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IMPLICATIONS OF AOA,TRIPS, IPRS….

Mallikarjungouada patil NPALB 5139

History of govt. interventions in agricultural markets

• Been going on for millennia• Sometimes to raise tax revenue• Sometimes to boost food

self-sufficiency/food security• Sometimes to reduce domestic price

fluctuations

How addressed agriculture

• Sought commitments to reduce protectionist interventions in 3 areas:– cut agricultural export subsidies– cut barriers to imports

• with SPS Agreement to reduce the likelihood of re-instrumentalization

– cut domestic subsidies to farmers

Agreement on Agriculture(AOA)Formation of WTO in Jan 1,1995 as a successor to

GATT

Many trade related agreements were signed by the member countries

First time Agreement on Agriculture

To reform and dismantle trade barriers

Why Necessity of AOA on agricultural sector?

• In Developing Countries– Agriculture– Rural Development

• These sectors – Contribute a large share of GDP– primary Source of Employment

Play a crucial role in reducing poverty

Developed vs. Developing in Agricultural sector

Uruguay Round• Following the Uruguay round negotiations, all the

agricultural products were brought under AOA• The Agreement is made up on Three pillars

– Market Access– Export Competition– Domestic Support

• Except LDC, all the WTO members were required to make commitments in all these areas in order to liberalise agricultural trade.

• Developing countries were given a limited element of special

• and differential treatment (S&DT).

First Pillar-Market Access• Developed and developing countries to convert all non-

tariff barriers into simple tariffs (a process known as tariffication).

• All tariffs to be bound (i.e. cannot be increased above a certain limit).

• Developed countries to reduce import tariffs by 36% (across the board) over a six year period with a minimum 15% tariff reduction for any one product.

• Developing countries to reduce import tariffs by 24% (across the board) over a ten year period with a minimum 10% tariff reduction for any one product.

Second Pillar-Export Competition

• For developed countries, the value and volume of export subsidies to be reduced by 36% and 24% respectively from the base period 1986- 1990 over a six year period.

• For developing countries, the value and volume of export subsidies to be reduced by 24% and 10% respectively from the base period 1986- 1990 over a ten year period.

Third Pillar-Domestic Support• All forms of domestic support are subject to rules. The

WTO classifies domestic subsidies into three categories known as the Amber, Blue and Green Boxes . Only the Amber Box is subject to reduction commitments as follows:– For developed countries, a 20% reduction in Total AMS (Amber

Box) over six years commencing 1995 from a base period 1986-1988.

– For developing countries, a 13% reduction in Total AMS (Amber Box) over ten years commencing 1995 from a base period 1986-1988.

Domestic Support Boxes• In WTO terminology Boxes->Subsidies• Green means permitted• Amber means slow(be reduced)• Red means forbidden• NO RED BOX FOR AOA• But things exceeding reduction commitment levels in

Amber box are prohibited• One more box Blue means subsidies that are tied to

programs that limit production

Amber box• All domestic subsidies that are considered to distort

production and trade. E.g. Market price support

• Subsidies expressed in terms of “Total Aggregate Measurement of Support”(TAMS) – all supports in one single figure

• Subsidies are subject to WTO reduction commitments

Blue Box• This is the Amber box with conditions

• Conditions designed to distort production

• Deemed by WTO rules to be ‘partially decoupled’ from production and are not subject to WTO reduction commitments

Green Box• Subsidies that are deemed not to distort trade, or atleast

cause minimum distortion and are not subject to WTO reduction commitments

• They tend to be programmes that are not targeted at particular products, and include direct income supports for farmers that are not related to current production levels or prices.

• Mostly they are government funded

Special Safeguard Mechanism• Safeguards are contingency restrictions on imports taken

temporarily to deal with special circumstances such as a sudden surge in imports

• higher safeguards duties can be triggered automatically when import volumes rise above a certain level, or if prices fall below a certain level; and  

• it is not necessary to demonstrate that serious injury is being caused to the domestic industry.

Implications of AOA on India Market access • Developing countries like India who had not converted their quantitative

restrictions into tariffs, were allowed to have ceiling bindings, which were not subjected to reduction commitments

• India had bound it’s tariff as 100% for primary products, 150% for processed products and 300% for edible oils

• India has not taken any commitment to provide minimum market access opportunities which other countries who had tariffed their QRs had to undertake 5% of domestic consumption at the end of implementation period

• Though India is not entitled to use the Special Safeguard Mechanism of the agreement, it can safeguard action under WTO Agreement of safeguards, if there is a surge in imports causing serious injuries ( or threats) to the domestic producers

Contd….Domestic Support• For agricultural sector, domestic support upto 10% of total value of

agricultural produce is allowed in developing countries, and 5% in developed countries

• In India, the product specific support is negative, while non product specific support( Subsidies on power, irrigation, fertilisers, etc.) are well below the permissible level of 10% of value of agricultural output

• So, India under no obligation to reduce domestic support currently extended to the agricultural sector

Contd…Export subsidies• Export subsidies of the kind listed in the AOA, which

attract reduction commitments are not extended in India

• Developing countries free to provide certain subsidies – subsidising of export marketing costs, internal and international transports and freight charges, etc.

