CHAPTER 1

INTRODUCTION: The WTO was born out of negotiations, and everything the WTO does of negotiations. The bulk of the WTOs current work comes from negotiations called the Uruguay Round and earlier negotiations under Agreement on Tariffs and Trade (GATT). The WTO is currently the negotiations, under the Doha Development Agenda launched in 2001. is the result the 198694 the General host to new

Trade relations often involve conflicting interests. Agreements, including those painstakingly negotiated in the WTO system, often need interpreting. The most harmonious way to settle these differences is through some neutral procedure based on an agreed legal foundation. That is the purpose behind the dispute settlement process written into the WTO agreements. While the WTO is driven by its member states, it could not function without its Secretariat to coordinate the activities. The Secretariat employs over 600 staff, and its experts lawyers, economists, statisticians and communications experts assist WTO members on a daily basis to ensure, among other things, that negotiations progress smoothly, and that the rules of international trade are correctly applied and enforced 155 members on 10 May 2012. GATT is now the WTOs principal rule-book for trade in goods. The Uruguay Round also created new rules for dealing with trade in services, relevant aspects of intellectual property, dispute settlement, and trade policy reviews. The complete set runs to some 30,000 pages consisting of about 30 agreements and separate commitments (called schedules) made by individual members in specific areas such as lower customs duty rates and services market-opening.

MEANING: India is one of the founding members of WTO which came into existence on January 01, 1995 replacing GATT (General Agreement on Tariffs and Trade) and promising the herald of new era in the rule based system of governing and promoting international trade concomitant with the needs of the on-going processor globalization. Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to open markets for trade. But the WTO is not just about opening markets, and in some circumstances its rules support maintaining trade barriers for example, to protect consumers or prevent the spread of disease.At its heart are the WTO agreements, negotiated and signed by the bulk of the worlds trading nations. These documents provide the legal ground rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives. Trade relations often involve conflicting interests. painstakingly negotiated in the WTO system, often harmonious way to settle these differences is through on an agreed legal foundation. That is the purpose process written into the WTO agreements. Agreements, including those need interpreting. The most some neutral procedure based behind the dispute settlement

There are a number of ways of looking at the World Trade Organization. It is an organization for trade opening. It is a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other. The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system

WHAT WTO STANDS FOR AND WHAT WTO DO: There are a number of ways of looking at the World Trade Organization. It is an organization for trade opening. It is a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other. The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system The WTO is run by its member governments. All major decisions are made by the membership as a whole, either by ministers (who usually meet at least once every two years) or by their ambassadors or delegates (who meet regularly in Geneva). While the WTO is driven by its member states, it could not function without its Secretariat to coordinate the activities. The Secretariat employs over 600 staff, and its experts lawyers, economists, statisticians and communications experts assist WTO members on a daily basis to ensure, among other things, that negotiations progress smoothly, and that the rules of international trade are correctly applied and enforced It is a 149-member organization with Pascal Lamay as its head. It represents all the trading nations of the world, who import-export goods & services. Created on Jan1, 1995, it was considered the biggest reform in trade since WWII. Its predecessor, GATT (General Agreement on Tariff & Trade), had a tumultuous 47 years history. GATT made a beginning in 1948, and provided a framework for trade expansion vis-vis removing barriers on free movement of goods and services. It provided platform for 8 trade negotiations in its checkered history until 1994, the last trade negotiations the Uruguay Round, resulted in the creation of WTO. In each of these Rounds (high level negotiations), the West, mostly Europe, Japan and North America negotiated trade deals with themselves in mind. The developing world including India, China, most of Africa and Latin America were forgotten as backward and without any clout. For Example, the Kennedy Round of 1963 quadrupled the world trade. At that time India and China had not emerged and hence did not figure in the world trade talks. Tokyo Round of 1973-79 quadrupled the already quadrupled world trade in last 25 years. In each case tariffs and trade distorting subsidies were progressively reduced on industrial goods & services. The West enjoyed unprecedented prosperity. US & Japan were the biggest gainers, followed by the all the nations of the Europe. Poor countries stayed poor. Nobody spoke on their behalf, and they had no clout to make their presence felt. There are simple reasons for that. First, the poor countries had no money to compete in the international market with quality goods, second subsidies provided by the nations to encourage development after WWII made their products much cheaper. Hence a die was cast for poor to stay poor. In 1982, China burst on the international trade scene. In 2002, India became an upcoming star for the world to take note. Hence a new trade body was needed to regulate and
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encourage trade. Hence at the Uruguay Round, a decision was taken to set up a new body (WTO) to manage the growing trade. TRADE NEGOTIATIONS: The WTO agreements cover goods, services and intellectual property. They spell out the principles of liberalization, and the permitted exceptions. They include individual countries commitments to lower customs tariffs and other trade barriers, and to open and keep open services markets. They set procedures for settling disputes. These agreements are not static; they are renegotiated from time to time and new agreements can be added to the package. Many are now being negotiated under the Doha Development Agenda, launched by WTO trade ministers in Doha, Qatar, in November 2001. IMPLEMENTATION AND MONITORING: WTO agreements require governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted. Various WTO councils and committees seek to ensure that these requirements are being followed and that WTO agreements are being properly implemented. All WTO members must undergo periodic scrutiny of their trade policies and practices, each review containing reports by the country concerned and the WTO Secretariat.

DISPUTE SETTLEMENT: The WTOs procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Countries bring disputes to the WTO if they think their rights under the agreements are being infringed. Judgements by specially appointed independent experts are based on interpretations of the agreements and individual countries commitments. The system encourages countries to settle their differences through consultation. Failing that, they can follow a carefully mapped out, stage-by-stage procedure that includes the possibility of a ruling by a panel of experts, and the chance to appeal the ruling on legal grounds. Confidence in the system is borne out by the number of cases brought to the WTO around 300 cases in eight years compared to the 300 disputes dealt with during the entire life of GATT (1947 94).

BUILDING TRADE CAPACITY: WTO agreements contain special provision for developing countries, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities, and support to help them build their trade capacity, to handle disputes and to implement technical standards. The WTO organizes hundreds of technical cooperation missions to developing countries annually. It also holds numerous courses each year in Geneva for government officials. Aid for Trade aims to help developing countries develop the skills and infrastructure needed to expand their trade. WTO IS MORE BENEFICIAL FOR LESS DEVELOPED CONTRIES: Giving them more time to adjust, greater flexibility and special privileges; over threequarters of WTO members are developing countries and countries in transition to market economies. The WTO agreements give them transition periods to adjust to the more unfamiliar and, perhaps, difficult WTO provisions. OUTREACH: The WTO maintains regular dialogue with non-governmental organizations, parliamentarians, other international organizations, the media and the general public on various aspects of the WTO and the ongoing Doha negotiations, with the aim of enhancing cooperation and increasing awareness of WTO activities. GOODS: It all began with trade in goods. From 1947 to 1994, GATT was the forum for negotiating lower customs duty rates and other trade barriers; the text of the General Agreement spelt out important rules, particularly non-discrimination. Since 1995, the updated GATT has become the WTOs umbrella agreement for trade in goods. It has annexes dealing with specific sectors such as agriculture and textiles, and with specific issues such as state trading, product standards, subsidies and actions taken against dumping.

SERVICES: Banks, insurance firms, telecommunications companies, tour operators, hotel chains and transport companies looking to do business abroad can now enjoy the same principles of freer and fairer trade that originally only applied to trade in goods. These principles appear in the new General Agreement on Trade in Services (GATS). WTO members have also made individual commitments under GATS stating which of their services sectors
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they are willing to open to foreign competition, and how open those markets are.

INTELLECTUAL PROPERTY: The WTOs intellectual property agreement amounts to rules for trade and investment in ideas and creativity. The rules state how copyrights, patents, trademarks, geographical names used to identify products, industrial designs, integrated circuit layout-designs and undisclosed information such as trade secrets intellectual property should be protected when trade is involved. The Indian patent law is under review for bringing it in conformity with WTO provisions. A particular part of Article 27 mentioned below has direct implications for agriculture. Even the product patent aspect will have implications for agriculture by way of protection to the inventors of new agricultural products. Since processes are easy to copy, product patents are necessary. The provision of TRIPs need to be strengthened to include (a) micro organisms but exclude life forms, b) registration system of grassroots innovations (unlike utility patent system, this registration system should be like product patent for ten years just as Australian innovation system has been proposed, (c) widespread patent search facility for educational and entrepreneurial networks and centres so that quality of research and education can be competitive, (d) just as a global registry has been proposed for wines under TRIPS, India must insist that similar global registry must exist for green small innovations too.

