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CHAPTER 1
INTRODUCTION:
The WTO was born out of negotiations, and everything the WTO does is the result ofnegotiations. The bulk of the WTOs current work comes from the 198694 negotiationscalled the Uruguay Round and earlier negotiations under the General Agreement on Tariffsand Trade (GATT). The WTO is currently the host to new negotiations, under the DohaDevelopment Agenda launched in 2001.
Trade relations often involve conflicting interests. Agreements, including those painstakinglynegotiated in the WTO system, often need interpreting. The most harmonious way to settlethese 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 itsSecretariat to coordinate the activities. The Secretariat employs over 600 staff, and itsexperts lawyers, economists, statisticians andcommunications experts assist WTO members on adaily basis to ensure, among other things, thatnegotiations progress smoothly, and that the rules ofinternational trade are correctly applied and enforced 155members on 10 May 2012.
GATT is now the WTOs principal rule-book for tradein goods. The Uruguay Round also created new rules fordealing with trade in services, relevant aspects ofintellectual property, dispute settlement, and trade policyreviews. The complete set runs to some 30,000 pagesconsisting of about 30 agreements and separate commitments (called schedules) made byindividual members in specific areas such as lower customs duty rates and services market-opening.
ME
ANI
NG:
India
isone
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ofthefounding
membersofWTOwhichcameintoexistence
onJanuary01,1995replacingGATT(GeneralAgreement onTariffsandTrade)and
prom
isingtheherald ofneweraintherule
based
system of
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governingand
prom
otinginternationaltradeconcomitantwiththeneed
s oftheon-going
processorglobalization.
Wherecountrieshavefacedtrade
barriersand
wantedthemlowered,thenegotiationshavehelpe
d toopen
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marketsfortrade
. ButtheWTO isnot
justaboutopeningmarkets,andinsomecircumstancesitsrulessupport
maintainingtrade
barriers
forexam
ple,to
protectconsumers or
preventthespread ofdisea
se.At
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itsheartarethe
WTOagreements,negotiatedandsigned bythe
bulkoftheworldstradingnations.Thes
edocuments
providethelegalgroundrules
forinternationalcommerce.Theyareessentially
contracts,
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bindinggovernme
ntstokeeptheirtrade
policieswithinagreedlimits.Althoughnegotiatedandsigned bygove
rnments,thegoalis tohelp
producersofgoods
andservices,exporters,andimportersconducttheir
business,
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whileallowinggove
rnmentstomeetsocial andenvironmentalobjectives.
Traderelationsofteninvolveconflictin
ginterests.Agreements,includingthose
painstakin
glynegotiatedintheWTOsystem,oftenneed
interpreti
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ng.Themostharm
oniouswaytosettlethesedifferencesisthroughsomeneutral
procedure
based onanagreed
legalfoundation.Thatisthe
purpose
behind the
disputesettlement
processwrittenintotheWT
Oagree
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ments.
Ther
e areanum
berofwaysoflooking attheWorldTradeOrganization.It isanorganizati
onfortradeopening.It isaforumforgove
rnmentstonegotiatetradeagreements. Itis a
place
forthem
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tosettletradedispu
tes.Itoperates asystem oftraderules.Essentially,theWTO isa
placewheremem
bergove
rnmentstrytosortoutthetrade
problemsthey
facewitheachother.
TheWTOagreement
s arelengt
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hyandcomplex
becausetheyarelegaltextscovering awiderangeofactivities.Butanum
berofsimple,fund
amentalprinciplesrunthroughout allofthesedocu
ments.These
principlesarethefoundation of
themulti
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lateraltrading
system
WH
AT
WTO
STA
NDS
FOR
AND
WH
AT
WT
O
DO:
There areanum
berofwaysoflooking at
theWorl
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dTradeOrga
nization.It isanorganizationfortradeopening.It isaforumforgovernmentstonegot
iatetradeagreements. Itis a
placeforthemtosettle
tradedisputes.Itoperates asystem oftraderules.Esse
ntially,
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theWTO isa
placewheremem
bergovernmentstrytosortoutthetrade
problemstheyfacewitheachother
.
TheWTOagreements arelengthyand
complex
becausetheyarelegaltextscovering awide
rangeof
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activities.Buta
numberofsimple,fundamental
principlesrunthroughout allofthesedocuments.These
principlesarethefoundation ofthemultilateral
tradingsystem
TheWTO isrun
byits
member
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governments.All
majordecisionsaremade
bythemem
bership asawhole,either byministers(whousually
meetatleastonceeverytwoyears) or
bytheiramba
ssadors ordelegates(whomeetregularlyinGeneva).
Whil
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e theWTO isdriven by
itsmem
berstates, itcouldnotfunctionwithout
itsSecretariattocoordinate theactivities.The
Secretariatemploysover600staff,anditsexperts
lawyers,economists,statisticiansandcommuni
cations
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experts assistWTO
memberson adaily
basistoensure,amongother
things,thatnegotiations
progresssmoothly,
andthattherulesofinternationaltradearecorre
ctlyappliedandenforced
It isa149-mem
berorga
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nizationwithPasc
alLamayasitshead.Itrepresentsallthetradingnations oftheworld,whoimport-
exportgoods &services.CreatedonJan1,1995
, itwasconsideredthe
biggestreform intradesince
WWII. Its
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predecessor,GAT
T(GeneralAgreement onTariff &Trade),hadatumultuous 47yearshistory.GATTmade
abeginningin1948, and
providedaframewor
k fortradeexpansionvis--visremoving
barrierson
freemove
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mentofgoods
andservices.It
provided
platformfor 8tradenegotiations initscheckeredhistoryuntil1994, the
lasttradenegotiationstheUruguayRound,result
ed inthecreationofWTO.Ineachofthese
Rounds
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(highlevelnegotiatio
ns),theWest,mostlyEuro
pe,Japanand
NorthAmericanegotiatedtradedealswiththem
selves inmind.Thedevelopingworldinclu
dingIndia,China,mostofAfricaandLatin
America
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wereforgottenas
backwardandwithoutanyclout. ForExample, theKennedyRound of1963quadrupled theworld
trade. AtthattimeIndiaandChinahadnotemer
gedandhence didnotfigure intheworldtrade
talks.Toky
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oRound of1973
-79quadrupled thealreadyquadrupledworldtradeinlast25years. Ineachcasetariffs
andtradedistortingsubsidieswere
progressivelyreduc
edonindustrialgoods &services.TheWestenjoy
edunpr
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ecedented
prosperity.
