The Agreement on Agriculture, entered into by WTO Member Countries in 1995, would be coming up for review at the end of this year. The full text of the Agreement is available on website address www.wto.org/ wto/legal/finalact.htm. Article 20 of the Agreement on Agriculture (AoA) points the way to further negotiations on agriculture. As a run up to the same, the WTO Committee on Agriculture has instituted a process of analysis and information exchange wherein informal papers are presented by various member countries highlighting implementation problems as well as areas of the agreement which need amendment, modification and further clarity. While Article 20 mandates further negotiations, there is neither a fixed agenda nor a timetable for the same, which could probably mean that this process would simply be the beginning which could last for some years. These negotiations may cover several issues depending upon the position of different groups of countries. The Agreement on Agriculture contains provisions in following three broad areas of agriculture and trade policy: a) Market access envisages tariffication of all non-tariff barriers (that is removal of quantitative restrictions and export and import licensing). b) Domestic support measures or subsidies are disciplined through reduction in the total Aggregate Measurement of Support (AMS) and area of export subsidies is also a trade concern for India as these measures affect the export of developing countries, rendering them uncompetitive when compared to subsidised exports of the developed countries. Further, they also result in distorting the world prices of agricultural commodities and thereby adversely affecting those developing countries which are net importers of foodgrains. The Uruguay Round and the subsequent negotiations in services had not yielded significant returns to the developing countries, particularly in regard to market access in terms of movement of natural persons and hence, there was need to remove the existing imbalances in the General Agreement on Trade in Services (GATS) taking into account the interests of developing countries.

1. WTO’s Agreement on Agriculture
Issues and Concerns for India
Yogesh Bandhu
Workshop on WTO
U.P. Academy of Administration & Management, Lucknow
August 28th , 2012

2. AoA : From GATT to WTO
The original 23 GATT countries were among over 50
which agreed a draft Charter for an International Trade
Organization (ITO). The Charter was intended to provide
world trade disciplines and also contained rules relating
to employment, commodity agreements, restrictive
business practices, international investment and
services.
Although, in its 47 years, the basic legal text of the
GATT remained much as it was in 1948, there were
additions in the form of "plurilateral" - voluntary
membership - agreements and continual efforts to
reduce tariffs.
The GATT was established on a provisional basis in the
wake of other new multilateral institutions dedicated to
international economic cooperation - notably the "Bretton
Woods" institutions now known as the World Bank and
the International Monetary Fund.

3. The Tokyo Round –
A First Try at Reforming the Trading System
 Subsidies and countervailing measures
 Technical barriers to trade
 Import licensing procedures
 Customs valuation
 Government procurement
 Anti-dumping
 Bovine Meat Arrangement
 International Dairy Arrangement
 Trade in Civil Aircraft
Conducted between 1973 and 1979 with
102 participating countries

4. 4
The WTO and Agreement on Agriculture
• GATT - Inefficiency of Policies, Trade Tensions and
Disputes
• Punta del Este Declaration (1986)
• Uruguay Round Negotiations (7.5 years)
• Agreement on Agriculture
Agriculture in GATT… Exemptions on Import Restrictions,
Domestic Support, Export Subsidies
Market Access Difficult
WTO covers areas well beyond GATT
Textile and
Agriculture
Services
Intellectual
Property Rights
Investment

5. Basic Principles of WTO
 Protection to domestic industry through
tariffs.
 Binding of tariffs.
 Most Favoured Nation (MFN) Treatment.
 National Treatment
Three Pillars of the AoA
Market Access Domestic Support
Export
Competition
S&D, Peace Clause, Commitment to Reform, NFIDC Decision

6. Domestic Support:
Three Categories of Domestic Support
“Green Box” “Blue Box” “Amber Box”
Product Specific
Non-Product Specific
De Minimis Provisions
(AMS)
Aggregate
Measurement
of Support

7. Green Box
Art. 6.2
Blue Box
Amber Box
Categories of Domestic Support
Subject
to
Reduction
Commitments
No/Minimal
Effects on Trade
or Production
Development
Programmes All other support
Production
Limiting
Programmes
De minimis