CHAPTER 2
IMPORTANCE OF INDIAN AGRICULTURE:

Agriculture forms the backbone of the Indian economy. This sector contributes to the Indian economy in a variety of ways:

It provides direct employment to 65% of working people in the country and contributes about 29% of GDP of the country. In advanced nations like the US, agriculture accounts for a mere 2% of GDP, and employs 4% of the total labour force. The position is similar in other advanced countries. For example, agriculture contributed 2% of GDP in France with 6% share in labour force; in Germany the contribution of agriculture to GDP was 1% with 3% share in labour force. The corresponding figures for UK were 2% and 3% (World Bank 2000). Agriculture also provides the foodgrains to feed the large population of the country. Indian agriculture is an important source of supply of raw materials to industries in the country. Agriculture contributes a sizeable share in Indias exports. Besides, it provides fodder for the large cattle population. Being the largest source of employment and income to millions of people, it provides a vast market for our industrial products.

The country has made significant improvements in agricultural production, but the achievements have been mainly confined to a few areas. The major challenges for our agriculture system would always be increasing production and productivity to ensure food security for the rising population. Meeting this challenge means also ensuring food security and a better standard of living for the rural people. Indias performance in agriculture affects overall rural development and the extent of rural poverty. Therefore, the performance of the economy is crucially dependent upon that of agriculture.

ITS MEMBERS: While the WTO is driven by its member states, it could not function without its Secretariat to coordinate the activities. The Secretariat employs over 600 staff, and its experts lawyers, economists, statisticians and communications experts assist WTO members on a daily basis to ensure, among other things, that negotiations progress smoothly, and that the rules of international trade are correctly applied and enforced 155 members on 10 May 2012. India 1 January 1995

CONCEPT OF WTO ARISES: 1944 - The United Nations Monetary and Financial Conference is held in Bretton Woods to plan the future of the worlds monetary system. Came to be known as the Bretton Woods system. The International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) are set up. The conference also recommends the setting up of an International Trade Organization (ITO). 1946 - A Preparatory Committee, with 23 members, is established by the United Nations Economic and Social Council to draft the charter of the proposed International Trade Organization (ITO). 1947 - The General Agreement on Tariffs and Trade (GATT) is set up with the objective of removing barriers to world trade. 1947 The first multilateral trade negotiation's (MTN) rounds are held in Geneva.8 1949 - The second round is held in Annecy, France. While further tariff concessions are negotiated, 10 more countries join GATT in Annecy. 1950 - The third round became members of GATT. 9 as an interim measure by the enters into force on 1 January is held Torquay, England, and four more countries The General Agreement on Tariffs and Trade is signed original 23 countries on 30 October 1947. And GATT 1948. 1956 - The fourth round comes back to Geneva.

1960 - The fifth round was known as the Dillon round (1960-61). 1962 - With the Kennedy Round in 1962-67, the focus shifts to an elimination of non-tariff barriers. By the time of the Kennedy Round, around 50 countries are members of GATT 1973 The Tokyo (1973-79) rounds begin. Reduction of non-tariff barriers receives even more serious attention. 99 countries participate in the negotiations. A few of the Tokyo Round results are incorporated as codes or arrangements, referred to as the GATT-plus system.10 1981 The new Reagan administration in the US becomes more aggressive on liberalizing agriculture. 1982 The Ministerial declaration launches work programme on agriculture, the De Zeeuw Committee on Trade in Agriculture. 1985 - Leutwiler group (1983) report recommends clearer and fairer rules for agricultural trade. 1986- Fourteen agricultural exporters meet in August in Cairns, Australia, to work on agricultural trade issues together. In September, the Punta Del Este Ministerial Declaration takes place in September. 1987- The US calls for complete phase out of all agricultural subsidies that distort trade by 10 years. 1988- Working Group on Sanitary and Phytosanitary Measures set up, Mid-term Review, Montreal, December 1988. 1989 - Individual countries submit detailed liberalization proposals. 1991 The Dunkel Draft Text, 1991 announced.
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THE URUGUAY ROUND: The Uruguay Round (1986-94) is considered by both its defenders and its critics as a major landmark in international trade negotiations. It has changed the terms of the world trade regime in many significant ways. In this round, besides negotiation areas of tariff and non-tariff measures, three new areas were touched: 1. Trade in services, 2. Trade related investment measures (TRIMS), 3. Trade related intellectual property rights (TRIPS)

Through these agreements, WTO members operate a non-discriminatory trading system that spells out their rights and their obligations. Each country receives guarantees that its exports will be treated fairly and consistently in other countries markets. Each promises to do the same for imports into its own market. The system also gives developing countries some flexibility in implementing their commitments. The Uruguay Round also persists with this trend, such as in the government procurement code or the information technology agreement. In the government procurement negotiations, India is an observer, but not a signatory. In the final Uruguay Round package, such GATT-plus, agreements are called Plurilateral trade agreements. This is in contrast to multilateral trade agreements, which are GATT/WTO agreements proper and have universal application. TRIPS. To break this deadlock in talks, Arthur Dunkel, the then Director General of GATT, unilaterally presented a 433-page document on December 20, 1991. 11 The Final Act, which was signed in Marrakesh in 1994 by 135 countries, consisted of an entirely new set of 16 agreements that had superseded the earlier GATT agreement. It created a formal international institution - the World Trade Organization or WTO12, which came into force on 1 January 1995 - to oversee implementation of multilateral trading rules. It introduced many new areas under the purview of GATT and the WTO: agriculture, textiles and clothing, services, trade-related intellectual property rights, trade-related investment measures, subsidies, anti-dumping rules, public procurement, and so on. It allowed for trade disputes to be brought before a Dispute Settlement Body of the WTO and for retaliation across trading categories for transgression of rules. It enforced a shift from quantitative restrictions on imports to tariffs, as well as greater predictability in tariff reductions by forcing every member country to declare tariff bindings in all traded goods, and by promising tariff reduction over time.
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Gains from the Uruguay Round

At the time of signing the Marrakesh agreement, the following kinds of gains were to benefit the signatories: 1. Static gains due to a reallocation of resources to areas of comparative advantage (that is, those that are relatively better at producing particular goods). 2. Efficiency gains that would result from reduced slack in economies that have been highly protected. 3. Dynamic gains due to improved technical efficiency or lower input use per unit of output and technological change. The World Trade Organization (WTO) on January 1, 1995, succeeded the General Agreement on Tariff and Trade (GATT). It was a watershed event in the history of global trade. At present, the WTO has 146 member countries including India. The WTO deals with the tariffs and quotas between the member countries and works to remove any anomalies. Agriculture was also included in the WTO (Agreement on Agriculture)14. India, being one of the signatories of WTO and after losing its appeal in the WTO, liberalized trade on agro-commodities as per WTO norms. Article 20 of the AOA15 ensured that these reforms are an ongoing process. Renegotiations in this regard take stock of the experience of the past years and explore the potential for further commitments to the reform process. The Uruguay Round negotiations involved discussions on new areas such as agriculture, textiles, garments, trade in services, trade-related intellectual property rights (TRIPS), and trade-related investment measures (TRIMS), in three distinct thematic groups. The first was reducing specific trade barriers and improving market access for partner countries. Areas under this were tariffs, non-tariff measures, tropical products, natural resourcebased products, textiles and clothing, and agriculture. A second theme was one of strengthening GATT disciplines and improving the rules under which GATT operated. Areas under this theme were GATT articles, safeguards, MTN agreements and arrangements, subsidies and countervailing measures, dispute settlement and functioning of the GATT system (FOGS). The third and final theme covered new areas including TRIPS, TRIMS, and services.

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FEATURES OF THE WTO: Under the auspices of the WTO, many trade-related agreements were signed by the member countries and for the first time, an Agreement on Agriculture (AOA) was reached to reform and dismantle trade barriers in the agricultural sector The objective of the Agreement of Agriculture is to reform trade in the sector and to make policies more market oriented. This would improve predictability and security for importing and exporting countries. The WTO wishes to liberalize trade barriers within member countries by reducing the tariff and non-tariff barriers, such as quota restrictions.