US&Japanwerethe
biggestgainers,followed
bytheallthenations oftheEuro
pe.
Poorcountriesstayed
poor.Nobodyspoke ontheir
behalf,andtheyhadnoclouttomaketheir
prese
ncefelt.
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There aresimple
reasonsforthat.First,the
poorcountrieshadnomoney tocompeteintheinternationalmark
etwithqualitygoods,secondsubsidies
provi
dedbythenations toencouragedevelopmentafter
WWII
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madetheir
products
muchchea
per.Hence adiewascastfor
poortostay
poor.In1982,China
burstonthe
internationaltradescene. In2002,India
became
anupcomingstarfortheworld totakenote.Henc
e anew
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tradebodywasneed
ed toregulateandencouragetrade.Hence attheUruguayRound, adecisionwastakentoset
up anewbody(WTO)tomanagethegrowing
trade.
TRA
DE
NEG
OTI
ATI
ONS
:
TheWT
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Oagreements
covergoods,servicesandintellectual
property.Theyspelloutthe
principlesofliberalization,
andthepermittedexce
ptions.Theyincludeindiv
idualcountriescommitmentstolowercustoms
tariffs
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andothertrade
barri
ers,andtoopenandkeepopenservicesmarkets.Theyset
proceduresforsettlingdisputes.Thes
eagreements arenotstatic;theyarerenegotiate
dfromtimetotimeandnewagreementscan
beadde
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d tothe
package.
Many arenow
beingnegotiatedunder theDohaDevelopmentAgenda,launched
byWTOtrademinis
tersinDoha,Qatar, in
November2001.
IMPLE
ME
NTA
TIO
N
AND
MO
NIT
ORI
NG:
WT
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Oagreements
requiregovernmentstomaketheirtrade
policiestrans
parent bynotifyingtheWTOaboutlaws
inforceandmeasuresadopted.VariousWTO
councilsandcommitteesseektoensurethat
theserequi
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rementsare
being
followedandthatWTOagreements are
beingproperlyimplemented.AllWTOmem
bersmust
undergoperiodicscrutinyoftheirtrade
policies
andpractices,eachreviewcontainingreports bythe
country
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concernedandthe
WTOSecretariat.
DIS
PUT
E
SET
TLE
ME
NT:
TheWTOs
procedureforresol
vingtradequarrelsunder theDisputeSettlement
Understandingisvitalforenforcingtherulesand
therefore
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forensuringthat
tradeflowssmoothly.Countries
bringdisputestotheWTO iftheythinktheirrightsunder theagree
ments arebeinginfringed.Judgments byspeciallyappoi
ntedindependentexpertsare
based oninter
preta
tionsof
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theagreements
andindividualcountriescommitments.
Thesystemencouragescountriestosettletheirdiffer
encesthroughconsultation.Failingthat,theycan
follow acarefullymappedout,stage-by-stage
proce
durethat
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includesthe
possi
bilityof aruling bya
panelofexperts,andthechance toappealtheruling onlegalgrounds.
Confidence inthesystem is
borne out
bythenum
berofcases
broughttotheWTO around
300cases
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ries,includinglonge
rtime
periods toimplementagreementsandcommitments,measurestoincreasetheirtradi
ngopportunities,andsupporttohelpthem
build
theirtradecapacity,tohandledisputesandto
implemen
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eaimstohelp
developingcountriesdeveloptheskillsandinfrastructureneeded toexpandtheirtrade.
WT
O IS
MO
RE
BEN
EFI
CIA
L
FOR
LESS
DEV
ELO
PED
CON
TRI
ES:
Giving
themmore
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timetoadjust,
greaterflexi
bilityandspecial
privileges;overthree-quartersofWTOmem
bersaredevel
opingcountriesandcountriesintransitionto
marketeconomies.TheWTOagreements
givethem
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nationalorganizati
ons,themediaandthegeneral
public onvariousaspects oftheWTOandtheongoing
Dohanegotiations,withtheaimofenhancingcoop
erationandincreasingawarenessofWTOactivi
ties.
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textiles,andwith
specificissuessuchasstatetrading,
productstandards,subsidiesandactionstakenagainst
dumping.
SER
VIC
ES:
Banks,insurance
firms,telecommunicationscompanies,touropera
tors,hotel
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ement onTrade inServi
ces(GATS).WTOmem
bershavealsomadeindiv
idualcommitmentsunderGATSstating
which oftheirservicessectorstheyarewilling
toopentoforeigncompetition,andhowopen
thosemark
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etsare.
