a. The plight of the
fanners in developing countries is directly linked to the level and kind of
subsidy given to the farming sector in the developed world. Exporters of
agricultural produce from developing countries face a protection offour to
seven times higher than the manufacturing sector, while exporting to developed
b. The agriculture
subsidies provided by the OECD countries are more than six times what they
spend on official development assistance for developing countries.
c. OECD governments
support sugar producers at the rate of US $ 6.4 billion annually – an amount
nearly equal to all developing countries exports.
d. The distortions in
the trade of agricultural commodities, created through the high level of
subsidies in the developed countries, shut out the potentially more competitive
agricultural products from developing countries like India. This poses high
risk to the very livelihood of more than 650 million people in India, who are
solely dependent on agriculture.
e. The legitimate
concerns of millions of farmers in India, for whom agriculture means survival
and not commercial operation, cannot be sacrificed to sub-serve the
agri-business profits of a few millions in the developed world which is
sustained through US$1 billion subsidies each day in the OECD countries
Origins and Nature
The General Agreement on Tariffs and Trade was put in was in Geneva, in
1948 by 23 countries including India in order to transform the world economy impaired
in the Second World War which followed the Great Depression . The GATT
comprised a trade pact among the member countries with the objective of forming
a permanent organisation, which would enforce a set of rules for the conduct of
world trade and also update these rules.
The agricultural sector has done a large extent in the fringes of the
process of trade liberalisation that has been going on for the last 25 years.
The rules of the General Agreement on Tariffs and Trade cover agricultural
trade, but country have found it convenient both to ask for aspersion to
protect their own domestic agicultural Interests and also to be less rigorous
in the enforcement of such rules even when derogations have not been requested.
The principles of the GATT recognise that agricultural trade based on
the international division of labour is to the advantage of each country whether
importer or exporter. But the existence of extensive domestic farm-support
policies has meant that such trade has often become divorced from considerations
of efficient production moreover, such trade as exists has been characterised
by price instability and uncertainty of income for producing countries.
One of the alternative, which was the establishment of domestic farm
policies which are less disruptive of trade, has the larger application.
Country would still preserve their right to run as extensive a farm programme
as they see fit either individually or in conjunction with other country.
In India it has been possible to maintain without any hindrance the
domestic policy instruments for promotion of agriculture or for subsidised
targeted supply of food grains. The domestic policy measures like the operation
of the Minimum Support Price (MSP), the public distribution system (PDS) as
well as provision of input subsidies to agriculture have not been constrained
by the Agreement. In fact, certain provisions contained in Annex 2 of the
Agreement, popularly known as the ‘Green Box’, give us the flexibility to
provide support for, research and extension services, pest and disease control,
marketing and promotion services, infrastructure development, payments made for
relief from natural disasters, payments under regional assistance programme for
disadvantaged regions and payments under environmental programmes. As
agriculture constitutes a vital segment of the Indian economy, finding greater
market access for India’s agricultural products, especially in the developed
country markets, would therefore, be one of the important issues during the
negotiations. Food security of our people, protection of the interests of
domestic farmers and their livelihood as well as the need for export
maximisation will be the guiding principles during the ongoing negotiations. Lessons Learned It is an attempt to
understand the implication of multilateral trade liberalization on Indian agriculture.
In particular, the research is to examine how the participation of India in WTO
– a full and liberalized trade regime would affect the agricultural trade. The necessity
to do this study comes from the fact that agriculture constitutes one of thelargest sectors of the Indian economy, which contributes about 26 per
cent of the total GDP oflndia and provides employment to almost 59 per cent of
India’s total work force. It is often said trade liberalization in agriculture
has inherent benefits for the developingcountries since they enjoy a comparative advantage in agriculture.
Nevertheless, in a competitive world characterized by rapid technologies
advance, the benefits of trade liberalization in agriculture to country’s like
India would essentially depend on therelative competitiveness of agriculture. Benefits to India liberalizing
its agricultural trade depends on the extent multilateral trade negotiations
can bring about trade liberalizations, eliminate excessive domestic and export
subsidies by the developed countries and provide market access in particular to
the developed countries markets. Recommendations for the future The rules governing
agricultural trade have undergone a major change as a result of the Uruguay
Round. The Agreement on Agriculture has extended to agriculture the
tariffs-only rule for border protection, banned additional export subsidies,
categorized domestic policies into those that are acceptable and those deemed
trade distorting, and improved the rules on the use of sanitary and
phytosanitary standards. The process of converting NTM to tariffs and the
binding of those and other tariffs is clearly the most significant of these new
developments. The existence of GATT-bound tariffs has the great advantage of
limiting the influence of domestic lobbies on the formulation and operation of