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The WTO agreement requires the conversion of all non-tariff barriers on agrocommodities trade into equivalent tariffs. These tariff rates equivalent are to be combined with the existing tariffs and the resulting composite tariffs are to be bound at that rate. - Each country is given the flexibility in distributing the average tariff cut over different commodities, as long as each individual tariff is reduced by at least 15% (10% for the developing countries) over the relevant period. - Where the resulting tariff is prohibitive, a minimum level of imports, equal to 3% of domestic consumption is to be guaranteed. These minimum access quotas will rise to 5% of domestic consumption after six years. - The minimum allocation quotas for developing countries constitute 2% of domestic consumption moving up to 4% after 10 years. - The agreement also provides for a cut in the subsidies from the 1986-90 levels by 36% (24% for the developing countries) over six years (ten years for the developing countries) in equal annual installments. - Developed countries are also required to reduce the volume of exports of each subsidized commodity by 21% over six years with average export levels of 1986-90. A corresponding reduction by 14% is required for the developing countries. Benefits for India Reduction in export subsidies on farm products in developed countries will make Indian agricultural exports more competitive. Exports will increase to $ 1.5 billion by 2005. Fruits, oil seeds, cotton, and milk products will be benefited due to subsidy reductions. There will be higher price realizations, which will help in improving the standard of living of farmers. Countries will be forced to produce only what they are best at. This will mean increased efficiency and higher productivity throughout India.16 Environmental programmes are exempt from cuts in subsidies so that the environment protection programmes continue unabated. India does not have to cut subsidies or lower tariffs as much as developed countries and it has been given enough time to complete its obligations. Distortions in the market place would reduce, which would benefit the end consumer.

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THE CHARACTERISTICS OF WORLD TRADE ORGANIZATION ARE AS FOLLOWS: World Trade Organization is a separate legal entity. It has a legal and institutional foundation of the multi trading system. All its agreements are permanent and binding to all member countries. All its members enjoys equal voting rights, irrespective of type and volume of trade. It has an automatic dispute settlement system. It has a rule based and time bound approach. orld Trade Organization has global status like IMF, but it is not an agent of UN. It has a wide coverage of not only trade but also service. It focuses an trade related aspects of intellectual property rights. World Trade organization is a huge organizational body having a large secretariat.

BENEFITS FOR INDIA: Reduction in export subsidies on farm products in developed countries will make Indian agricultural exports more competitive. Exports will increase to $ 1.5 billion by 2005. Fruits, oil seeds, cotton, and milk products will be benefited due to subsidy reductions. There will be higher price realizations, which will help in improving the standard of living of farmers. Countries will be forced to produce only what they are best at. This will mean increased efficiency and higher productivity throughout India.16 Environmental programmes are exempt from cuts in subsidies so that the environment protection programmes continue unabated. India does not have to cut subsidies or lower tariffs as much as developed countries and it has been given enough time to complete its obligations. Distortions in the market place would reduce, which would benefit the end consumer.

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CHAPTER 3
THE AGREEMENT ON AGRICULTURE:

The Agreement on Agriculture signed at the end of the Uruguay Round of negotiations deals mainly with the nature of entry of the imported goods in domestic markets and the nature of support provided to the domestic farmers and exporters of agricultural goods by their governments. It also lists the different types of crops subsidies that have to be reduced. The Agreement on Agriculture signed at the end of the Uruguay Round of negotiations, which has as its objective the establishment of a fair and marketoriented agricultural trading system, dealt with three groups of issues. These were (i) better market access, or easier entry of imported goods into different national markets; (ii) reduced domestic support, or lower direct or indirect support provided to domestic farmers by national governments; (iii) lower export subsidies or lower budgetary support for exporters of agricultural products.

MARKET ACCESS: Market access was sought to be increased in a number of ways. First, the AoA made tarrification mandatory. That is, countries had to dismantle, in a phased manner, any non-tariff barriers such as a ban on imports of particular agricultural products or ceilings set on the quantities of individual products that could be imported (otherwise termed quantitative restrictions or QRs), and only use import tariffs or duties as means of protection. Second, the agreement required that the developed countries reduce their tariff levels by 36 percent over a six-year period from the start of implementation, with a commitment to reduce tariffs on each tariff line by a minimum of 10 percent. Developing countries were required to reduce tariffs by 24 percent over a 4-year period, and ensure a tariff reduction of 10 percent in each tariff line17. Third, all countries had to specify ceilings at which their tariffs were bound, or the maximum level to which tariffs would be raised under any circumstances. Finally, there was a minimum level of actual access of imported commodities to domestic markets that each country had to ensure. This was set at 3 percent of average domestic consumption during the 1986-88 reference years, to be ensured by 1995 and 5 percent of the same by 2000 in the case of the developed countries and 2004 in the case of the developing countries. If countries did not reflect this minimum access, they were expected to use the mechanism of tariff-rate quotas, or lower tariffs for imports of a magnitude required to ensure the realization of minimum access requirements. Despite these detailed specifications, the AoA provided countries with an escape clause in the event of a large and disruptive inflow of imports. Under the Special Safeguards provisions, countries that had tarrified their QRs, It needs to be noted that given the level of such tariffs at the time of implementation of the tariff reduction commitment, the actual increase in access may not be substantial. The least
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developed countries were provided a concession, as they were not required to reduce their tariff levels.tarrified products, with an import surge or by a fall in import prices to levels that were low relative to those that prevailed during the 1986-88 reference period, were allowed to impose higher tariffs and other restrictions to restrain imports.

DOMESTIC SUPPORT: The AoA defined the principles on the basis of which the Aggregate Measure of Support (AMS) provided by the government of a country to its agricultural sector was to be computed. The aggregate measure of support was the sum total of the AoA product-specific and non-product-specific support provided by national and subnational or federal governments in individual countries. The original Dunkel Draft of the Uruguay Round Agreement provided for commitments to reduce domestic support on a product-by-product basis. However, the agreement between the G-2, the US, and EC at meetings that took place at Blair House in Washington in November 1992 (known as the Blair House Accord), which paved the way for the successful conclusion of the negotiations on the Uruguay Round, replaced these product-wise commitments to a commitment to reduce overall support to agriculture18. Not all of these measures of support were considered violative of free trade principles and therefore eligible for inclusion in calculations of the AMS. In fact, the Agreement on Agriculture categorized the different possible measures of support into three categories. The first, termed the amber box measures, were seen as those policies, which do have a substantial impact on the patterns and flow of trade. All such domestic support measures were to be taken into account while computing the AMS level, and countries had to commit themselves to reduce in the aftermath of the agreement. The second termed the green-box measures were those that were seen as having no major effect on production and trade and were considered completely nonviolative of the AoA and not subjected to any reduction commitments. They included a variety of direct payments to farmers, which were seen as augmenting their incomes without influencing production decisions. Some of them were: Producer retirement programmes, Resource retirement programmes, Environmental protection programmes Regional assistance programmes Public stockholding for food security reasons Agricultural input subsidies for low-income, resource-poor families, Domestic food aid, Certain types of investment aid, General services that provide among other things:

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SUPPORT IN THE FORM OF SUBSIDIES COMES BY WAY OF: price support, or measures such as government procurement, backed by export or import controls using tariffs and QRs and budgetary support, in the form of explicit budgetary outlays on subsidies on farm inputs and credit, agricultural research and extension, deficiency payments, insurance and disaster payments, diversion payments for temporary retirement of resources, and compensation in lieu of reductions in market price support or implicit budgetary outlay in the form of revenues foregone as a measure of support to agriculture. Research, training, and extension, Marketing information, Certain types of rural infrastructure.

