Globalization, WTO and Agriculture

Anjani Kumar
 Globalization
Globalization is defined in many ways and viewed from
different aspects.
In simple terms globalization means expansion of
economic activities across the globe. It
It refers to a process of economic integration, economic
openness and economic interdependence in the world
economy.
The process also involves profit and competition which are
the driving forces of globalization
Globalization evokes a positive as well as a negative points
of view.
It is positive when it is viewed as a process of deepening
integration of world economy. If it is viewed as a strategy
for disintegration, it becomes suspect.
 Consequences/Impact of Globalization

Trade Liberalization

New Technologies

New forms of industrial organization

The process of Globalization

Neo-Liberal Model

Inequalities and Asymmetries

Unequal Partnership

Reduced Autonomy of the Nation

Important Role of the State

 Globalization

Need for Reshaping Rules

Corrective Measures
 WTO
The World Trade Organisation (WTO) was established in 1995 keeping
in mind the need for the multilateral trade system to promote global
prosperity.
It is a successor to the General Agreement on Tariffs and Trade
(GATT) which was a temporary legal agreement.
It provides legal and institutional basis for international trade on a
multilateral platform.
It is a package form which has to be accepted by members in its
totality.
WTO aims at
(i) a smooth administration of international trade agreements and
trade negotiations,
(ii) prevention and settlement of trade disputes among members,
(iii) overseeing and review of national trade policies,
(iv) technical assistance and training programmes to developing /
least developed countries in trade policy issues, etc.
 WTO
A forum which deals with the rules of trade between nations at a global or
near global level.
Its purpose is to promote international trade and to remove or minimize
trade distortions.
Located at Geneva, Switzerland.
Started working under the rules of GATT, 1994
The original GATT established in 1947.

WTO created as a result of Uruguay round negotiations of GATT from

1986-1994.
Present membership: 164
India founding member of WTO
 WTO

The WTO package also includes obligations for the

governments of member countries to formulate and apply
their laws and regulations relating to trade.

The trade relations among WTO Members are carried through

discussions, negotiations and decisions; whereas trade
disputes, if any, are settled through Dispute Settlement Board
(DSB).
 WTO Structure

Ministerial
Conference

Dispute
General Trade policy
settlement
council review body
body

Dispute Council for

Council for Council for
settlement trade in
trade in goods TRIPS
panels services
 Ministerial conferences

Singapore, 9-13 December, 1996

Geneva, 18-20 May, 1998
Seattle, 30 November to 3 December, 1999
Doha, 9-13 November, 2001
Cancun, 10-14 September, 2003
Hong Kong, 13-18 December, 2005
Geneva, 30 November, 2 December, 2009
Geneva, 15-17 December, 2011
Bali, 3-6 December 2013
Nairobi, 15-19 December, 2015
Beunos Aires, 11-14 December, 2017 (to be held)
 Principles of WTO

MFN treatment
Requires countries to conduct trade without
discriminating among countries
National treatment
Requires countries to refrain from imposing
internal taxes on imported products at rates
higher than those levied on similar domestic
products
 WTO Agreements

An umbrella agreement (agreements establishing the

WTO)
Agreements for each of the three broad areas of trade
covering;
Goods
Services and
Intellectual property
Dispute settlement and
Reviews of governments trade policies.
 Agreement on Agriculture (AoA)
A set of rules pertaining to international agricultural policy development
Mandate:
To liberalize trade in agriculture
To decrease existing distortions in agricultural sector
Implementation Conditions
Market access: Various trade restrictions confronting imports
Domestic support: Subsidies and other programmes including those that
raise or guarantee farm gate prices
Export subsidies: Subsidies used to make exports artistically competitive

These three main areas of the AoA are also known as its
three pillars.
Further, special and differential treatment for developing
countries is an integral part of the three pillars and non-
trade concerns are also to be taken into account.
 Genesis of AOA

Agriculture was exempted from GATT

Steady expansion of American production of special agril
regime & protectionist measure influenced world prices.
Creation of EC in 1957 & promulgation of common
Agricultural policy (CAP) , intervention in agri became a
regular feature
In early 1990s, agriculture in many industrialized countries
was regulated, subsidized and centrally planned to an
exceptional degree.
State purchasing, distribution, subsidies & administered
pricing were prevalent

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 Market Access

Elimination of non-tariff barriers through tariffication

Fixing of bound rates or tariff quota
Bound tariffs
Gradual reduction of bound tariffs over a period of time
Abolition of non-tariff barriers like import quotas, import
licenses, foreign exchange restrictions etc.
 Domestic Support