8. 8
Green Box
No, or at most minimal, trade-distorting effects or effects on
production
Assistance Provided through publicly funded
government programme
Not involving transfers from consumers
Not resulting in price support to producers
measures freely used as long as they meet Annex 2 criteria
can be introduced new, and/or modify old, programmes
continuous obligation to ensure that all programmes are, and
remain, Green

9. 9
Green Box – Scope
General services
research
pest and disease control
training
extension/advisory services
inspection
marketing and promotion
infrastructural services
Public stockholding for food security
Domestic food aid
Direct payments
decoupled income
support
income insurance and
income safety-net
relief from natural
disasters
structural
adjustment
assistance
producer
retirement
resource
retirement
investment aids
environmental
programmes
Regional
assistance
programme
s

10. 10
Policy-Specific “Decoupling”
Amount of payments not linked to:
In any year after the base period
Type of
production
Volume of
production
Domestic
prices
International
prices
Factors of
production

11. 11
Blue Box
Exempt from Reduction of Direct Payments Under
Production Limiting Programmes if:
based on fixed area and yields; or
made on 85% of base level of production;
or
livestock payments are made on a fixed
number of head

12. 12
Article 6.2
(Development Programmes Exempt from Reduction)
Examples of notified Article 6.2 programmes e.g:
• Bangladesh – 2% interest rebate for repayment of loan on schedule
• Thailand – Farming input assistance programme
• Brazil – Production credit; Investment credit; Debt rescheduling
investment subsidies generally
available to agriculture
input subsidies generally available to
low-income or resource poor producers
support to encourage diversification
from growing illicit narcotic crops

13. 13
Amber Box – Current Total AMS
Non-product-specific
support
For example
 Market price support
 Non-exempt direct payments
(e.g. loan deficiency payments,
grants, compensatory payments)
 Other non-exempt measures

All product-specific EMS For
example
 Water subsidies
 Fertilizer subsidies
 Crop insurance
 Subsidized credits
Product-specific
support
+
Current Total AMS
Any form of domestic support not included in either the Green or
Blue Boxes or under Article 6.2
De minimis

14. Export Subsidy:
 Prohibited
 Otherwise subject to reduction commitments
 Value of Subsidy
 By 36% over 6 years for developed countries
 By 24% over 10 years for developing countries
 No reduction for least developed countries
 Quantity of Export
 By 21% over 6 years for developed countries
 by 14% over 10 years for developing countries
 No reduction for least developed countries

15. 15
Export Subsidies
Article 1(e): Subsidies contingent upon export performance,
including the export subsidies listed in Article 9
Legal Framework
 General prohibition under Article 3.3 of the AoA, except:
• If listed in a Member’s Schedule – subject to reduction
commitments (volume and budgetary outlays)
• Roll-over provisions (now expired)
• S&D: Article 9.4 - subsidies for marketing and internal
transport (during the implementation period – now expired)
 Anti-circumvention provisions

16. 16
Subsidy Coverage - Article 9.1
 Direct subsidies contingent on export performance
 Sale or disposal for export by governments or their
agencies of non-commercial stocks at prices below
domestic market price
 Payments on exports financed by government action
(including producer financed subsidies)
 Subsidies to reduce cost of marketing, including handling,
upgrading, international transport and freight
 Favourable internal transport and freight charges on export
shipments
 Subsidies on agricultural products contingent on their
incorporation in exported products

17. 17
Subsidy Circumvention – Article 10
 Other forms of export subsidies
 Export credits, insurance and guarantees
 develop internationally agreed disciplines
 but ... negotiations with no result - OECD
Arrangement on Officially Supported Export
Credits does not cover agriculture
 Food aid
 specific criteria, Food Aid Convention, FAO
 but ... is it always genuine aid or dumping?