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CHAPTER 4
WTO & AGRICULTURE IN INDIA: India is one of the founding members of WTO which came into existence on January 01, 1995 replacing GATT (General Agreement on Tariffs and Trade) and promising the herald of new era in the rule based system of governing and promoting international trade concomitant with the needs of the on-going processor globalization. WTO provisions related to international trade are now similarly applicable to agriculture which was brought within the fold of GATT in the Uruguay Round (1986-93) of multilateral trade Negotiations (MTNs). Application of WTO provisions on agriculture involves many contentions issues and is an area of serious concern for developing countries which are primarily agrarian economies, Moreover, the world, despite growing interdependence and integration, is highly heterogeneous with regard to levels of development. This heterogeneity is very much noticeable when we compare the agricultural sector of developed and developing countries. Support infrastructure like storage, processing, finance, marketing, transport and R&D facilities are much more advanced and organized. In sharp contrast, in a country like India, for millions of farmers who derived their livelihood from agricultural, it is still a way of life and not an occupation they have chosen for themselves. Indian farmers are mostly involved in subsistence farming with very little or no marketable surplus. On the other hand, there have veer instances where in the USA farmers have been given subsidies worth millions of dollars to keep their farmland uncultivated. In India 70% of the holding are not of the economy size, making application of modern technology difficult and unaffordable for the farmers. The developed countries like the USA, Japan and EU countries heavily subsidize their agriculture with high quality standards and aggressive marketing practices, these countries hold 72% share of world trade in agricultural products are keep the developing countries virtually at the periphery of world market. The silent features 0f this agreement include three main provisions which have become effective 1 Jan, 2000. Under access all non-tariff barriers like quota will be converted into tariffs. India has already removed quantitative restriction on all her import. It has now imposed protective tariff on imports of sensitive agricultural products in order to protect the interest of its farming community. As far as the maximum limit of tariff is concerned no country is permitted to impose tariff beyond a certain limit. All industrialization countries are to reduce tariff by 36% within six years. For individual agricultural products tariff has to reduce by at least 15%. Developing countries like India have to reduce tariff by 24% within 10 years. On any individual agro product tariff cut has to be at least by 10%.

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Under Export Competition the developed countries are to reduce the value of direct export subsidies by 36% over a period of six years and in volume terms 21%. The base period for these cut is 1986-90 or 91-92 if exports were higher in that period. Over the same periods the developing countries are to reduce the value of direct export subsidies by 24% and volume terms by 10%. Under domestic support this issue is linked to providing state support to farmers in farm production. Under AoA (Agreement on Agriculture) the developed countries are to reduce AMBER BOX subsidies within 6 years by 20c starting from 1995 with 1986-88 periods as base. The same has to be reduced by 13c with in 10 years by developing countries. AoA has classified all subsidies given to farmers into three categories AMBER BOX subsidies, BLUE BOX subsidies and GREEN BOX subsidies. Under AMBER box subsidies such domestic support its included which is meant to encourage farmers to produce more. BLUE BOX subsidies are related to quantum of output and hence are considered minimally trade distorting. Such subsided is provided only up to certain limit of production. GREEN BOX subsidiary aid to farmers comes under this category. The developed countries have used provisions of AoA to further infest of their farmers. The developed countries have used provisions of AoA to further the interest of their farmers. For example, they have remodeled AMBER BOX subsidies in such a way that these qualities to be put into BLUE or GREEN BOX subsidies. These countries are constantly pressuring the developing countries for greater market access for agricultural product but are not willing to bring down the level support that they provide to their own farmers. Developing countries like India feel that they are being discriminated against in matter like tariff on food imports into developed countries. For example, in the name of mutual access, OECD countries impose very low tariff on imports from fellow members while similar imports from developing countries are subjected to higher tariffs. The Nov. 2001 Doha round of ministerial talks were termed as Development Round because comprehensive development of the accepted as its agenda. Theoretically, issues like production and trade of agriculture products along with domestic support and subsidy to it, compliance issues, intellectual property rights, special discriminatory practices and market access were to be discussed. But soon it became clear that on the ground developed countries were not willing to yield much to the developing countries for deeper market access. By the termination of this round it was clear that issue related to agriculture pushed other issues to the background. For the developing countries safeguarding the interest of their farming sector is a matter related to the very survival and substances of there population. Moreover in a representative democracy like ours it would be a political hara-kiri if the government ignores the interests of farmers and agriculture under international compulsions.

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In the Doha round of negotiations, while the developed countries were mainly concerned about issues like market access and IPR, the developing countries were concerned about food security, poverty elimination and economic growth with respect to the process of globalization. It is alleged by developing counties that the developed world shows only hypocritical concern about these issue. In the farm bill in the USA and the collective farming policy in EU, agate support has been promised to the farmers than before. Sensing a major deadlock in future rounds of discussions on AoA, the agriculture ministers of EU countries presented a reconciliatory package in the last week of June 2003. In this they promised not to offer any subsidy to their farmer but insisted that agricultural income world still be protected. This is a wily move as it replaced a trade distorting measure like subsidy by protection of agriculture income which will not be treated as trade distorting and hence qualifies to be put in the GREEN BOX. It would be a misnomer to call such protection as minimally trade distorting because it will influence the allocation of recourses in the since that in the absence of such protection fewer resources would be committed to agriculture protection will serve as an inceptive not to move resources away from agriculture leading to over production this surplus produce will be used to disallow imports from the developing world or for dumping in the world market. The worst aspect of this package was that not even a mention of reducing export subsidy found place in it. The ministerial meet at Cancun in Mexico held on 10-14 sep. 2003 raised questions on the working of the whole apparatus of WTO. The only major achievement on the part of the developing countries was that they did not succumb to the pressures of the developed countries. As expected the Cancun meet too was focused on agriculture G-5 group countries with India, china, Brazil, Argentina and South Africa as its members emphasized the urgency of the need to reduce farm subsidy in the developed countries especially in the USA and EU countries. India played a pro active role in this initiative. It was highlighted that the cotton export dependent economies of the world like Chad, benign, male and Burkina Faso have suffered massively due to the farm subsidy that the USA gives to its 25,000 cotton growers. Even Australia and New Zealand supported the stand taken by the G-21 group of the developing countries. The revised draft presented for negotiations was heavily titled in favour of the developed countries. It required the developing countries like India to reduce farm subsidy by 70% while EU members and the USA were required to reduce it by 41% and 36% respectively. The revised draft was a big blow to the heightened expectation of the developing countries. At cocoon the developed countries did not yield much to the outstanding demand of the developing world but cleverly included issues like investment, competition, trade facility and government procurement to build pressure on the developing countries. Honk Kong ministerial conference ended in the same manner. The developing countries, led by G-5 opposed the proposals of US and European Union on the ground that they were against the interests of the poor countries. Doha round talks
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are at the moment floundering because of the uncompromising stands adopted by players such as EU, US and G-5. The interesting part of the whole thing is not one can be said to be the main culprits because every Government involvement in the WTO negotiations is squarely accountable and answerable to its constitution and population back home, which means among other things, that no commitment can be made which will lead to weakening of the domestic support base beyond a point. Politically the issue of AoA is so sensitive that no government, whether in the developed or the developing countries, is in a position to compromise with the interests of farmers in the name of collectivism. Now the question arises that what should be Indians strategy? As things stand at present, the provisions of AoA do not appear to have a threatening impact on domestic support and export subsidy under AoA. The non-product specific support amounts to 7.5% of the value of agriculture production in India. Since product specific support is negative, the Aggregate measure of support to Indian agriculture is still below the deminimise of 10 percent in terms of the Uruguay round stipulations. India has already suggested that AMS be calculated as the sum of the product specific and non-product specific support (WTO 2001). As the input subsides to resource-poor farmers are exempt from reduction commitments under WTO (these come under non product specific support), so the overall level of support given to Indian Agriculture is less than the minimum of 10% as set under WTO stipulations. Agriculture sector in India has responded positively to the launching of macroeconomic reforms in 1991. With liberalization of exchange rate, the terms of trade for agriculture have shown a significant improvement. Private investment in agriculture registered a step rise in the post-reform period. For the first time since independence India has become a net exporter of foodgrain. The fear that liberalization of imports would lead to massive influx of agriculture imports too has been found to be misplaced. Quantitative restrictions on imports have been lifted since April 2000. Though import like fruits, ketchup and meat products have increased, they still account for a miniscule of total agricultural imports. Though there is clearly a need to be constantly vigilant and work in league with other developing countries and removal of tariff and non-tariff barriers, the major challenges the developed countries at WTO, we need to take measures which make Indian agriculture more competitive. The fortunes of Indian agriculture which now accounts for about 20% of the GDP and provides employment to about 60% of labour force crucially depend upon greater investment, both private and public, in irrigation power, roads and the ability of agriculturists to access the modern technology specially the yield augmenting technology. Conditions need to be created for widespread diffusion and application of this technology by the farm sector. To conclude, it can be said that WTO provisions pose no real threat to Indian agriculture though aspects related to IPR, removal of tariff and non-tariff barriers and market access need to be dealt with constant vigil and suitable expertise. Relevant
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institutional and legal changes (like in patenting) need to be brought about Equally import is the need to restructure, modify and revamp our agriculture sector so that it can rise up to the challenges thrown by growing integration with the rest of the world. The need of the time is to make it more efficient, modern diversified and competitive. The time to engineer a second Green revolution has arrived.