INT
ELL
ECTUAL
PRO
PER
TY :
TheWTOsintellectual
propertyagreementamounts torulesfortradeand
investmentinideasandcreativity.Therulesstatehow
copyrights,
patents,trademarks,geographicalnames
usedto
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reviewfor
bringing
it inconformitywithWTO
provisions.A
particular
partofArticle 27mentioned
below
hasdirectimplicationsforagriculture.Even
theproduct
patentaspectwillhaveimplicatio
nsfor
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systemhas
beenprop
osed
(c)widespread
patentsearchfacili
tyforeducationalandentre
preneurialnetw
orksandcenters sothatquality ofresearchandeduc
ationcan
becompetitive,(d)
justas agloba
lregist
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B
Thecountryhasmadesignificantimprovementsinagricultural
production,
buttheachie
vementshave
beenmainlyconfinedto afewareas
.Themajorchallenges forouragriculture
system
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wouldalways
beincreasing
productionand
productivitytoensurefoodsecurityfortherising
popu
lation.Meetingthischallengemeansalsoensur
ingfoodsecurityanda
betterstandardof
living for
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statisticiansandcom
municationsexperts assistWTOmem
berson a
dailybasistoensure,amongotherthings,
thatnegotiations
progresssmoothly,andthatthe
rulesofinternationaltradearecorrectlyapplied
andenfor
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regimeinmanysigni
ficantways. Inthisround,
besidesnegotiatio
nareasoftariffandnon-tariffmeasures,three
newareasweretouched:
1.Tradein
services,
2.Traderelatedin
vest
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rtsintoitsown
market.Thesystemalsogivesdevelopingcountriessomeflexi
bilityinimplementingtheircom
mitments.
TheUruguayRoundalso
persists
withthistrend,suchas inthegovernment
proc
urement
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tionovertime.Gain
sfromtheUruguayRound
At thetimeofsigningtheMarrakeshagreement
, thefollowingkindsofgainswereto
benefitthe
signatories:
1.Staticgains
due
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miesthat
have
beenhighly
protec
ted.
3.Dynamicgain
sduetoim
provedte
chnicalefficiencyorlo
wer
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tradeinservices,trade
-relatedintellectual
propertyrights(TRI
PS),andtrade-relatedinvestmentmeas
ures(TRIMS),inthreedistinctthematicgrou
ps.
Thefirstwasreducingspecifictrade
barriersand
improvin
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gmarketaccess for
partnercountries.Areasunderthisweretariff
s,non-tariffmeasures,tropical
products,natur
alresource-
based
products,textilesandcloth
ing,andagriculture. Asecondthemewasone
ofstren
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ff
c
u
to
v
e
r
d
if
f
e
r
e
n
t
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m
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o
d
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ie
s,
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s
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n
g
a
s
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e
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p
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i
v
it
y
t
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h
r
o
ug
h
o
u
t
I
n
d
ia
.
1
6
E
n
v
ir
o
n
m
e
n
ta
l
p
r
o
g
r
a
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m
m
e
sa
r
e
e
x
e
m
p
t
fr
o
m
c
u
ts
i
n
s
u
b
si
d
ie
s
s
o
t
h
Page | 129
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at
t
h
ee
n
v
ir
o
n
m
e
n
t
p
r
o
te
ct
i
o
n
p
r
o
g
r
a
m
m
e
s
c
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-
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t
s
u
bsi
d
ie
s
o
r
l
o
w
e
r
ta
ri
ff
s
a
s
m
u
c
h
a
s
d
e
v
el
o
p
Page | 132
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e
d
c
ou
n
tr
ie
s
a
n
d
it
h
a
s
b
e
e
n
g
i
v
e
n
e
n
o
u
g
h
ti
m
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e
t
o
co
m
p
le
te
it
s
o
b
li
g
at
i
o
n
s.
D
is
t
o
rt
i
o
n
s
i
n
t
h
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e
m
a
rk
et
p
la
c
e
w
o
u
l
d
r
e
d
u
c
e,
w
h
ic
h
w
o
u
l
d
b
e
n
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e
fi
t
th
e
e
n
d
c
o
n
s
u
m
e
r.
THEC
H
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R
A
C
T
E
R
I
S
T
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C
S
O
F
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O
R
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L
D
T
R
AD
E
O
R
G
A
N
I
Z
A
T
I
O
N
A
R
E
AS
FOL
L
O
W
S
:
W
It
A
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A
It
It
W
It
It
W
BEN
EFI
TS
FORINDI
A:
R
e
d
u
ct
Page | 138
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i
o
n
in
e
x
p
o
rt
s
u
b
si
d
ie
s
o
n
f
a
r
m
p
r
o
d
u
ct
s
i
n
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u
r
al
ex
p
o
rt
s
m
o
r
e
c
o
m
p
et
it
i
v
e.
E
x
p
o
rt
s
w
il
l
i
n
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c
r
e
as
e
t
o
$
1
.
5
b
il
li
o
n
b
y
2
0
0
5
.
F
r
u
it
s,
o
il
s
e
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e
d
s,
co
tt
o
n
,
a
n
d
m
il
k
p
r
o
d
u
ct
s
w
il
l
b
e
b
e
n
e
fi
te
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d
d
u
et
o
s
u
b
si
d
y
r
e
d
u
ct
i
o
n
s.
T
h
e
r
e
w
il
l
b
e
h
i
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g
h
e
rp
ri
c
e
r
e
al
iz
at
i
o
n
s,
w
h
ic
h
w
il
l
h
el
p
i
n
i
m
p
r
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-
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u
n
tr
ies
w
il
l
b
e
f
o
r
c
e
d
t
o
p
r
o
d
u
c
e
o
n
l
y
w
h
at
t
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h
e
y
ar
e
b
e
st
at
.
T
h
is
w
il
l
m
e
a
n
i
n
c
r
e
a
s
e
d
e
ff
ic
Page | 148
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ie
n
c
ya
n
d
h
i
g
h
e
r
p
r
o
d
u
ct
i
v
it
y
t
h
r
o
u
g
h
o
u
t
Page | 149
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I
n
d
ia.