• India making use of these subsidies in certain schemes of APEDA (Agricultural and Processed food products Export Development Authority)

CRITISICM• Civil society – for reducing tariff protection for small farmers, a key

source of income for developing countries• NGOs – for categorising subsidies. . As efficient agricultural

exporters press WTO members to reduce their trade-distorting ‘amber box’ and ‘blue box’ support, developed countries’ green box spending has increased – a trend widely expected to continue.

• A book  from the International Centre for Trade and Sustainable Development shows how green box subsidies do in fact distort trade, affect developing country farmers and can also harm the environment. 

• Third World Network states that; "This has allowed the rich countries to maintain or raise their very high subsidies by switching from one kind of subsidy to another

Issues for Negotiations• India argued for additional flexibility by appropriate adjustments

to the provisions of the AoA, in order to enable us to pursue our legitimate non-trade concerns

• India believes that a focused discussion on the subject will contribute to increased awareness to the non-trade concerns such as food security and rural employment

Impact on increasing agri exports from India’s a result of WTO AoA • More to gain from the trade reforms

• Reduction in export subsidy and domestic support to the agricultural sector by the developed countries may lead to a decrease in production in those countries.

• Scope for expansion of exports from developing countries

Components of AOA

• Domestic support• Export competition • Market access

THE MAIN COMMITMENTS UNDER AOA ARE

• Tariffication of all non-tariff barriers such as quotas, quantitative restrictions (QR’S) , import control etc.

• Phased reduction of tariff rates to make the trade more free and fair.

• Reduction of export subsidies to promote export competition

• Aggregate measure of support is to be reduced to less than 5% and 10% of the total support given by the developed and developing countries respectively.

Cont..• The obligatory market access has to be 3% of

the base period consumption which has to be raised to 5% in 2000 in developed and 2004 in developing countries. This commitment is yet to be accepted and implemented.

• Export competition involves progressive removal of subsidies and removal of quantitative restrictions and reduction of tariff rates.

• Trade distorting subsidies contained in the amber box are to be progressively eliminated

Cont..• Blue box measures representing direct payment

to farmers under production limiting programs of the developed countries are exempted from reduction requirements and are pegged to 1992 level.

• Green box policies which are minimum trade distorting items are exempted from reduction requirements. These include research, extension, trading and infrastructure.

Cont…• The sanitary and Phyto-sanitary protection of

animal and plant life or health within the territory from risks arising from the entry, establishment, or spread of pests, diseases, disease carrying organisms or disease causing organisms.

• Besides there are provisions for geographical indications if specific product attributes can be associated with the place of origin.

cont…• IPR issues are also extended to the agriculture,

which makes provision for patenting of seeds, plant varieties and micro-organisms. India has already enacted protection of plant varieties and farmers right act in 2002 adopting a suigeneris method.

• Patent act is also amended and a revised seeds bill 2004 is under the active consideration of the parliament.

cont..• The new food law in EU and the bio safety

protocol that came into force in 2003 also provide the framework for the merging trade environment for agricultural products and processed products.

• All these developments make trade in agriculture more complex and challenging covering the entire stages in the commodity chain.

TRIPS• Intellectual property rights (IPR) are “statutory rights

accorded to innovators for their own innovations, processes, thoughts, ideas etc “.

• The purpose of IPR is to protect the rights of individuals to enjoy their creations and discoveries. A new IPR regime has been ushered with the establishment of WTO.

• In WTO, trade related aspects of intellectual property rights (TRIPS) deals with IPR issues like patents, copyrights, trademarks, industrial designs, geographical indications and undisclosed information. Intellectual property rights influence international marketing and trading of knowledge

Cont..• Patent: are exclusive rights granted by a country to the

owner of an invention for a limited time. Once issued a patent right gives the inventor the legal right to create a monopoly by excluding others from creating, producing or selling the invention.

• In India patent rules are framed on “The patents act, 1970 “. The act was amended in patent bill 1999 and 2002. India joined the Paris convention and became a member of the pct on Dec 8-1998.

Different types of intellectual property rights are:

• Protection of new plant varieties• Features of PPV and FR act 2001• Protection of biological diversity• Geographical indications of goods• Intellectual property protection of

traditional knowledge on PGR 

Protection of new plant varieties:

• Presently India has enacted the legislation for protection of plant breeder’s rights and rights under the PPV and FR bill. This bill aimed to provide for the establishment of an effective system for protection of rights of plant breeders and farmers and to encourage the development of new varieties of plants.

Features of PPV and FR act 2001 :

• The PPV and FR rules had been published in 2003. This act recognizes and protects the rights of farmers in respect of their contributions made at any time in conserving, improving and making available plant genetic resources for the development of new plant varieties.

Protection of biological diversity:

• In Dec 2002, Lok Sabha passed the biodiversity bill 2002 ‘intended to provide for conversation of biological diversity, sustainable use of its components and fair and equitable sharing of the benefits arising out of biological resources , knowledge and for matters connected there with or incidental there to “, in accordance with CBD.

Geographical indications of goods:

• International treaty related to GI is Lisbon agreement for the protection of appellations of origin and their international registration (1958). A geographical indication in relation to goods means an indication which defines such goods as originating or manufactured in the territory of a country.

• Some of the examples of possible geographical indications in India includes Dehradun’s basmati rice, Darjeeling Tea , Coorg orange, Chanderi , Mysore sandal, etc.

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