AGRICULTURE SUBSIDIES: Due to the Agreement on Agriculture (AOA), India can no longer remain aloof from the rest of the world. It had to join the WTO. This AOA has established a number of generally applicable rules with regard to agriculture and trade related matters. Most of the developed countries are providing huge subsidies to the agricultural sector. In these countries not more than 10% of the population is dependent on agriculture. The below table gives the information about the subsidies that are being given to agriculture by different countries and the percentage of the population depending on agriculture India provides only 2.33% subsidy to agriculture. It is very small when compared with other countries. The Aggregate Measure of Support (AMS) to agriculture will be 10 percent in India as against 5% in the developed world. The total subsidy on agriculture in the developed world works out to $150 billion and in the developing world $19 Billion. If the AMS exceeds 10 percent in any country, it has to reduce by 13% by 2004. According to the WTO the AMS in India, product subsidies is 7.5% and subsidy on non-product is minus 38.5%. So there is no question of losing any thing in our agriculture by accepting the AOA.

SUBSIDIES TO AGRICULTURE: Country Subsidy per hectare EEC $82 USA $32 japan $35 China $30 South Africa $24 india $14

%subsidies 37% 26% 72% 34% 60.67% 2.33%

Population dependant on agriculture 8% 5% 4% 24% 18% 60%

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TARIFFS: The tariff on agricultural commodities have been consider-ably restructured to comply with WTO requirements. India is committed to reduce tariffs on 686 agricultural products. The average tariff on agricultural commodities was 115% before the agreement. After the agreement it has been reduced to 35%. Along with 686 commodities the tariff on 587 other commodities is on an average 50% less than the negotiated tariff. Only on 10 commodities is the tariff rate more than the negotiated tariff rate. We must recall, in this context that two decades ago India agreed at an international meeting to reduce the tariff either to zero or to a minimum level on the import of dairy products. In other words, India had accepted in principle the import of agricultural products many years ago. In the case of edible oils we agreed (binding) to impose a tariff of up to 150 percent but the bounded duty at present is 0. With a duty reduction on edible oils as low as 25%, hundreds of oil mills have closed down, groundnut farmers are unable to get a minimum price and even compelled to dispose of their product at huge losses. Pulses were imported under OGL (Open General License) at zero interest rates. In July 1999 the Government of India sought to renegotiate the tariff on pulses. But the international community has not yielded.

THE CHALLENGE: a. Investment: Indian agriculture needs a lot of investment to have large-scale production. By this we can reduce production costs. But the problem is that large scale agriculture displaces persons who are dependent on agriculture. Instead of criticising WTO we have to think of an alternative system. Corporatisation of agriculture is seen to be inimical to social justice. Redistribution of land to the landless poor through the various land ceiling acts leads to fragmentation which will be a hurdle to improved production as well as productivity. b. Patent System: Plants such as neem, turmeric and products such as Basmati (scented rice) are patented or about to be patented by American companies. It is strange that in India these have been household plants used in cooking and for medicinal purposes since ancient times. The system of Ayurveda has existed since times immemorial. All medicinal products based on plants and plant products must be patented by Indian companies. Conceding the patent rights to an American based company is ridiculous and we have to take this up with the WTOs Dispute Settlement Board (DSB) at Geneva. c. The challenges before Indian agriculture are immense. India is not where it should have been in the world market for agricultural products despite being one of the top producers. The country needs to put greater emphasis on cultivation of international varieties. Until India takes some steps in this direction, it will continue to produce more only to earn less. The major challenges for Indian agriculture system would always be increasing production and productivity to ensure food security for the raisingpopulation. d. Rigid quality control is a major challenge for Indian agriculture. The global agricultural market is influenced to a great extent by the quality of products, especially when exporting to developed nations. Indian agricultural exports have to face tough competition, which is a matter of serious concern. The right type of technology for growing and processing must be adopted so that there is good quality production at lower costs, which
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in turn will reduce the prices and place India in a better position to compete globally. Indian producers produce agricultural goods at competitive prices. Yet low global prices resulting from subsidies by the developed nations mainly the European Union and United States, deprives India of any advantage on the price front. The US is exporting wheat at prices 40 per cent lower than production costs. In the case of soybean, the price difference has been increasing steadily over the last four years and is currently at 30 per cent while for maize it is 25-30 per cent. In 2001, cotton was being sold in the international markets at a price 57 per cent lower than its production cost, while the price difference for rice has stabilized at 20 per cent. As a result of these prices, the US Is the worlds largest exporter of wheat, corn, cotton and soybean, and the second largest in rice. While agricultural trade liberalization was justified on the grounds that Northern agricultural markets would open to India, Indias exports to Europe have actually declined from 13 to 6 per cent. This is because the North still maintains high subsidies and trade barriers. The WTO regime has become a challenge because it has shown that agriculture trade liberalization has become a unidirectional phenomenon that opens markets in the South for Northern business corporations but closes markets in the North for trade from South. Such trade will destroy livelihood opportunities for resource-poor farming families and agricultural labour. Global forces are now playing an important role in determination of cropping patterns, investment levels, price structures, quality of production and level of international trade. Indian farmers are facing multiple challenges. Firstly, they are being asked to provide a greater variety of better quality products at lower cost, and in a safer manner than ever demanded before. Secondly, they are being asked to produce this abundance on a shrinking natural resources base that is often subject to government regulations. As far as India is concerned there are some danger signals. Population growth rate and higher per capita income suggest that demand for foodgrains is growing. But there are doubts about the supply response. In terms of acreage, area under foodgrains has not increased. Yield growth rates of food grains are also stagnating in most parts of the country. The productivity of soil has also started declining. The underground water table in most Indian states is getting rapidly depleted. Based on these facts, various studies have pointed out that India will be a net importer of rice in the near future.

FISHING IN INDIAN WATERS: There is another problem that has arisen as a result of our accepting WTO norms. Every country has to allow fishermen of other countries to catch fish in its territorial waters. India exports special grade fish (Tuna and Prawns) to other countries and earns substantial foreign exchange. Around 10 lakhs people are dependent on fishing. Deep sea fishing leads to exhausting not only fish resources, but also displacement of our people in fish catching, processing industries etc. This too is an issue that needs to be discussed at the appropriate WTO forum.

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BENEFITING THE CONSUMER: Given that exports from India are already very low, we will be put to greater disadvantage if new hurdles are put in the way of our exports. There are still larger issues of public good at stake in such decisions. If producers from other countries were able to offer better commodities at far cheaper prices, it would be unjust and unfair to the Indian consumers to restrict or ban such imports indefinitely. Expecting such protection as a time bound measure may be reasonable, if during that limited time span, we make determined efforts to increase productivity in agriculture, improve the infrastructure and upgrade the efficiency of Indian industry to face global competition. We, the farmers of India are confident that with judicious measures of protection during the brief transition period of 4-5 years, we will be able to successfully face international competition by building world class agriculture, provided the government gets off our backs and stops putting new hurdles in our way. THE QUESTION OF SUBSIDIES: Another important stipulation in the WTO Agreement on Agriculture is that Governments direct support to agriculture i.e. non-product-specific. The Aggregate Measurement Support (AMS) should not exceed 5% in the case of developed countries and 10% in the case of developing countries. USA, Europe, S. Korea, Japan etc., support agriculture in various ways. In rich countries, it has become necessary to ensure that agriculture continues and that some people stay in agriculture. Besides, if the whole of the country becomes a forest of industries and cement concrete, there is a risk of the environment being destroyed. For these reasons, richer countries feel the need to keep agriculture operating and even flourishing. Subsidies and income guarantees are given for producing as also for not producing. There is a subsidy for producing a commodity and another subsidy for not producing the same commodity. There is also a subsidy for keeping the land fallow. Apart from this, governments spend liberally on research in agriculture; the development of underdeveloped areas; infra-structure, transport and communication to mention a few. The situation in India is quite the contrary. In rich countries 1 to 2% of the population depends on agriculture. In India, it is more than 70%. 98% of the population of developed countries can extend ample help to their 2% farmers. On the other hand, 30% of Indias population cannot extend much help to 70% farmers; nor is there the political will to do so. Therefore, the Indian farmer faces the continuing prospect of being crushed under negative subsidy for decades to come. Some suggest that the Government should get included in the WTO Agreement, new ways and means to support farmers. As of today, there isnt any condition in the WTO Agreement on Agriculture (AoA), which stops the Indian government from helping farmers. Therefore, talking of fresh provisions is pointless.