18. Market Access:
 Reduction of Tariffs
 By a simple average of 36% over 6 years for developed countries
 By a simple average of 24% over 10 years for developing countries
 Ceiling bindings & reduction commitments)
 Minimum Access
 Not less than 3%, rising to 5% by 2004 for developing countries
 Not less than 3%, rising to % by 2004 for developing countries
Quantitative Restrictions
 Variable Levies
 Minimum Import Prices
 Discretionary Import Licensing
 NTMs Maintained Through STEs
 Voluntary Export Restraints
 Similar Border Measures
Tariffication of Non Tariff Barriers (NTB’s)
Prohibition not to maintain, resort or revert to:
BUT Annex 5 – Special Treatment

19. 19
TIERED FORMULA
Tariff escalation (list) Tropical products (list)
Minimum average cut (Developed)
SVE flexibility
Maximum average cut (Developing)
LDC flex
SENSITIVE
PRODUCTS
SPECIAL
PRODUCTS
(Developing)
RAMs SP flexibility
SVEs SP flexibility
Commodities
MARKET ACCESS
SSG
SSM (Developing)
LDC products
VRAMs and small
low-income RAMs flexibility
RAM flexibility
Preference Erosion

20. 20
Uruguay Round Reduction Commitments
Developed Developing
Time period 6 years (1995-2000) 10 years (1995-2004)
Market access
Tariff reduction 36% average, 15%
minimum
24% average, 10% minimum
Domestic support
Total AMS reduction
De minimis
S&D exemption
20%
5%
13.3%
10%
Article 6.2 (investment, input
and diversification subsidies)
Export competition
Export subsidy reduction
S&D exemption
36% value, 21% volume 24% value, 14% volume
Article 9.4 (transport and
marketing subsidies)
No reduction commitments for LDCs (least-developed countries)

21. Notification Obligations
 Members bound to notify changes in Market
Access, Export Subsidies and Domestic
Support
 India notifies
 AMS
 Product Specific for 19 crops
 Non product specific: Fertilizer, Irrigation Electricity
and seeds
 Green Box
 Special & differential , provisions for low income/
resource poor farmers

22. India’s Commitments
 Market Access
No tariffication; ceiling bindings of
 100% for primary commodities
 150% for processed agricultural products
 300% for edible oils
 Domestic Support
Price Support for 19 products
AMS is negative by a large margin and below De Minimis
 Export subsidy
India does not have these.
No commitments

23. 23
Doha Negotiating Mandate
 Comprehensive negotiations aimed at:
• substantial improvements in market
access
• reductions of, with a view to phasing
out, all forms of export subsidies
• substantial reductions in trade-distorting
domestic support
 S&D - integral to negotiations and outcome
 Non-trade concerns to be taken into
account

24. 24
TIERED FORMULA
Developed countries
Threshold/Tier/Band
(tariffs)
Cuts
0-20% 50%
20-50% 57%
50-75% 64%
>75% 70%
The Tiered Formula
Overall Minimum Average cut of 54%

25. 25
Developing Countries
SVEs RAMs*
Threshold/Tier/B
and
(tariffs)
Cuts
(2/3rds Developed
cuts)
Cuts Cuts
0-30% 33.3% 23.3% 25.3%*
30-80% 38% 28% 30%
80-130% 42.7% 32.7% 34.7%
>130% 46.9% 46.9% 38.9%
THE TIERED FORMULA
Overall maximum average cut of 36%
(Venezuela 30%, S&D for Bolivia & Suriname)
*No cuts if tariff less than or equal to 10%
Very recent RAMs and small low-income RAMs with economies in transition exempt from
reduction commitments
Longer implementation period, 10 years

26. 26
Special Agricultural Safeguard
 Developed countries – reduce coverage to 1% of
schedule tariff lines on 1st day of implementation
 Remaining SSG coverage eliminated after 7
years
 Developing countries – reduce coverage to 2.5%
on 1st day of implementation
 SVEs – reduce coverage to 5% of tariff lines over
12 years