1
6
E
n
v
ir
o
n
m
e
n
ta
l
p
r
o
g
r
a
m
m
e
s
a
r
e
e
x
Page | 150
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e
m
p
tfr
o
m
c
u
ts
i
n
s
u
b
si
d
ie
s
s
o
t
h
at
t
h
e
e
n
v
ir
o
Page | 151
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n
m
e
nt
p
r
o
te
ct
i
o
n
p
r
o
g
r
a
m
m
e
s
c
o
n
ti
n
u
e
u
n
a
Page | 152
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b
at
e
d.
I
n
d
ia
d
o
e
s
n
o
t
h
a
v
e
t
o
c
u
t
s
u
b
si
d
ie
s
o
Page | 153
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r
l
o
we
r
ta
ri
ff
s
a
s
m
u
c
h
a
s
d
e
v
el
o
p
e
d
c
o
u
n
tr
ie
s
Page | 154
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a
n
d
ith
a
s
b
e
e
n
g
i
v
e
n
e
n
o
u
g
h
ti
m
e
t
o
c
o
m
p
le
te
Page | 155
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it
s
o
bli
g
at
i
o
n
s.
D
is
t
o
rt
i
o
n
s
i
n
t
h
e
m
a
r
k
et
p
la
c
Page | 156
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e
w
o
ul
d
r
e
d
u
c
e,
w
h
ic
h
w
o
u
l
d
b
e
n
e
fi
t
t
h
e
e
n
d
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c
o
n
su
m
e
r.
C
H
A
P
T
E
R
THE
AGR
EE
ME
NT
ON
AGR
ICULTU
RE:
The
Agre
emen
t on
Agri
cultu
re
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signe
d at
the
end
ofthe
Urug
uay
Roun
d of
negot
iatio
ns
deals
main
ly
with
the
natur
e of
entry
of
the
imported
good
s in
dome
stic
mark
ets
and
thenatur
e of
supp
ort
provi
ded
to
the
dome
stic
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farm
ers
and
expo
rtersof
agric
ultur
al
good
s by
their
gove
rnme
nts.
It
also
lists
the
differ
ent
types
of
cropssubsi
dies
that
have
to be
reduc
ed.
TheAgreement onAgriculturesigned attheend
ofthe
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UruguayRound ofnegot
iations,whichhasasitsobjectivetheestab
lishmentof afairandmarket-orientedagric
ulturaltradingsystem,dealtwiththreegrou
ps of
issues.Thesewere
b
r
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l
MA
RKE
T
ACC
ESS:
M
arketaccesswassought to
beincreasedin anum
berofways.First,theAoAmadetarrificationmandatory.Thatis,countrieshadtodism
antle,in a
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phasedmanner,any
non-tariff
barrierssuchas a
banonimportsof
particularagricultural
productsorceilings
setonthequantitiesofindividual
productsthat
couldbeimported(otherwisetermedquantitative
restriction
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s orQRs), andonlyuse
importtariffs orduties asmeans of
protection.
Second,theagreementrequiredthatthe
developedcountriesreducetheirtarifflevels by36
percentoverasix-year
periodfromthestart
ofimpl
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ementation,witha
commitmenttoreducetariffs oneachtariffline
by aminimumof10
percent.Developing
countrieswererequiredtoreducetariffs by24
percentovera 4-year
period,andensure atariff
reduction
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of10
percent ineach
tariffline17.Third, allcountrieshadtospecify
ceilings atwhichtheirtariffswere
bound, or
themaximumleveltowhichtariffswould be
raisedunderanycircumstances.Finally,there
wasa
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by1995and5
perce
nt ofthesame
by2000inthecaseofthedevel
opedcountriesand2004inthecaseofthe
developingcountries.Ifcountriesdidnotrefle
ctthisminimumaccess,theywereexpectedto
usethe
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mechanism oftariff-rate
quotas,orlowertariffs forimportsof amagn
ituderequiredtoensure therealizationofmini
mumaccessrequirements.Despitethesedetailed
specifications,theAoA
providedcountrieswithan
escape
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clause intheeventof a
largeanddisru
ptiveinflow ofimports.Under theSpeci
alSafeguards
provisions,countriesthat
hadtarrifiedtheirQRs,Itneeds to
benotedthat
giventhelevelofsuchtariffs atthetimeofimpl
ementatio
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n ofthetariffreduction
commitment,theactualincreaseinaccess
maynot
besubstantial.Theleastdeveloped
countrieswere
providedaconcession, astheywere
notrequiredtoreducetheirtarifflevels.tarrif
iedprod
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ucts,withanimport
surgeor
by afallinimport
prices tolevels
thatwerelowrelative tothosethat
prevaileddurin
g the1986-88reference
period,wereallowed toimpo
sehighertariffsandotherrestrictions torestra
inimpo
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rts.
DO
MES
TICSUP
POR
T
TheAoAdefinedthe
princ
iplesonthe
basisofwhich theAggregateMeas
ureofSupport(AMS)
provided
bythegove
rnment ofacountry toitsagriculturalsector
wasto be
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computed.Theaggregate
measureofsupportwasthesumtotalofthe
AoAproduct-specificandnon-
product-speci
ficsupport
provided
bynationalandsub-natio
nalorfederalgovernmentsinindividualcount
ries.The
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originalDunkelDraft
oftheUruguayRoundAgreement
provided
forcommitmentstoreducedomesticsupp
orton aproduct-
by-product
basis.However,
theagreement
betweentheG-2,theUS,andEC
atmeeti
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ngsthattook
placeat
BlairHouse inWashingtonin
November1992(kno
wnastheBlairHouseAccord),which
paved thewayforthesuccessfulconclusionofthe
negotiationsontheUruguayRound,replaced
theseprod
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uct-wisecommitments
to acommitmenttoreduceoverallsupport
toagriculture18.