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EXPORTING AGRICULTURAL PRODUCE: Coming to ground realities, what are the prospects and scope for the export of Indian agricultural produce? Potential exporters will face difficulties both in the domestic and foreign markets. The demand for Indian farm products (excluding some exceptions like Basmati Rice, Darjeeling Tea etc.) is very low. The reason is that Indian products are of poor quality. India lacks a system of grading and testing our produce. There is little awareness of regulations that are accepted the world over as necessary for the protection of the health of a consumer. Due to the license-permit system, Indian exporters have earned a bad name as unreliable suppliers. Indian agricultural exports are limited to ethnic markets catered through cousin-to-cousin channels. The deficiencies in Indian agriculture pose severe problems in entering the world market. Land in India, due to various land-related Acts and chronic penury, is fragmented. Efforts to encourage the consolidation of land and production of quality-produce in viable volumes have been ineffective. Besides, the infra-structure for storage, transport, processing, grading and rating quality-standards are almost non-existent. Farmers fail to comprehend the sophistication of global markets, as their experience is limited to primitive APMC operations. THE PLIGHT OF INDIAN FARMERS: Up to 1996-97, the prices of most agricultural commodities in the global markets were higher than those in Indias domestic market and, therefore, there was a clear comparative advantage in exports. At least at the farm gate, the Indian farmer was capable of competing with any farmer in the world. By the time the produce reached the point of embarkation, poor infrastructure wiped out most of the advantages. Even then, in some areas like organic farming products, medicinal and aromatic plants, multiplication of hybrid seeds etc., India had an advantage in global markets. This situation has rapidly changed in the last 2-3 years. Modern technology has helped improve agricultural productivity in many countries around the world. As a result, there is a glut in the agricultural commodity market and a recession in prices. Therefore, the Indian farmer is not able to export several agricultural products, as our domestic prices are higher than those in global markets. The condition of the Indian farmer is like that of a debilitated convalescent trying to face a flood. Exploited by the white colonial rulers and now by our own brown rulers, our land has been fragmented and depleted of fertility resulting in low production, capital evasion, lack of new investment, poor infrastructure; the lack of storage and marketing facilities; inadequate irrigation and electricity, the absence of roads and the insufferable burden of indebtedness. And then one fine morning, our farmers in such a condition, see a surging flood of globalization and revolution in biotechnology. The basic objective of globalization is to improve the global Division of Labour with reference to comparative advantage. Indian agriculture has the benefit of abundant sunlight, ample water and a hardy peasantry. Ultimately, these elements will be decisive in global competition. But while taking the such big leap from traditional agriculture to world-class competitive agriculture, some measures need to be taken that will be immensely useful and essential. These are:
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 Freeing Indian Agriculture from State Control Laws and by-laws, rules and regulations, red-tapeism, and inefficiency of governmental machinery have strait-jacketed Indian agriculture. Ousting the State from agriculture and privatization of the agriculture sector are the most important measures. At present, land is owned by the State. It is leased to farmers for cultivation. The State, at its whim, can acquire land on the pretext of public purpose and dislodge farmers. Understandably, farmers are not willing to undertake sizeable investment on their land. The State controls all farm inputs like fertilizers, pesticides and farm equipment, etc. Disposal of the produce is also under comprehensive State control. Unifying the Indian Market The entire world is getting unified as a market, but India itself is not a unified market. State barriers like district bans, state bans, zoning and levy have fragmented the domestic market. On the other hand, different countries in Europe, with different languages, faiths and cultures, and despite a history of two world wars have come together and developed a unified common market (The European Economic Community or the EEC). In India, it has become imperative to scrap the Essential Commodities Act and other restrictive measures emanating from it and to create a unified market when we are on the threshold of globalization. A unified Indian market will increase the demand for agricultural produce; besides, the market will facilitate cropping patterns consistent with agro-climatic realities and comparative advantage. Modernization of Market Networks In India, agricultural commodities are sold mostly through Agricultural Produce Marketing Committees (APMCs). At one time, these Committees helped to improve agricultural marketing. But, today they do not provide even minimal facilities required for marketing, like shelter, godowns, facilities for processing, grading, sorting, quality evaluation, packaging, and information on various commodity markets, etc. Commission agents and adatiyas dominate these markets. If, instead of this system, another one like super-market networks so common in many developed countries take over, farmers will feel comfortable entering global markets. Information Network Information regarding price, the demand and supply positions of commodities in different markets all over the world, weather reports and forecasts and agricultural extension advice must be easily accessible to farmers in the villages. Websites and portals providing such information and services are available. Development of information and communication networks enabling farmers to have access to this information is necessary. Warehousing Receipts The present system for the purchase of cereals and other farm produce must be changed and replaced by a system of storing farm produce in warehouses and extending to farmers credit to the extent of 70% of the value of material kept in godowns, needs to be introduced. This can easily be done by recognizing warehouse receipts under the Negotiable Instruments Act.

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 Corporatisation with Land Equity All these measures are beyond the ambit of the State. They are also beyond the capabilities of cooperative establishments. For this, the efficiency of the company structure (joint stock companies) and the sense of participation and involvement of co-operatives will have to be brought together to forge new forms of economic institutions. Farmers could come together and form companies with share holdings proportionate to their land. Joint Stock Companies should take responsibility for finance, management, technology, and post-harvest work like warehousing, storage, processing, sales and export. If this is achieved, Indian farmers will be able to handle the challenge of global competition. After thousands of years of enslavement and exploitation, with changes in the situation worldwide the chain that binds the hands and legs of the farmers - are breaking. Opportunists would like us to believe that there is happiness in living as slaves and that freedom is painful. Farmers cannot be deceived by such calumnies and allow themselves to be diverted from their determination to live with self-respect and in freedom. Editors Note: This extract has been edited to make for easier reading without in any way changing the meaning or the thrust of this part of the Declaration. Kerala farmers driven to death by falling produce prices Thiruvanathapuram, April 11 Incidences of farmers committing suicide following the fall in prices of agricultural commodities have been reported in Kerala. A farmer in the northern district of Palakkad ended his life by consuming pesticides after he was served notice from a bank for revenue recovery. The body of 38-year old Ganeshan, a traditional paddy cultivator, was found in his fields last week. Ganeshan, who owed Rs.2.75 lakhs to the Land Mortgage Bank by way of loan and interest, had hidden the notice he received from his family members. Farmers organizations say that the plight of a large number of farmers in the state is similar. The steep fall in the prices of agricultural commodities like rubber, coffee, coconut and tea as a result of globalisation have pushed farmers to penury. The Kerala farmers have suffered losses to the tune of Rs.6,650 crores in 2000-2001, according to a recent study conducted by the Kerala Agricultural Prices Board for a workshop on World Trade Organisation. Board Chairman Dr. Thomas Varghese said that the per capita loss suffered by farmers in Kerala would amount to Rs.12,000 per annum.

IMPLICATIONS OF AOA ON INDIAN AGRICULTURE:

The repercussions of the WTO Agreement and the removal of Quantitative Restrictions on imports are quite alarming. The fall in the prices of agricultural goods and dumping of cheap agriculture commodities from other countries is causing harm to the welfare of Indian farmers. Developed countries have imposed heavy tariffs to minimize imports, whereas in India tariffs are low. Due to this, various commodities are being dumped in India. The US is dumping five primary farm commodities in global markets in clear violation of WTO Agriculture rules. It is exporting corn,
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soybean, wheat, rice and cotton at prices far below their production cost in an effort to wipe out global competition. The continuation of high domestic support to agriculture in developed countries is a cause of concern as they encourage overproduction in these countries leading to low levels of international prices of agricultural products. At the same time the rich industrialized countries continue to subsidize farmers by giving them direct payments which are exempt from any reductions requirement and which essentially are cash handouts contingent on making adjustments in production. These payments are neither affordable nor helpful in a developing country. The result is that the industrialized countries continue to dominate world trade in agriculture while preventing India and other developing countries from achieving self-sufficiency in food production. The AoAs requirement to reduce domestic support will prevent the Indian government from providing the necessary support to farmers to compensate for shortage or overabundance caused by climatic fluctuations in market prices or any other factors. In fact subsidies are essential for Indian agriculture as 65 per cent of people are directly or indirectly dependent upon agriculture. It is no longer the question of mere economics because the social and political implications of developments in agriculture cannot be ignored. The domestic support provision also affects Indias food security. The Agreement exempts governmental expenditures relating to public stockholding for food security purposes from reduction requirement if the operation of such a programme is transparent and follows officially published objective criteria. This automatically subjects these programmes to external scrutiny. A developing country may acquire and release foodstuffs at administered prices; however, the difference between the international market price and the administered price will be included in the calculation of AMS. Therefore, the public stockholding system will be subject to reduction requirements if the AMS exceeds the de minimis level. The export commitment requirements, in turn, prevent India from providing subsidies to industry that are necessary for it to expand its share of world export markets. This limitation will also adversely affect the future of Indian agriculture.

