WTO agreement on agriculture: Strategic issues for India

AS MANDATED under the General Agreement on Tariffs and Trade (GATT), signed in April 1994 at Marrakesh, the developed countries are to implement the terms of the Agreement on Agriculture by end 2000 and negotiations between all member countries to further the cause of trade reforms are to be carried out during the current year.

As India prepares to engage itself in negotiations which are deemed to benefit the country, a number of crucial issues have surfaced, which need to be debated within the country and presented to the special session of the WTO committee on Agriculture in Geneva. In the past, right from the early days of the Uruguay Round on Multinational Trade, including TRIPS, there have been serious criticism that the Indian stand was never properly debated among the stakeholders within the country and hence the final outcome was none too favourable for India.

It is important that a similar situation does not occur in the current exercise in the field of agriculture - an area of great significance to our predominantly agriculture-oriented economy.

The Conference of State Ministers of Agriculture and Food held on September 14th, 2000, has brought out a document highlighting the salient features of the agreement and the likely issues which would come up for negotiation. The Union Ministry of Commerce has endorsed the views expressed at the State Ministers' conference. These documents are in the public domain, presumably, to elicit comments from the interested publics, even though, as usual, they were circulated much too late to make meaningful debate possible. Under Article 20 of the Agreement, all members are to submit their proposals before the end of December, 2000.

It is important to present some of the views expressed at a recent Workshop on these issues held at the Madras Institute of Development Studies, Chennai. The areas, which need immediate attention to enable India to take an equitable, yet realistic stand at the on-going negotiations relate:

1.Transitional period available for developing countries for full implementation of the Agreement and the need to extend the same

2. The terms, conditions and tariff structures for ready access by developing countries to other markets

3. Minimal domestic support systems needed to ensure food security, which should go far beyond products and distribution to areas of equitable supply at affordable prices

4. Export subsidies to ensure that Indian commodity exports are competitive in the Global markets, considering that the developed countries have been consistently providing major concessions directly or indirectly to their exporters

5. Non-tariff modalities practised by developed countries, including invoking issues on labour, sanitary and phytosanitary measures

6. Special Safeguard provision, which imposes import restrictions under certain conditions, which are considered to be discriminating against developing countries

7. Impact of phasing out quantitative restrictions by April 2001, which India had enjoyed on the basis of her Balance of Payment (BOP) problems

8. India's favourable total Aggregate Measure Support (AMS), which being negative, to be taken into account while considering the across the board commitments for tariff reduction agreed to by developing countries

9. The impact of modern Biotechnology, particularly agricultural Biotechnology, which is already making a major impact on costs of production and in turn on global prices. Developing countries are disadvantaged, as they have little access to such cost-effective modern technologies and this aspect has to be taken into account while reviewing and revising tariff structures

10. The design of the Green and Blue Box measures, the former indicating the list of support areas, where no reduction is required and the latter representing direct payments for limiting production to enable price parity, particularly practised by developed countries and

11. Special and differential treatment provisions available to developing countries.

In the light of the above cardinal issues which will have a major bearing on the future of agricultural activities, including trading of products, both as imports and exports, from and to global markets, how can India protect her interests during the forthcoming WTO negotiations ? How should India model the negotiation strategies to ensure that the country's interests are paramount within the context of a world trade order, represented and managed by the WTO ?

With the formation of regional blocks and lobbies such as NAFTA, APEC, ASEAN, MERCOSUR, EU and many other vested interested groups such as the CAIRNS Group, MIAMI Group, among others, there is bound to be polarisation of group interests at the negotiating table.

Does India have any partners who can debate among each other and arrive at meaningful and common negotiating points from a position of strength?

What India needs to do

The strategies to be adopted by India would consist of many components. It is important to introspect and carry out a quantitative evaluation of the impact the Agreement on Agriculture has on Indian agriculture, including production, pricing, imports and exports, current tariffs and committed revisions. It would appear from available data that there is considerable scope to argue for status-quo on tariffs, in view of our negative Total Aggregate Measure of Support, which means that, there should be no compulsion to reduce tariffs by 13% by 2004.

India does not provide any export subsidies which attract reduction commitments under GATT. The only benefit provided is exemption from Tax under 80 HHC , which is not classified as a subsidy. India does not use any of the other subsidies, allowed for developing countries, such as subsidies for marketing costs, freight , for most of the agricultural products.

India has never considered full utilisation of benefits available to her under the Green Box provisions, which include expenditure on R&D, domestic Food Aid and assistance for public stocking of food , food security, insurance etc. Similarly, India has not claimed or utilised Safeguard measures available to selected developing countries. With all the relevant Bills on Agriculture- related issues, such as the Biodiversity Bill and the Plant Varieties Protection Bill not yet enacted, a high degree of ambiguity exists with respect to optimising our efforts in the area of sustainable agriculture and adequate food security. There have been no policy decisions on new food crops developed through modern biotechnology and on their production and prices, all important aspects impinging on global trade. Labelling , producing and permitting the marketing of genetically modified foods are all issues which still have to be resolved.

It is to be realised that all these matters are strictly within the ambit of our own initiatives and decisions. Negotiations at the WTO meet on Agreement on Agriculture should take into account all the other major issues common to many other developing countries in the same socio-economic belt and analyse their impact on Indian agriculture from an Indian perspective. We also need to realise that sitting around the negotiating table without adequate study and assessment of the possible ramifications of forced settlements under the mandated reform process will seriously affect not only our agricultural production and distribution, but also the fundamental viability of the Country's agrarian economy.

M. D. Nair

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