Agreement on Agriculture: WTO | 18 Sep 2021

Why in News

Recently, while addressing the G-33 Virtual Informal Ministerial Meeting, India’s Commerce and Industry Minister pointed out the imbalances in the Agreement on Agriculture at the World Trade Organization (WTO).

  • He claimed that it was in favour of developed countries and historical asymmetries and imbalances must be corrected to ensure a rule-based, fair and equitable order.
  • He urged that G33 must strive for positive outcomes on a permanent solution to Public Stockholding (PSH) for food security purposes, finalization of a Special Safeguard Mechanism (SSM) quickly and a balanced outcome on Domestic Support.

G-33

  • It is a forum of developing countries formed during the Cancun ministerial conference of the WTO, to protect the interest of the developing countries in agricultural trade negotiations.
    • India is a part of the G33, which is a group of 47 developing and least developed countries.
  • It was created in order to help group countries which were all facing similar problems. The G33 has proposed special rules for developing countries at WTO negotiations, like allowing them to continue to restrict access to their agricultural markets.

Key Points

  • About:
    • It is aimed to remove trade barriers and to promote transparent market access and integration of global markets.
    • The WTO's Agriculture Committee oversees implementation of the Agreement and provides a forum for members to address related concerns.
  • Three pillars of Agreement on Agriculture:
    • Domestic Support: It calls for reduction in domestic subsidies that distorts free trade and fair price.
      • Under this provision, the Aggregate Measurement of Support (AMS) is to be reduced by 20% over a period of 6 years by developed countries and 13% over a period of 10 years by developing countries.
      • Under this, Subsidies are categorized into:

Green Box

Amber Box

Blue Box
  • Subsidies that do not distort trade, or at most cause minimal distortion.
  • They are government-funded and must not involve price support.
  • They also include environmental protection and regional development programmes.
  • “Green box” subsidies are therefore allowed without limits, provided they comply with the policy-specific criteria.
  • All domestic support measures considered to distort production and trade (with some exceptions) fall into the amber box as all domestic supports except those in the blue and green boxes.
  • These include measures to support prices, or subsidies directly related to production quantities.
  • This is the “amber box with conditions”. Such conditions are designed to reduce distortion.
  • Any support that would normally be in the amber box is placed in the blue box if the support also requires farmers to limit production.
  • At present, there are no limits on spending on blue box subsidies.
  • Market Access: Market access for goods in the WTO means the conditions, tariff and non-tariff measures, agreed by members for the entry of specific goods into their markets.
    • Market access requires that tariffs fixed (like custom duties) by individual countries be cut progressively to allow free trade. It also required countries to remove non-tariff barriers and convert them to Tariff duties.
  • Export Subsidy: Subsidy on inputs of agriculture, making export cheaper or other incentives for exports such as import duty remission etc are included under export subsidies.
    • These can result in dumping of highly subsidized (and cheap) products in other countries and damage the domestic agriculture sector of other countries.

World Trade Organization

  • It came into being in 1995. The WTO is the successor to the General Agreement on Tariffs and Trade (GATT) established in the wake of the Second World War.
    • Its objective is to help trade flow smoothly, freely and predictably.
    • It has 164 members, accounting for 98% of world trade.
  • It was developed through a series of trade negotiations, or rounds, held under the GATT.
    • GATT is a set of multilateral trade agreements aimed at the abolition of quotas and the reduction of tariff duties among the contracting nations.
  • The WTO’s rules – the agreements – are the result of negotiations between the members.
    • The current set is largely the outcome of the 1986- 94 Uruguay Round negotiations, which included a major revision of the original GATT.
  • The WTO Secretariat is based in Geneva (Switzerland).
  • Other Mechanisms of WTO

Source: IE