The reduction in custom duties and non-tariff barriers as well as guaranteed minimum market share for imports will force Indian farmers to compete against large Transnational Corporations which have excessive financial power resulting from their oligopolistic control over world food markets. Indian farmers cannot compete on equal terms against the enormous financial and technological clout of the transnational giants of the rich countries, particularly when custom duties and other import barriers are reduced, and these companies are guaranteed a share of Indian market. Compliance with market access requirements will devastate domestic food production and India will become dependent on foreign foodgrains. To conclude, it is feared that the Agreement is not favorable to India due to the following reasons:
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i. The country will be compelled to import at least 3% of the domestic demand for agricultural products. ii. The government will be forced to reduce subsidies to farmers. iii. The Public Distribution System and Public Procurement System will have to be abandoned.

AGRICULTURE AND NEW TRADE ISSUES: Inclusion of new trade agenda issues in the next round is considered by some developing country negotiators as undesirable because it would distract attention from the market access issues that are deemed to be of greater importance to them. However, inclusion would have the advantage that more OECD non-agricultural groups would take part in the round which could counter-balance forces favouring agricultural (and other sectoral) protection. As well, better rules on some of those new issues would reduce the risk of farm trade measures being replaced or made ineffective by domestic agricultural measures and technical barriers to trade that may be almost as tradedistorting a risk that has grown considerably in the past year or so (Anderson 1998b; Roberts, Josling and Orden 1999). The new trade agenda issues are highly relevant to agriculture. Indeed, some of them figured prominently in the Uruguay Round negotiations on agriculture. For example, progress was made in designing rules for the application of sanitary and phytosanitary standards, and in disciplining the ability of governments to grant agricultural production subsidies. However, disciplines are weak, country-specific, or nonexistent in many other areas. These include competition-related policy and regulation (the nexus of state-trading, export taxes and cartels, and intellectual property broadly defined to include indications of origin, breeders rights and seed varieties), liberalization of ancillary services and input markets (distribution, marketing, use of new production technologies),and the extraterritorial application of production process standards. The UR Agreement on Sanitary and Phytosanitary (SPS) standards requires that SPS measures be imposed only to the extent necessary to ensure adequate food safety and animal and plant health on the basis of scientific information, and are the least trade-restrictive measures 15 available to achieve the risk reduction desired. Although there is substantial wiggle room in the wording of disciplines, the dispute settlement evidence to date shows that exporting countries can succeed in obtaining rulings against the most egregious cases of protectionist abuse of standards (Roberts 1998). As is generally the case, the SPS agreement was motivated by market access concerns. The relevance of much of the new trade agenda is that it mostly concerns domestic policies. For example, in some countries entry and arbitrage barriers may be significant; or state-trading entities (STEs) may have the exclusive right to import and/or to export so as to control domestic supply and distribution of agricultural commodities (Ingco and Ng 1998). India is an extreme case where there are restrictions on mobility and trade in agricultural goods, with private traders being prohibited to build up stocks in key staples or to engage in arbitrage activity across districts. In part such restrictions are enforced because of the existence of monopsony state buying agencies (e.g., in cotton).14 The point is a general one: the positive payoff to developing country agriculture from domestic regulatory reform can be substantial (Gisselquist and Srivastava (1997). Governments therefore need to determine how multilateral negotiations on the specifics of regulatory regimes could
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be helpful in the pursuit of such reforms. In practice, unilateral action would be required in any event; the challenge is to use the multilateral process to support beneficial reforms.

A key question is whether rule-making efforts to accommodate the new issues be de-linked from the agricultural negotiations on border measures? A suggestion by Josling (1998) is to incorporate all the new issues as they apply to agriculture under the three headings used in the Uruguay Round Agreement on Agriculture, viz. import market access, export subsidies, and domestic support. While such an approach may be necessary if the next round is confined to just agriculture and services, or may be more expedient, it simply prolongs the day when agriculture is fully integrated with other sectors in the WTO. While that separation remains, WTO rules are less clear, and exceptional (i.e., less-liberalizing) treatment is encouraged. Hence a more generic approach to the new issues is worthy of consideration. Such as appraisal requires finding a way to determine whether domestic policies that have detrimental effects on foreign suppliers can be justified on public interest grounds. More specifically, it can be asked whether a less trade-distorting policy instrument can be identified to achieve a particular objective at no greater cost. If so, the presumption would be that the measure should be contestable by other WTO members.

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CHAPTER 5
WTO ISSUES IN INDIA: India is one of the founding members of the World Trade Organisation (WTO) and participation in the WTO rule based system implies greater stability, transparency and predictability in the governance of international trade. The importance of WTO in promoting multilateral trade is being increasingly acknowledged. The WTO rules envisage nondiscrimination in the form of national treatment and most favoured nation (MFN) treatment to our exports in the markets of other WTO members. National treatment ensures that our exports to other member countries would not be discriminated vis-a-vis their domestic products. MFN treatment likewise ensures non-discrimination among various members in their tariff regimes and also other rules and regulations. Emerging from continued discussions in various multilateral for a , developmental issues along with trade related issues are being increasingly focused at the international level. Poverty concerns of developing countries along with development and trade policies are also being given cognisance. Need has been felt for integration of trade policies with development strategies, increasing support to areas of finance and debt relief, recognising the importance of technology for development, improvement in market access for developing countries in sectors like textiles, clothing and agriculture, and providing better access to the dispute settlement mechanisms for these countries. The issue of abuse of the anti-dumping procedure*, the problems of rules of origin criteria, technical barriers to trade, regional trading blocs, etc., are also being considered at various levels in the WTO. The Government of India has taken several steps to implement the policy commitments made under some of the agreements, particularly under the Agreement on Tariffs and Quantitative Restrictions Agreement on Agriculture (AoA), Trade Related Intellectual Property Rights (TRIPs), Trade Related Investment Measures (TRIMs), General Agreement on Trade in Services (GATS), apart from others. A strategy for tariff negotiations is, however, required. The additional 'non-trade' issues relating to transparency in government procurement practices trade and competition policy, trade and environment, and trade and labour standards proposed in the Singapore and the Geneva Ministerial need to be addressed for negotiations. The commitments regarding the technical barriers to trade, social agenda covering labour standards and environmental and phyto-sanitary issues also require establishment of certain national standards and technical regulations in a standardised and transparent system. At the same time, there are some issues on which India has expressed certain reservations. These are:

During the implementation of WTO agreements in the last six years, India has experienced certain

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imbalances and inequities in the WTO agreements. It is found that some developed countries have not fulfilled their obligations in letter and spirit of the WTO agreements, and many of the Special and Differential Treatment clauses, in favour of developing countries, added in various WTO agreements have remained in operational.

Taking advantage of the exception clauses provided in the WTO, most industrialised countries are still enforcing various regulations on foreign producers and suppliers.

Extending the scope of the investment regime in WTO beyond Trade Related Investment Measures and General Agreements on Trade in Services, is not appropriate.

A multilateral framework cannot guarantee an increase in FDI inflows although it threatens to adversely affect the quality of the inflows.

There are also other asymmetries present, as the WTO does not address the responsibilities of corporations which often impose trade restrictive clauses on their subsidiaries.