27. 27
Other Market Access Elements
 Tariff escalation (the problem of higher tariffs on processed products
than on raw materials, which hinders processing for export in the
country producing the raw materials).
 Commodities – inter alia, if tariff escalation not eliminated,
Members to engage with commodity-dependent producers to
find satisfactory solution
 Tariff simplification- conversion of complex tariffs to their ad-
valorem equivalents
 Tariff quotas
• reductions in bound in-quota tariff rates
• tariff quota administration)
 LDCs – inter alia, duty- and quota-free access for at least 97
percent of products at a tariff line level
 Cotton market access - duty- and quota-free for cotton exports
from LDCs

28. 28
Domestic Support
Main issue – size of reductions
Green Box
Product-specific
limits Cotton
de minimis
Overall trade-distorting
domestic support
Amber
Box/AMS
10% VoP
(Avg 95-00)
Blue Box
S&D

29. 29
Reductions in OTDS
 Tiered reduction formula – higher cuts for higher
levels of OTDS
 Developed Countries with high relative levels of
OTDS in the second tier (≥ 40% of Value of
Production) to undertake additional 5% effort
(Japan)
Minimum overall commitment
Tier Threshold (US$ billion) Cuts
1 > 60 (EC) 80%
2 10-60 (US and Japan) 70%
3 < 10 (all other DDC) 55%

30. 30
Reductions in OTDS
Special & Differential Treatment
 Developing Countries reduction
2/3rds of Developed Countries cuts in
the third tier (37%)
BUT
 Developing Countries exempt from OTDS
reductions if:
don’t have Amber box commitments;
NFIDCs ;
very recent RAMs and small low-income
RAMs with economies in transition
very recently acceded Members

31. Product-Specific AMS Limits
Current situation:
Total AMS
New product-specific
AMS limits
sugar
beef
dairy
rice
wheat
dairy
beef
rice
wheat
sugar
limit
Beef limit
Rice limit

32. 32
De minimis
Developed Countries
 Reduce by at least 50% but more if necessary to meet
OTDS
Special and Differential Treatment
 Reduce by at least 2/3rds of Developed Countries but more
if necessary to meet OTDS commitment
 RAMs with de minimis of 5 percent reduce by at least 1/3rd
Developed Countries reduction
 Longer implementation period
(i) Developing with no Final Bound Total
AMS;
(ii) Developing with AMS but which allocate
almost all that support to subsistence and
resource poor producers;
(iii) NFIDCs as list in G/AG/5/Rev.8;
(iv) Very recently acceded Members;
(v) Small low-income RAMs with economies
in transition
Exempt from
reductions

33. 33
Blue Box
 Additional criteria – expansion of policy coverage to
include direct payments that do not require production
 Overall cap on Blue Box – 2.5% of average total value
of agricultural production, 1995-2000 (i.e. reduction from
5% vop to 2.5%) but if BB more than 40% of trade-
distorting support, reduce by level of AMS cut
 Product-specific limits
 Special and Differential Treatment
 Blue box cap at 5% of the average total value of
agricultural production, either over the period 1995-
2000 or 1995-2004
 Flexibilities with respect to determining the product-
specific limits

34. 34
Final Bound
Total AMS
10% value of
Ag. production
Higher of: avg.
Blue Box payments
OR
5% val. Ag. prod
Base Overall
OTDS
Lower Blue Box Limit
Reduced AMS
Reduced de minimis
Tiered
reductions
Tiered
reductions
Final Overall
OTDS
Reductions in Overall Trade-Distorting
Domestic Support
+
+
S&D for Developing
Countries

35. 35
Green Box – Proposals
Possible amendments to Annex 2, including:
 expand coverage of para.2 to specifically cover the special
needs of developing country Members
 Additional flexibility when accounting for the acquisition of
stocks for foodstuffs for food security purposes under para
3
 tighten provisions related to base period update (paras. 6,
11 & 13)
 fine-tune eligibility criteria in para 8, base periods and an
allowance for payments in the event of destruction of
animals or crops to control/prevent pest and diseases
 exempt developing country Members from the condition
that disadvantaged regions must constitute a clearly
designated contiguous geographical area with a definable
economic and administrative identity

