Agreement On Agriculture

Presented by:
Tushar Singhal
MBA(IB)
Roll No. 28
Agreement on Agriculture(AOA)
Formation of WTO in Jan Many trade related
1,1995 as a successor to agreements were signed
GATT by the member countries

To reform and dismantle First time Agreement on

trade barriers Agriculture
Why agricultural sector?
• In Developing Countries
Play a crucial role in
▫ Agriculture reducing poverty
▫ Rural Development
• These sectors
▫ Contribute a large share of GDP
▫ primary Source of Employment
Developed vs. Developing in
Agricultural sector
Uruguay Round
• Following the Uruguay round negotiations, all the
agricultural products were brought under AOA
• The Agreement is made up on Three pillars
▫ Market Access
▫ Export Competition
▫ Domestic Support
• Except LDC, all the WTO members were required to
make commitments in all these areas in order to
liberalise agricultural trade.
• Developing countries were given a limited element of
special
• and differential treatment (S&DT).
First Pillar-Market Access
• Developed and developing countries to convert all non-
tariff barriers into simple tariffs (a process known as
tariffication).
• All tariffs to be bound (i.e. cannot be increased above a
certain limit).
• Developed countries to reduce import tariffs by 36%
(across the board) over a six year period with a
minimum 15% tariff reduction for any one product.
• Developing countries to reduce import tariffs by 24%
(across the board) over a ten year period with a
minimum 10% tariff reduction for any one product.
Second Pillar-Export Competition
• For developed countries, the value and volume of export
subsidies to be reduced by 36% and 24% respectively
from the base period 1986- 1990 over a six year period.

• For developing countries, the value and volume of export

subsidies to be reduced by 24% and 10% respectively
from the base period 1986- 1990 over a ten year period.
Third Pillar-Domestic Support
• All forms of domestic support are subject to rules. The
WTO classifies domestic subsidies into three categories
known as the Amber, Blue and Green Boxes . Only the
Amber Box is subject to reduction commitments as
follows:
▫ For developed countries, a 20% reduction in Total AMS (Amber
Box) over six years commencing 1995 from a base period 1986-
1988.
▫ For developing countries, a 13% reduction in Total AMS (Amber
Box) over ten years commencing 1995 from a base period 1986-
1988.
Domestic Support Boxes
• In WTO terminology Boxes->Subsidies
• Green means permitted
• Amber means slow(be reduced)
• Red means forbidden
• NO RED BOX FOR AOA
• But things exceeding reduction commitment levels in
Amber box are prohibited
• One more box Blue means subsidies that are tied to
programs that limit production
Amber box
• All domestic subsidies that are considered to distort
production and trade. E.g. Market price support

• Subsidies expressed in terms of “Total Aggregate

Measurement of Support”(TAMS) – all supports in one
single figure

• Subsidies are subject to WTO reduction commitments

Blue Box
• This is the Amber box with conditions

• Conditions designed to distort production

• Deemed by WTO rules to be ‘partially decoupled’ from

production and are not subject to WTO reduction
commitments
Green Box
• Subsidies that are deemed not to distort trade, or atleast
cause minimum distortion and are not subject to WTO
reduction commitments
• They tend to be programmes that are not targeted at
particular products, and include direct income supports
for farmers that are not related to current production
levels or prices.
• Mostly they are government funded
Special Safeguard Mechanism
• Safeguards are contingency restrictions on imports taken
temporarily to deal with special circumstances such as a
sudden surge in imports

• higher safeguards duties can be triggered automatically

when import volumes rise above a certain level, or if
prices fall below a certain level; and

• it is not necessary to demonstrate that serious injury is

being caused to the domestic industry.
Implications of AOA on
India
Market access
•Developing countries like India who had not converted their
quantitative restrictions into tariffs, were allowed to have ceiling
bindings, which were not subjected to reduction commitments

• India had bound it’s tariff as 100% for primary products, 150% for
processed products and 300% for edible oils

• India has not taken any commitment to provide minimum market

access opportunities which other countries who had tariffed their QRs
had to undertake 5% of domestic consumption at the end of
implementation period

• Though India is not entitled to use the Special Safeguard Mechanism of

the agreement, it can safeguard action under WTO Agreement of
safeguards, if there is a surge in imports causing serious injuries ( or
threats) to the domestic producers
Contd….
Domestic Support
• For agricultural sector, domestic support upto 10% of total
value of agricultural produce is allowed in developing
countries, and 5% in developed countries

• In India, the product specific support is negative, while

non product specific support( Subsidies on power,
irrigation, fertilisers, etc.) are well below the permissible
level of 10% of value of agricultural output

• So, India under no obligation to reduce domestic support

currently extended to the agricultural sector
Contd…
Export subsidies
• Export subsidies of the kind listed in the AOA, which
attract reduction commitments are not extended in India

• Developing countries free to provide certain

subsidies – subsidising of export marketing costs,
internal and international transports and freight
charges, etc.