Notallofthesemeasures
ofsupportwereconsideredviolativeoffreetrade
principlesandthereforeeligi
bleforinclusionin
calculatio
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ns oftheAMS. Infact,
theAgreement onAgriculturecategorized thediffer
entpossiblemeasuresofsupportintothree
categories.Thefirst,termedtheamber
boxmeas
ures,wereseenasthose
policies,which dohave
asubst
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antialimpact onthe
patte
rnsandflowoftrade.Allsuchdomesticsupp
ortmeasureswereto betakenintoaccountwhile
computingtheAMSlevel,andcountrieshadtocom
mitthemselves toreduce intheaftermathofthe
agreement
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.Thesecondterm
edthegreen-
boxmeasureswerethosethatwere
seenashaving nomajoreffect on
productio
nandtradeandwereconsideredcompletelynon-viola
tiveoftheAoAandnotsubjectedtoanyreduc
tioncom
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mitments.
Theyinclu
dedavariety ofdirect
paymentstofarmers,
whichwereseenasaugmentingtheirinco
meswithoutinfluencing
productiondecisions.
Some ofthemwere:
P
R
E
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R
P
A
D
C
G
SUP
POR
T
IN
THE
FOR
M
OF
SUBSIDI
ES
CO
MES
BY
WA
Y
OF:
pr
ice
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support,
ormeasuressuchasgo
vernment
procurem
ent,backed
byex
port
orim
portcontrolsus
ing
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tariffsand
QRsand
budgetary
support,inthefor
mofex
plicit
budgeta
ryoutlaysonsu
bsidie
so
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nfarmin
putsandcredit,agricu
lturalresearchandex
tension,deficiency
pay
ments,insuranceanddi
sast
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erpaymen
ts,diversion
payments
fortem
poraryretir
ementofresources,an
dcom
pensationinlieu
ofre
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ductions
inmarket
pricesu
pp
ortorim
plicit
bu
dgetaryoutlayinthe
formofrevenuesfore
go
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neasamea
sureofsu
pporttoagri
culture.
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WT
O &
AGR
ICU
LTU
RE
IN
INDI
A:
Indiais
oneofthefoundingmem
bersofWTOwhic
hcameintoexistenceonJanuary01,1995repla
cingGATT(GeneralAgreement onTariffsandTrad
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e)and
promising
theherald ofneweraintherule
basedsyste
m ofgoverningand
promotinginternationaltradeconcomitantwiththeneeds oftheon-going
processorglobalization.
WTO
provisionsrelate
d tointer
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nationaltradeare
nowsimilarlyapplicabletoagriculturewhich
wasbroughtwithin thefoldofGATT intheUruguayRound(1986-93)ofmultilateraltrade
Negotiations(MT
Ns).
Application ofWTO
provisions
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onagriculture
involvesmanycontentionsissuesandis anarea
ofseriousconcernfordevelopingcountrieswhich are
primarilyagrarianeconomies,More
over,theworld,despitegrowinginterdependen
ceand
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integration, ishighl
yheterogeneouswithregard tolevels ofdevelopme
nt.Thisheterogeneityisverymuchnoticeablewhenwecomparetheagriculturalsector ofdevel
opedanddevelopingcountries.
Supportinfra
structure
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likestorage,
proce
ssing,finance,marketing,trans
portandR&D
facilitiesaremuchmoreadvancedandorganized. Insharpcontrast,in acountrylikeIndia, formilli
onsoffarmerswhoderivedtheirlivelihoodfrom
agricultur
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al, itisstilla
wayoflifeandnotanoccu
pationtheyhave
chosenforthemselves.Indianfarmersaremostlyinvolvedinsubsistencefarming
withverylittleornomarketablesurplus.
Onthe
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otherhand,therehave
veerinstanceswhere intheUSAfarmershave
been
givensubsidiesworthmillionsofdollars tokeeptheirfarmlanduncultivated. InIndia70%ofthe
holdingarenotoftheeconomysize,making
applicatio
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n ofmoderntechn
ologydifficultandunafforda
bleforthefarm
ers.
ThedevelopedcountriesliketheUSA,
JapanandEUcountriesheavilysubsidizetheiragriculturewithhighqualitystandardsand
aggressive
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marketing
practices,
thesecountrieshold72%shareofworldtradein
agricultural
productsarekeepthedevelopingcountriesvirtuallyatthe
peripheryofworl
dmarket.
Thesilentfeatures0fthisagree
mentinclu
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dethreemain
provi
sionswhichhave
becomeeffective1Jan,2000
.
Underaccess allnon-tariff
barrierslike
quotawill
beconvertedintotariffs.Indiahasalreadyremovedquantitativerestrictiononall
herimpo
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rt. Ithasnowimpo
sedprotectivetariffonimportsofsensitiveagric
ultural
productsinorderto
protecttheinterestofitsfarmingcommunity.
Asfarasthemaximumlimitoftariffisconcerned
nocount
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ry ispermittedto
imposetariff
beyond acertainlimit.Allindustriali
zationcountriesaretoreducetariff
by36%within sixyears. Forindividualagricultural
prod
uctstariffhastoreduce byatleast15%.Developin
gcount
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rieslikeIndiahave
toreducetariff
by24%within 10years. Onany
individualagro
producttariffcuthasto beatleast
by10%.