WTO has not been able to ensure abolition of non-trade barriers being imposed on labour and environmental considerations, including the linkage in certain Generalised System of Preferences (GSP) schemes to these issues.z The present negotiations strategy is based on the decisions taken at the Doha Ministerial in November 2001. The Doha Declaration focused mainly on TRIPs agreement, public health, trade and environment and the implementation related issues and concerns. Elaborate timetables on work programme for current negotiations in agriculture and services and other issues have been worked out. The Doha Conference presented mixed results for India. India's main concern was to speed up implementation of various agreements and to undo the imbalances and inequities present in some WTO agreements. From India's point of view, faster removal of the textile quotas maintained by developed countries like the USA was the most important implementation issue, which was, however, met with limited success. As far as environmental issues are concerned, the Doha declaration has mandated negotiations to clarify WTO rules in the light of multilateral environmental agreements. These negotiations could lead to developed countries raising barriers against goods from developing countries on the pretext of environmental protection. India had also reservations on starting negotiations on four new 'non-trade' areas, namely, multilateral investment, global rules on competition, transparency in government procurement and trade facilitation, i.e., framing of uniform custom's procedures for clearance of goods. India could secure only a twoyear respite and the study process would continue for two more years, i.e. up to the Fifth Ministerial Conference, when a decision about negotiations will be taken on the basis of an explicit consensus. Apart from mandated negotiations in agriculture and services where the process has already started, negotiations on market access for non- agricultural products is quite important for India, as reduction
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or elimination of tariffs, tariff peaks and tariff escalation as well as removal of non-tariff barriers will be quite helpful in exports. India would, of course, have to make offers even though the negotiations will be carried out under less than full reciprocity as far as developing countries are concerned. The other area where action is required is in regard to extension of protection of geographical indications to products other than wines and spirits under Article 23 of TRIPs and the relationship between TRIPs and the Convention on Biological Diversity (CBD), and Traditional Knowledge (TK) under Article 71.1. The process of legislation in regard to geographical indications needs to be completed. In the area of TRIPs and access to medicine, where additional flexibility is provided in separate ministerial declarations in terms of compulsory licensing and parallel imports, India can benefit in terms of lower prices of crucial life saving drugs and even promoting exports of pharmaceutical products. India and other developing countries should now ensure an average balance of reciprocity in these negotiations. There is need for a continued effort to handle some of the complex issues, as per international requirements as well as our domestic resources and other constraints, during the Tenth Five Year Plan.

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CHAPTER 6
CONCLUSION:

Infrastructure in relation to post-harvest technology, including rural communication, godowns, refrigerated storage, and transportation arrangements for perishable commodities is inadequate. The World Trade Agreement stringent requirements of sanitary and phytosanitary measures are yet to be understood. There is an urgent need to improve yield per drop of water. During the last few decades, farmers in various countries have shifted from flow irrigation to sprinkler, drip, and now membrane irrigation. Plant-scale agronomy is replacing field-scale agronomy. Precision farming techniques need to be adopted. Contract farming and corporate farming, with increased investments needs to grow. There is indeed an urgent need to quickly implement the Plant Variety Protection and Farmers Rights Act as well as Biodiversity Act without delay. Indian farmers need adequate information. Computerized systems of information need to be developed and the benefits of cyberspace should be extended to poor farm families. Given the complexities and escape routes available to the western world in the implementation of the agreements, one could question the methodologies followed in the reduction commitment norms. Market-access commitments have been tampered with dirty tariffication. Moreover, already low rates of tariffs have been reduced as compared to a reduction in high tariff rates.35 On the other hand, some of Indias low tariff bindings may be re-negotiated. Calculation of price support within the product-specific AMS is not clearly defined in the text. Therefore, it would be a good idea to bring a consensus among the member countries on this issue. Developing countries that have net-taxed their agriculture, may ask for credit of some sorts for having negative AMS. Further, blue-box policies may be suggested to be eliminated altogether or moved out of the exemptions for the calculation of current AMS. Moreover, along with export subsidies, export credits and guarantees may also be suggested to be brought under reduction commitments. The SPS and TBT agreements do affect agricultural markets. Modernizing our agricultural processing will not only enhance our exportmarket potential, it would also reform domestic food quality. Understanding the direction and magnitude of the effects of WTO agreements on Indian agriculture is a very difficult proposition. Some attempts have been made in the past to quantify the effects of the WTO Agreement and trade liberalization on Indian agriculture. While the direction of the gains to Indian agriculture may be correct, one may not agree with the assumptions of their models, and the magnitude and distribution of these gains. In the presence of imperfectly competitive export market structures, the increase in terms-of-trade for Indian agriculture may not be as high as predicted by the computable general equilibrium studies that implicitly assume perfectly competitive markets. Whatever little improvement may occur in the terms-of-trade, it will have negative or at best very little effect on farmers welfare, as supply response to terms-of-trade improvement is ambiguous. On this ground, developing countries may ask for further and sharp reductions in the export subsidies and domestic support given by the developed world. Indian agriculture will stand to gain through improvements in irrigation, transport, agricultural extension services and research. Expenditures on such items are exempt from domestic support reduction commitments under the green-box policies. In the emerging post-WTO world economic order, direct competition from imported goods cannot be prevented. With the eventual dismantling of the quantitative restrictions and reductions of industrial tariffs, our choice of warding off foreign competition is nothing more than wishful thinking. So, we must focus on how India can use the changed conditions to earn benefits. For this, first and foremost the economy has 35 Therefore, the Swiss Formula may be suggested to reduce higher tariffs by steeper cuts.
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to identify and develop a modern infrastructure to facilitate agricultural exports. The post-harvest technology and the storage facilities need to be upgraded. There is a need to commercialize the farm operations by improving the management and marketing techniques. This can be achieved by establishing mutually beneficial linkages with the industry. Thus, there is plenty of scope for India to change from a mere producer to an exporter of value-added and processed farm products and high quality seeds. Under the existing circumstances, the liberalization of world trade in agriculture will benefit developed countries more than developing countries. Given the conditions of high tariffs in the developed world and low or nil tariffs in developing countries, the removal of Quantitative Restrictions on agricultural commodities will tilt the balance of global trade in favour of the developed nations with detrimental effects on the producers in Third World countries. India must be alert to the implications of the WTO and its policies, and decide its own national priorities while taking policy decisions in the future. It is our duty not only to protect our national interest but also to promote it so as to take advantage of the situation. The situation is inescapable but there is scope to manipulate it in the national interest.

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GLOSSARY OF KEY POINTS ON PRODUCTIVITY SUBJECT

WORLD TRADE ORGINASATION:

An international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably, and freely as possible. WTO. An internationalagency which encourages trade between member nations, administers globaltrade agreements and resolves disputes when they arise. INTELLECTUAL PROPERTY: Intellectual property rights can be defined as the rights given to people over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creations for a certain period of time. URUGUAY ROUND: The Uruguay Round was the 8th round of multilateral trade negotiations (MTN) conducted within the framework of the General Agreement on Tariffs and Trade (GATT), spanning from 1986 to 1994 and embracing 123 countries as "contracting parties". The Round transformed the GATT into the World Trade Organization. The Round came into effect in 1995 and has been implemented over the period to 2000 (2004 in the case of developing country contracting parties) under the administrative direction of the newly created World Trade Organization (WTO). GENERAL AGREEMENT ON TARIFFS AND TRADE: General Agreement on Tariffs and Trade. Treaty organization affiliated with the United Nations whose purpose was to facilitate international trade. The primary actions of the organization were to freeze and reducetariff levels on various commodities. GATT was created in 1947, and was originally intended to become a part of the International Trade Organization (ITO); however, the ITO failed to be created, so the GATT was left as an independent organization. In 1994, GATT was superseded by the WTO.

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TRADE NEGOTIATIONS: The Trade Negotiations Committee (TNC) operates under the authority of the General Council.It was set up by the Doha Declaration, which in turn assigned it to create subsidiary negotiating bodies to handle individual negotiating subjects. THE AGREEMENT ON AGRICULTURE: The Agreement on Agriculture is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO on January 1, 1995. TARIFF: Tariff tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economicnot to increase a nation's revenue but to protect domestic industries from foreign competition. For that reason, protective tariffs, as they are often called, are opposed by advocates of trade free.

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ABBREVIATIONS

WTO: world trade orginasation. GATT: general agreement on tariffs and trade. AOA: agreement on agriculture. DSB: dispute settlement board. AMS: aggregate measurement support. EEC: european economic community. APMCs: agricultural produce marketing committees. SPS: sanitary and phytosanitary standards. STEs: state-trading entities. MFN: most favoured nation. TRIPs: trade related intellectual property rights. TRIMs: trade related investment measures. GATS: general agreement on trade in services. GSP: generalised system of preferences. CBD: convention on biological diversity. TK: traditional knowledge.

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REFERENCES
1. www.preservearticles.com 2. www.liberalsindia.com

3. www.termpaperwarehouse.com 4. www.bignerds.com

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