 nov 2001

Implementation related issues and concerns over.Implementation related issues and concerns over.

I.I. Food aidFood aid

II.II. Technical and financial assistance to improveTechnical and financial assistance to improve

agricultural productivity.agricultural productivity.III.III. Financing normal levels of commercial imports of Financing normal levels of commercial imports of

basic foodstuffs. basic foodstuffs.

Also includes the members to exercise restraints inAlso includes the members to exercise restraints in

challenging measures notified by developingchallenging measures notified by developingcountries under thecountries under the Green Box Green Box to promote Ruralto promote Rural

Development and adequately address food securityDevelopment and adequately address food security

concerns.concerns.



FICCIs comment FICCIs comment

Lack in clear direction and specific commitment to dealLack in clear direction and specific commitment to dealwith the distortion in world agricultural market.with the distortion in world agricultural market.

Substantial reductions in trade related domesticSubstantial reductions in trade related domestic

products only, while production related domestic products only, while production related domestic

support provided by developed nations continue tosupport provided by developed nations continue to

distort agricultural trade.distort agricultural trade.

Draft did nothing about the harassment of IndustrialDraft did nothing about the harassment of Industrial

Nation towards the provision of subsidies under the Nation towards the provision of subsidies under theWTO¶s agreement on agri.WTO¶s agreement on agri.



Contd..Contd..

As a result Indian Govt. continued to impostAs a result Indian Govt. continued to impost

high tarrifs to safeguard Indian Farmers.high tarrifs to safeguard Indian Farmers.

1.1. 100% on primary agricultural products .100% on primary agricultural products .2.2. 150% on processed products150% on processed products

3.3. 300% on edible oils300% on edible oils



Indias StandIndias Stand

US filed complaints against India for imposingUS filed complaints against India for imposingQuantitative restrictions on Agricultural, Textile andQuantitative restrictions on Agricultural, Textile andIndustrial products.Industrial products.

IMF¶s support to Indian BOP ( 1991 forex crisis) ledIMF¶s support to Indian BOP ( 1991 forex crisis) ledto the negotiation of most of the QRs to be lifted byto the negotiation of most of the QRs to be lifted byApril 2000. Resulting of free imports of textile andApril 2000. Resulting of free imports of textile andagricultural commodities.agricultural commodities.

Indian Agricultural sector opened to compete with

Indian Agricultural sector opened to compete withcheap imports.cheap imports.

Contd«Contd«



Contd..Contd..

Govt. extend support to farmers in form of inputGovt. extend support to farmers in form of input

subsidy and support prices.subsidy and support prices.

Subsidy to farmers directly transferred to farmers asSubsidy to farmers directly transferred to farmers as

direct income support, which is non discriminatorydirect income support, which is non discriminatorytrade.trade.

Per capita income of less than $1000, which meansPer capita income of less than $1000, which means

PDS (public distribution system) can continue.PDS (public distribution system) can continue.

Documents

WTO agricuture