UnderExportCom
petitionthedevelopedcountriesaretoreduce thevalueof
direct
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exportsubsidies
by36%overa
period ofsixyearsandinvolu
meterms21%.The
baseperiod forthesecutis1986-90or91-92 ifexportswerehigher inthat
period.Overthesame
periodsthedeveloping
countries
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aretoreduce the
valueofdirectexportsubsidies
by24%and
volumeterms
by10%.
Underdomesticsupp
ortthisissueislinked to
providingstatesupporttofarmersinfarm
production.Under
AoA(Agr
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eementonAgri
culture)thedevelopedcountriesaretoreduce
AMBERBOXsubsidieswithin 6years
by20cstartingfrom1995with1986-88
periods as
base.The
samehasto bereduced
by13cwithin 10years
by
developin
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gcountries.
AoAhasclassifiedallsubsidiesgiventofarmers
intothreecategoriesAMBERBOXsubsidies,BLUE
BOXsubsidiesandGREENBOXsubsidies.UnderAMBER
boxsubsidiessuchdomesticsupport
itsinclu
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dedwhich ismean
t toencouragefarmersto
producemore.
BLUEBOXsubsidiesarerelated toquantumof
outputandhence areconsideredminimallytradedistorting.Suchsubsidedis
providedonlyup
tocertai
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nlimitof
prod
uction.GREENBOXsubsidiaryaidtofarmers
comesunderthiscategory.Thedevelopedcountrieshaveused
provisionsofAoAtofurther
infestoftheirfarmers.
Thedevelopedcountries
haveused
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provisionsofAoA
tofurthertheinterestoftheirfarmers.For
example,theyhaveremodelledAMBERBOXsubsidiesinsuchawaythatthesequalitiesto be
putintoBLUE orGREENBOXsubsidies.These
countries
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areconstantly
press
uringthedevelopingcountriesforgreatermark
etaccess foragricultural
product
butarenotwillingto
bringdownthelevelsupportthat
theyprovide totheirownfarmers.
Developing
countries
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likeIndiafeelthat
theyare
beingdiscriminatedagainst inmatterlike
tariffonfoodimportsintodevelopedcountries.Forexam
ple,inthenameofmutualaccess,
OECDcountriesimposeverylowtariffonimpo
rtsfrom
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fellowmem
bers
whilesimilarimportsfromdevelopingcountries
aresubjectedtohighertariffs.
TheNov.
2001Doharound ofministerialtalksweretermedasDevelopmentRound
becausecomprehensive
developme
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nt oftheacce
pted
asitsagenda.
Theoretically,issueslike
productionandtradeofagriculture
products
alongwithdomesticsupportandsubsidyto it,complianceissues,intellectual
propertyright
s,speci
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aldiscriminatory
practicesandmarketaccesswereto bediscussed.
Butsoonit
becameclearthatonthegrounddevelopedcountrieswerenotwillingtoyield
muchtothedevelopingcountriesfordeeper
market
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access.Bythe
termination ofthisround itwasclearthatissuerelate
d toagriculture
pushedotherissues tothe
background.
Forthedevelopingcountriessafeguardingtheinterestoftheirfarmingsecto
r isa
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matterrelated to
theverysurvivalandsubstancesoftheir
populatio
n.Moreoverin arepresentativedemocracylikeoursitwould bea
politicalhara-kiriifthe
governmentignorestheinterestsoffarmers
andagric
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ultureunder
internationalcompulsions.
IntheDoharoun
d ofnegotiations,whilethedevelopedcountrieswere
mainlyconcernedaboutissueslikemarketaccessandIPR,thedevelopingcountrieswere
concerned
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aboutfoodsecurity,
povertyeliminationandeconomicgrowthwith
respect tothe
process ofglobalization.It isalleged
bydevelopingcountiesthatthedeveloped
worldshowsonlyhypocriticalconcernabout
theseissue
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.
Inthe
farmbillintheUSAandthecollectivefarming
policy inEU,agatesupporthas
beenpromisedto
thefarmersthan
before.Sensing amajordeadlockinfuturerounds ofdiscussions onAoA,
theagric
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ultureministers
ofEUcountries
presentedareconciliatory
pack
ageinthelastweekofJune2003. Inthisthey
promisednottoofferanysubsidytotheir
farmerbutinsistedthatagriculturalincome
world
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stillbeprotected.
Thisis awilymoveas itreplacedatradedistorting
measurelikesubsidy
byprotectionofagricultureincomewhichwillnot
betreated as
tradedistortingandhencequalifiesto be
putin
theGRE
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ENBOX.
Itwould beamisnomertocallsuch
protection
asminimallytradedistorting
becauseitwill
influencetheallocationofrecoursesinthesincethatintheabsenceofsuch
protectionfewe
rresou
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rceswould becom
mitted toagriculture
protectionwillserveasan
incentivenottomoveresourcesawayfromagricultureleadingtoover
productionthissurpl
usproducewill
beusedtodisallowimports
fromthe
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developingworl
d orfordum
pingintheworldmarket.The
worstaspect ofthis
packagewasthatnotevenamentionofreducingexportsubsidyfoun
dplacein it.
TheministerialmeetatCancun
inMexi
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coheldon10-
14sep.2003raisedquestionsontheworking
ofthewholeapparatusofWTO.
The
onlymajorachievementonthe
partofthedevelopingcountrieswasthattheydidnot
succumb
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tothe
pressures
ofthedevelopedcountries.AsexpectedtheCanc
unmeettoowasfocusedonagriculture G-5grou
pcountrieswithIndia,china,Brazi
l,ArgentinaandSouthAfrica asitsmem
bers
emphasize
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d theurgencyof
theneedtoreducefarmsubsidyinthedevel
opedcountriesespeciallyintheUSAandEUcountries.