Support categorized to product support and non-product

support
The reduction commitments refer to total level of support and
not to individual commodities
Distinguishes between support programmes that stimulate
production directly and those with no direct effects
De minimis exemption of 5 per cent of value of production to
developed countries and 10 per cent to developing countries
applicable
Boxes of support: Blue box, Green box and Amber box
 Domestic
support Developing
country
De minimis
exemptions:
exemptions AMBER BOX BLUE BOX Investment and
Trade distorting (Total AMS) Production limiting input subsidies,
domestic support Trade distorting payments based on domestic support
exempt for domestic support no more than 85 % to encourage
subsidies that are: subject to of the base level of diversification
reductions production from illicit crops
etc

Non-product
Product subsidies
specific : Less
specific: Less
than 5% of GREEN BOX
than 5% of
value of Non- or minimally trade
value of
production distorting policies
production
(10 % for including direct
(10 % for
developing payments on
developing Non-
countries) Product environment, food aid,
countries) product
specific insurance, income safety
specific
AMS nets etc
AMS

Source: De Gorter, Ingco and Ignacio, 2003

 Green Box:
The green box subsidies include the support provided through publicly-funded
government programmes, including government revenue foregone.

These subsidies may be in the form of programmes that are not targeted at
particular products and include direct income supports for farmers that are
not related to (are decoupled from) production levels or prices.

Examples are research, training, extension, advisories, inspection, marketing

and promotion, infrastructure including electricity, roads, market, ports, water
supply, dams, drainage, environmental protection, regional development
programmes, etc.

These are allowed without limits provided there is compliance with the policy-
specific criteria.

Further the green box measures are permitted only if there is no trade
distortion or a minimal trade distortion is caused. Particularly, the price
support measures must not be included in the green box.
Amber Box:
This box included all domestic support measures directly related to production
like support prices or subsidies.

The reduction commitments were expressed in terms of Aggregate Measures

of Support (AMS).

The measures for such support include a minimal support price to farmers for
various crop produces.

In the WTO package, the limits allowed for supports under the amber box
were 5 per cent of agricultural production for developed countries 10 per cent for
developing countries
Blue Box:
The blue box subsidies are the subsidies given in a way that reflects reduced
trade distortion. Normally such support should have been in the amber box,
but it is allowed under the Article 6(5) of AoA.
Blue Box:
The blue box subsidies are the subsidies given in a
way that reflects reduced trade distortion. Normally
such support should have been in the amber box,
but it is allowed under the Article 6(5) of AoA.

Sometimes another box, namely S&D box, is also

mentioned, which covers exemptions for developing
countries through special and differential treatment
including provisions for subsidies to encourage
diversification from growing illicit narcotic crops by
farmers.
 Export Competition

Both the amount of money spent on export subsidies and

the quantities of exports that receive subsidies have to be
reduced.
India does not provide any explicit subsidies on
agricultural products and does not have any reduction
commitments
The only subsidy available to Indian exporters are
Exemption of export profit from income tax under section 80-HHC
of income tax act
Subsidies on cost of freight on export shipments of fruits,
vegetables and floricultural products
 Reduction Targets for Agriculture

Developed countries Developing countries

(6 years: 1995 to 2000) (10 years: 1995 to 2004)
Tariffs
Average cut for all agri. -36% -24%
products
Minimum cut per product -15% -10%

Domestic support
Total AMS cut for sector -20% -13%
Export subsidies
Value of subsidies -36% -24%
Subsidised quantities -21% -14%
 Bound Tariffs: Indias Commitments
Edible oils: 300 per cent
Processed products: 150 per cent
Primary agricultural products: 100 per cent
Some other products like skimmed milk powder, maize,
rice, spelt wheat millets: 0 per cent

Bound rates Tariff lines

0-85 % 134
100 % 323
150% 213
300% 25
Total 695
 Agreement on SPS

SPS agreement sets out the basic rules to ensure that in

international trade of food commodities, the consumers are
supplied with food that is safe to eat.
Agreement lays down guidelines for assessing risks to
human, animal or plant life
SPS agreement allows countries to set their own standards.
The rules should not arbitrarily or unjustifiably
discriminate between countries where identical or similar
conditions prevail.
 SPS Agreement
contd

Member countries are encouraged to use international

standards, guidelines and recommendations where they
exist.
Countries can set higher standards based on appropriate
assessment of risks so long as the approach is consistent, not
arbitrary.
The SPS measures can take many forms, like products
disease-free area, inspection of products, specific treatment
of products, setting of allowable maximum levels of
pesticide residues etc.
 Technical Barriers to Trade
Technical regulations and standards for packing,
marketing, labeling, testing should not create barriers to
trade.
To enable members to prevent fraud, protect national
security, human and plant health
Harmonizing with international standard
Transparency
Increasingly being used as NTB
Developing countries do not have appropriate technology
and capacity of international standard
Improper notifications

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 TBT Contd

Unlike SPS, these are technical details to be complied for

exports. Eg. Food labeling
Labels position, lettering, composition, nutrient content,
quality, grading, etc.
India to look carefully into the Code of good trade
practices for the preparation, adoption and application of
standards by standardizing bodies.
State level nodal agencies to serve as information network
for this purpose.