• India making use of these subsidies in certain schemes of

APEDA (Agricultural and Processed food products
Export Development Authority)
How India will be impacted by WTO
trade facilitation agreement
• Due to India’s outdated farming techniques, there are
worries that Indian farmers will struggle to compete
once trade barriers are removed
• As a developing country, needs to invest in
modernized
equipment.
• It is not mature enough to compete in global market,
with practices from US and EU it will take a huge hit

• A classic case is Indian farmers having to buy high-cost

genetically engineered seeds and chemicals from
multinational corporations like Monsanto, which has
been eyeing India’s vast farming sector for its products.
CRITISICM
• Civil society – for reducing tariff protection for small farmers,
a key source of income for developing countries
• NGOs – for categorising subsidies. . As efficient agricultural
exporters press WTO members to reduce their trade-
distorting ‘amber box’ and ‘blue box’ support, developed
countries’ green box spending has increased – a trend widely
expected to continue.
• A book from the International Centre for Trade and
Sustainable Development shows how green box subsidies do
in fact distort trade, affect developing country farmers and
can also harm the environment.
• Third World Network states that; "This has allowed the rich
countries to maintain or raise their very high subsidies by
switching from one kind of subsidy to another
The Bali decision
• Based on Stockholding :- developing countries fear
they could breach the limits they have agreed on trade-
distorting domestic support
• Used “Green Box” supports, which was allowed without any
limit because they do not distort trade
• They started altering the trade-distorting support using a
different method of taking inflation into account, or a “peace
clause” shielding any breaches of the agreed limits from
legal challenge
• The “peace clause” is an interim solution. Members agreed in
Bali to find a permanent solution by 2017 (the 11th
Ministerial Conference)
After the bali
• The first proposal for a permanent solution came from the G–33
on 16 July 2014, -- to move these programmes into the Green
Box
• In the General Council on 25 July 2014, India, a G–33 member,
complained of slow progress on the permanent solution
• They spelt out that the permanent solution should be
found through meetings of the agriculture negotiations,
but in
“dedicated sessions” that would be accelerated and separate
from the rest of the Doha Round agriculture talks. And, they
said, negotiations would also “continue to progress” on all
three pillars of the agriculture negotiations
• After US deal, India to push for Doha
agenda at WTO in 2016
• India and the US -- key to get the multilateral
trading system back on track
• India also wants to bring back the long-stalled
Doha round on the table
Issues for Negotiations
• India argued for additional flexibility by appropriate
adjustments to the provisions of the AoA, in order to enable us
to pursue our legitimate non-trade concerns
• India believes that a focused discussion on the subject will
contribute to increased awareness to the non-trade concerns such
as food security and rural employment
Impact on increasing agri exports from
India’s a result of WTO AoA
• More to gain from the trade reforms
• Reduction in export subsidy and domestic support to the
agricultural sector by the developed countries may lead to
a decrease in production in those countries.
• Scope for expansion of exports from developing
countries
 Doha Development Agenda (DDA).
• Early 2000 Negotiations on agriculture began under
Article 20 of the WTO Agriculture Agreement

• November 2001 - Fourth Ministerial Conference in

Doha, Qatar WTO Member governments agreed to launch
new negotiations and other issues, in particular the
implementation of the present agreements.
• 121 governments submitted a large number of negotiating
proposals with respect to agriculture
• The declaration confirmed and elaborated the objectives, and
set a timetable. Agriculture became part of the single
undertaking in which virtually all the linked negotiations
were to end by 1 January 2005
• long-term objective in the WTO Agreement: to establish a fair
and market-oriented trading system through a programme of
fundamental reform.
• Continued..
• The programme included strengthened rules, and specific
commitments on government support and protection for
agriculture.

• Purpose: to correct and prevent restrictions and

distortions in world agricultural markets.

• The Implementation decision included:

• Rural development and food security for developing
countries
• Least-developed and net food-importing developing
countries
• Export credits, export credit guarantees or insurance
programmes
• Tariff rate quotas
 • The member Government aimed at:
1. Market access: substantial reductions
2.Exports subsidies: reductions in all forms of export
subsidies .
(1 August 2004 “framework” members agreed to
eliminate
export subsidies by a date to be negotiated)
3. Domestic support: substantial reductions for
supports
that
distort trade
(1 August 2004 “framework” -developed countries
pledged
to
slash trade-distorting domestic subsidies by 20%
from
the first
• September 2003 - Fifth Ministerial Conference in
Cancún, Mexico, was intended as a stock-taking meeting but
the meeting was soured by discord on agricultural issues,
including cotton.

• 1 August 2004 – Some real progress was evident when

members agreed on a framework with a set of decisions in the
General Council (sometimes called the July 2004 package).

• January 2005 Original deadline was missed.

• end of 2006 - Members unofficially aimed to finish the

negotiations, but again unsuccessfully.
• December 2005- Further progress in narrowing
members’ differences was made at the Hong Kong
Ministerial Conference

• July 2008- ministers came to negotiate “modalities”

in Geneva where Director-General Pascal Lamy said
they had agreed tentatively on a number of issues but
were stuck on the “special safeguard mechanism” for
developing countries.

• new agriculture negotiations chairperson, Ambassador

David Walker of New Zealand, has been holding talks on
unsettled issues arising from the December 2008 draft
Current status
• 28 November 2016 Members seek more
information on policies affecting latest cotton
market trends
• 17 December 2016 During an informal
meeting WTO members discuss how to advance
services negotiations for post-Bali work
programme which will be determined based on
the progress in agriculture and non agricultural
market access negotiation.