Indiaplayed a
proactiveroleinthisinitiative.Itwashighlightedthatthecotto
nexpo
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rtdependentecon
omies oftheworldlikeChad,
benign,male
andBurkinaFasohavesufferedmassivelyduetothefarmsubsidythattheUSAgivesto its25,0
00cottongrowers.
EvenAustraliaand
New
Zealand
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supportedthestand
takenbytheG-21grou
p ofthedevelopingcount
ries.Thereviseddraft
presentedfornegotiationswasheavilytiltedinfavour ofthedeveloped
countries.Itrequiredthedevelopingcountries
likeIndia
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toreducefarm
subsidy
by70%whileEUmem
bersandtheUSA
wererequiredtoreduce it
by41%and36%respectively.Thereviseddraftwasa big
blowto
theheightenedexpectation ofthedevelopingcount
ries.
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Atcocoonthe
developedcountriesdidnotyieldmuchtotheoutst
andingdemandofthedevelopingworld
butcleverlyincludedissueslikeinvestmen
t,competition,tradefacilityandgovernment
procurem
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entto
buildpress
ureonthedevelopingcountries.
Honk
Kongministerialconferenceended inthesamemanner.
Thedevelopingcountries,led
byG-5opposedthe
proposalsofUSandEuro
peanUnion on
thegrou
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ndthattheywere
againsttheinterestsofthe
poorcountries.Doha
roundtalksareatthemomentfloundering
becauseoftheuncompromisingstands
adoptedbyplayerssuchasEU,USandG-5.
The
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interesting
part
ofthewholethingisnotonecan
besaid
to bethemainculprits
becauseeveryGovernmentinvolvement intheWTOnegotiations issquar
elyaccountableandanswerable toitsconstitutio
nand
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population
back
home,whichmeansamongotherthings,
thatnocommitmentcan
bemadewhichwillleadtoweakeningofthedomesticsupport
basebeyond a
point.
Politicallytheissueof
AoAis so
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sensitivethatno
government,whetherinthedevelopedorthe
developingcountries,is ina
positiontocompromisewiththeinterestsoffarmersin
thenameofcollectivism.
Nowthequestion
arises
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thatwhatshould be
Indiansstrategy?Asthingsstandat
present,
theprovisionsofAoAdonotappear tohaveathreateningimpact ondomesticsupportand
exportsubsidyunderAoA.Thenon-
product
specific
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supportamounts
to7.5%ofthevalueofagriculture
productio
n inIndia.
Sinceproductspecificsupport
isnegative,theAggregatemeasureofsupporttoIndianagriculture isstill
belowthe
demonetis
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e of10
percent in
termsoftheUruguayroundstipulations.India
hasalreadysuggestedthatAMS
becalculatedasthesumofthe
productspecificandnon-
productspecificsupport(WTO2001). Asthe
inputsubsi
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destoresource-
poorfarmersareexem
ptfromreductioncommitm
entsunderWTO(thesecomeundernon
productspecificsupport),sotheoverall
levelofsupportgiventoIndianAgriculture is
lessthan
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theminimumof
10%assetunderWTOstipulations.
Agriculturesector inIndiahasresponded
positively
tothelaunchingofmacroeconomicreformsin1991.Withliberalizationofexchange
rate,the
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termsoftradefor
agriculturehaveshown asignificantimprovem
ent.Privateinvestment inagricultureregisteredastepriseinthe
post-reform
period.
ForthefirsttimesinceindependenceIndiahas
beco
me anet
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exporteroffood
grain.
Thefearthatliberalizationofimpo
rtswouldleadtomassiveinflux ofagricultur
eimportstoohas
beenfound to
bemisplaced.Quantitativerestrictions onimportshave
been
liftedsince
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April2000.Thou
ghimportlikefruits,ketchupandmeat
prod
uctshaveincreased,theystillaccountfor aminisculeoftotalagriculturalimports.
Thoughthereisclearly aneedto beconstantlyvigilantand
workin
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leaguewithother
developingcountriesandremovaloftariffand
non-tariff
barriers,themajorchallenges thedevelopedcountriesatWTO,weneedtotake
measureswhichmakeIndianagriculturemore
competitiv
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e.
Thefortu
nesofIndianagriculturewhichnowacco
untsforabout20%oftheGDPand
providesempl
oyment toabout60%oflabourforcecruciallydependupongreaterinvestment,
bothprivate
andpubli
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c, inirrigation
powe
r,roadsandtheability ofagriculturiststoacces
s themoderntechnologyspeciallytheyieldaugmentingtechnology.Conditionsneedto becreat
edforwidespreaddiffusionandapplication of
thistechn
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ology bythefarm
sector.
Toconclude,itcan
besaidthat
WTO
provisions
posenorealthreat toIndian
agriculturethoughaspectsrelated toIPR,removaloftariffandnon-tariff
barriersandmark
etacces
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sneedto bedealt
withconstantvigilandsuita
bleexpertise.Relevant
institutionalandlegalchanges(likein
patenting)needto be
broughtaboutEquallyimport isthe
needtorestructure,modifyandrevampour
agricultur
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esector sothat
itcanriseuptothechallengesthrown
bygrowingintegrationwiththerestoftheworld.Theneedofthetimeis tomakeit
moreefficient,moderndiversifiedandcompetitive.
Thetime
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toengineer aseco
ndGreenrevolutionhasarrived.