36. 36
Export Competition
Parallel elimination of all forms of export subsidies by 2013
Food Aid
Main issues – definition of safe
box, monetisation
Exporting STEs
Main issue – monopoly powers
Export credits
Main issue -
self-financing
Export subsidies
Main issue – phasing
Special and differential treatment

37. 37
Export Subsidy Elimination
Developed Country
Members
Developing Country Members
Elimination End of 2013 End of 2016
(no reductions for LDCs)
Budgetary
Outlays
50% by the end of
2010 and remaining
by end 2013
Equal annual instalments
Quantity
levels
Standstill at actual
average 2003-05
levels – not to be
used to new markets
Equal annual instalments
Article 9.4 NA 2021
(5 years after the end-date for
elimination of export subsidies)

38. 38
Export Credits – Key Elements
 Forms and providers subject to disciplines
 Maximum repayment term: 180 days
 Must be self-financing:
 When premium rates charged over a previous 4 year
(6yrs for Developing Countries ) rolling period are
adequate to cover the operating costs and losses of the
programme during the same period
 Still subject to provisions of other Agreements, including
the Agreement on Subsidies and Countervailing Measures
(ASCM)
 If an export subsidies within the meaning of Item (j) of
Annex I of the ASCM, also deemed not to be self-financing
 Repayment period between 360 & 540 days for LDCs and
NFIDCs. Additional time in exceptional circumstances

39. 39
Agricultural Exporting State Trading
Enterprises (STEs)
 Provisions applicable to any exporting STEs
meeting the definition set out in the Understanding
on the Interpretation of Article XVII
 Elimination of:
 Export subsidies
 Government financing of STEs
 Government underwriting of losses
 Monopoly powers – except if have small share of
trade, so-called de minimis
 S&D – provisions for Deveoping Countries,
including SVEs and LDCs to maintain or use
monopoly powers

40. 40
What is at Stake?
To preserve flexibility in domestic support policies to ensure food and
livelihood security.
To create opportunities for a meaningful expansion of agricultural exports.
 Tariff reductions – continued reform process with a high level of
ambition
 Improved possibility for developing countries to increase trade with
developed countries but also other developing countries
 Flexibility for developing countries to protect their sensitive sectors
 Reduction of trade-distorting domestic support and elimination of
export subsidies for improved competition, both on domestic and
international markets
 No new concessions for LDCs but duty- and quota-free access for
97 percent of tariff line
India’s Objectives

41. As a S&D measure, developing countries to be allowed to
maintain appropriate levels of tariffs
Developing countries to retain flexibility for public stock holding
and public distribution of food grains
Use of special safeguard in the event of a surge in imports or a
decline in prices
Measures for poverty alleviation, rural development and
employment to be exempt from AMS.
Primary agricultural commodities like jute, rubber, coir and
primary forest produce which provide employment and livelihood to
many to be covered by AOA.
Exemption to developing countries from any obligations to
provide minimum market access.
Historical low tariff bindings to be rationalised commensurate with
bindings on similar category of products under the Uruguay Round.
Negative product specific support to be allowed to be adjusted
against positive non-product specific support.
Proposal:

42.  Suitable accounting of all trade distorting support in the AMS
calculations
 Elimination of all forms of export subsidies including export
credits, guarantees, insurance etc. by developed countries.
 Flexibility available to developing countries under ASCM to be
preserved in AOA
 Peace clause not to be extended for developed countries
 Down payment by way of 50% reduction in trade distortion and
tariffs by developed countries by the end of 2001
 Retaining and strengthening the existing S&D provisions
To achieve meaningful market access it is proposed to seek:
 Substantial reduction in tariffs, tariff peaks and tariff escalation
by developed countries
 Eventual abolition of TRQs
 Transparent administration of TRQs with preference to
developing countries in the interregnum
Proposals Continued….

43. Web: www.cetglad.org
Mail: yogeshbandhu@cetglad.org
Cell: 09415118971