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 TBT Versus SPS Measures

The SPS and TBT Agreements differ in scope.

The SPS Agreement applies to measures whose purpose is
to protect human, animal and plant life and health.
The TBT Agreement covers all technical regulations and
voluntary standards, and the procedures to ensure that
these are met, except when these are SPS measures.
The two Agreements have some common elements,
including basic obligations for non-discrimination and
similar requirements for the advance notification of
proposed measures and the creation of information offices
(called Enquiry Points).

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 Agreement on rules of origin

Relates to criteria to determine where a product is made.

Linked to trade measures such as quotas, preferential

tariffs, anti-dumping action, countervailing measure.

Preferential : criteria to enjoy tariff preferences & other

trade Benefits

Non-preferential: application of duty rates to imported

goods

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 Intellectual Property Rights (IPR) Agreement

The agreement on Trade Related aspects of Intellectual

Property Rights (TRIPS) gives exclusive rights to the
creators for their inventions, designs or other creations.
The rights prevent others from using them without
prior consent, and hence enable to negotiate payment in
return to using them
TRIPS apply to
Copy rights
Trade marks
Geographical indications
Industrial designs
Patents
Trade secrets and so on
 Patents

The term patent refers to a right granted to anyone who

invents or discovers any new and useful process, machine,
article of manufacture, or composition of matter, or any
new and useful improvement thereof.
Patent protection is available for both products and
processes, in almost all fields of technology.
It exclude diagnostic, therapeutic and surgical methods,
plants and animals (other than micro-organisms), and
biological processes for the production of plants or
animals (other than microbiological processes).
Patents protect the holders for a period of 20years as per
the present agreement
 Protection of Plant Varieties

Plant varieties are protectable through registration

under a separate system.
Protection of Plant Varieties and Farmers Rights
(PPV&FR) Authority established under PPV&FR
act, 2001, is the appellate body for plant variety
registration in India.
PPV&FRA is located at New Delhi
The mandate of PPV&FRA include
To provide for the establishment of an effective system for
protection of plant varieties
To protect the rights of farmers and plant breeders
To encourage the development of new varieties of plants
 Geographical Indications

A geographical indication (GI) is a name or sign used on

certain products or which corresponds to a specific
geographical location or origin (eg. a town, region, or
country).

GI may act as a certification that the product possesses

certain qualities, or enjoys a certain reputation, due to
its geographical origin.

TRIPS include special provision for GIs and calls for

prevention of misuse of place names.
 Geographical Indications
contd
In India, the parliament passed the geographical
indications of goods (registration and protection) Act in
1999.
The Act is administered by the Controller General of
Patents, Designs and Trade Marks, who is the Registrar of
Geographical Indications.
The Geographical inductions Registry is located at
Chennai.
 Geographical Indications
contd

Any association of person, producers or organization or

authority established by or under the law is eligible to apply
for a GI.
The applicant must represent the interest of the producers and
should be intended to prevent unauthorised use of registered
GI by others.
Once registered, the owner can retain the rights for ten years
and can be renewed later.
Some of examples of possible agricultural GIs in India are
basmati rice, Darjeeling tea, Alphonso mango, Nagpur orange
etc.
 Examples of GI
Darjeeling Tea
Kangra Orange
Koorg Orange
Basmati rice
Palakkad matta rice
Jasmine rice
Nanjanagud banana
Pochampally ikat
Chanderi saree
Kanchipuram saree
Mysore silks
Mysore sandal soaps and oils
 Dispute Settlement

The WTO members do not have to take a unilateral

action against any perceived violation of the WTO
agreements by another member. Rather they will
refer their case to the multilateral dispute settlement
mechanism.

All such cases of dispute are published on the WTO

website (http://www.wto.org/).

Other member can present their views in the matter if

they wish.

The findings and recommendations of the WTO dispute

settlement body (DSB) are binding upon the members.
 Non Trade Concerns

A number of non-trade concerns have been raised by WTO members

in the negotiations. These include
food security,
livelihood and poverty alleviation,
rural development,
protection of the environment,
food safety, and
animal welfare.
The WTO Committee on Agriculture has observed that in the
negotiation process on implementation of AoA, a serious
difference of opinion exists in the extent and the ways to take
into account non-trade concerns.

The non-trade concerns of developing countries are

fundamentally different than those of developed countries.
Thank you