Due to the Agreement on Agriculture (AOA), India can no longer remain aloof from the restof the world. It had to join the WTO. This AOA has established a number of generallyapplicable rules with regard to agriculture and trade related matters. Most of the developedcountries are providing huge subsidies to the agricultural sector. In these countries not morethan 10% of the population is dependent on agriculture. The below table gives theinformation about the subsidies that are being given to agriculture by different countries andthe percentage of the population depending on agricultureIndia provides only 2.33% subsidy to agriculture. It is very small when compared with othercountries. 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 developedworld works out to $150 billion and in the developing world $19 Billion. If the AMSexceeds 10 percent in any country, it has to reduce by 13% by 2004. According to the WTOthe AMS in India, product subsidies is 7.5% and subsidy on non-product is minus 38.5%. Sothere is no question of losing any thing in our agriculture by accepting the AOA.
SUBSIDIES TO AGRICULTURE:
Country
EECUSA
Japan
China
South Africa
India
TARIFFS:
The tariff on agricultural commodities have been consider-ably restructured to comply withWTO requirements. India is committed to reduce tariffs on 686 agricultural products. The
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average tariff on agricultural commodities was 115% before the agreement. After theagreement it has been reduced to 35%. Along with 686 commodities the tariff on 587 othercommodities is on an average 50% less than the negotiated tariff. Only on 10 commodities isthe 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. Inother words, India had accepted in principle the import of agricultural products many yearsago. 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 importedunder OGL (Open General License) at zero interest rates. In July 1999 the Government ofIndia sought to renegotiate the tariff on pulses. But the international community has notyielded.
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 criticizing WTO we have
to think of an alternative system. Corporatization 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 asproductivity.
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 Indiathese have been household plants used in cooking and for medicinal purposes sinceancient 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 totake this up with the WTOs Dispute Settlement Board (DSB) at Geneva.
The challenges before Indian agriculture are immense. India is not where it should havebeen 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. UntilIndia takes some steps in this direction, it will continue to produce more only to earnless. The major challenges for Indian agriculture system would always be increasing
production and productivity to ensure food security for the raising population.
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 whenexporting 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, whichin turn will reduce the prices and place India in a better position to compete globally.
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Indian producers produce agricultural goods at competitive prices. Yet low global pricesresulting from subsidies by the developed nations mainly the European Union and UnitedStates, 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 pricedifference 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 theinternational markets at a price 57 per cent lower than its production cost, while the pricedifference for rice has stabilized at 20 per cent. As a result of these prices, the US Is theworlds largest exporter of wheat, corn, cotton and soybean, and the second largest in rice.
While agricultural trade liberalization was justified on the grounds that Northernagricultural markets would open to India, Indias exports to Europe have actually declinedfrom 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 agriculturetrade liberalization has become a unidirectional phenomenon that opens markets in the
South for Northern business corporations but closes markets in the North for trade fromSouth. Such trade will destroy livelihood opportunities for resource-poor farming familiesand 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 agreater variety of better quality products at lower cost, and in a safer manner than everdemanded before. Secondly, they are being asked to produce this abundance on ashrinking natural resources base that is often subject to government regulations.
As far as India is concerned there are some danger signals. Population growth rate andhigher per capita income suggest that demand for food grains is growing. But there aredoubts about the supply response. In terms of acreage, area under food grains has notincreased. Yield growth rates of food grains are also stagnating in most parts of thecountry. The productivity of soil has also started declining. The underground water tablein 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. Everycountry has to allow fishermen of other countries to catch fish in its territorial waters. Indiaexports special grade fish (Tuna and Prawns) to other countries and earns substantial foreignexchange. Around 10 lakhs people are dependent on fishing. Deep sea fishing leads toexhausting 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 appropriateWTO forum.
BENEFITING THE CONSUMER:
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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 torestrict 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.
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
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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 unreliablesuppliers. 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 hasbeen 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-classcompetitive agriculture, some measures need to be taken that will be immensely useful and
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essential. These are:
Freeing Indian Agriculture from State Control
Unifying the Indian Market
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 informationand services are available. Development of information and communication networks enabling
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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 tothe 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.
Corporatization with Land Equity
All these measures are beyond the ambit of the State. They are also beyond the capabilities of
co-operative 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 globalization 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 Organization.
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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 isexporting corn, 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 resultis 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 minimize level.
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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 food grains.
To conclude, it is feared that the Agreement is not favorable to India due to the following
reasons:
The country will be compelled to import at least 3% of the domestic demand for agricultural
products.
The government will be forced to reduce subsidies to farmers.
The Public Distribution System and Public Procurement System will have to be abandoned.
Inclusion of new trade agenda issues in the next round is considered by some developingcountry negotiators as undesirable because it would distract attention from the market accessissues that are deemed to be of greater importance to them. However, inclusion would have theadvantage that more OECD non-agricultural groups would take part in the round which couldcounter-balance forces favoring agricultural (and other sectoral) protection. As well, better ruleson 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 bealmost as trade distorting a risk that has grown considerably in the past year or so (Anderson1998b; Roberts, Josling and Orden 1999).
The new trade agenda issues are highly relevant to agriculture. Indeed, some of them figuredprominently in the Uruguay Round negotiations on agriculture. For example, progress was madein designing rules for the application of sanitary and phytosanitary standards, and in discipliningthe ability of governments to grant agricultural production subsidies. However, disciplines areweak, 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 intellectualproperty broadly defined to include indications of origin, breeders rights and seed varieties),
liberalization of ancillary services and input markets (distribution, marketing, use of newproduction technologies),and the extra-territorial application of production process standards.
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The UR Agreement on Sanitary and Phytosanitary (SPS) standards requires that SPS measures beimposed only to the extent necessary to ensure adequate food safety and animal and plant healthon the basis of scientific information, and are the least trade-restrictive measures15 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 countriescan succeed in obtaining rulings against the most egregious cases of protectionist abuse ofstandards (Roberts 1998). As is generally the case, the SPS agreement was motiva