1 presentation to the ipc seminar challenges facing the doha development round trade negotiations on...

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Presentation toPresentation to the the IPC SeminarIPC Seminar

Challenges facing the Doha Development Round Challenges facing the Doha Development Round Trade Negotiations On AgricultureTrade Negotiations On Agriculture

ByByMR. DEVI DAYAL MR. DEVI DAYAL

Former Secretary Deptt of Banking ,Ministry of Finance Former Secretary Deptt of Banking ,Ministry of Finance Government of India.Government of India.

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PART IPART I

Agriculture in IndiaAgriculture in India

Current Scenario Current Scenario

andand

Policy FrameworkPolicy Framework

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Indian Agriculture has made rapid strides since Indian Agriculture has made rapid strides since independenceindependence

From food shortages and import From food shortages and import

to self-sufficiency and exports.to self-sufficiency and exports. From subsistence farming From subsistence farming

to intensive and technology led cultivation.to intensive and technology led cultivation. Today , India is the front ranking Today , India is the front ranking

producer of many crops in the world.producer of many crops in the world. Ushered in through the Ushered in through the

green, white, blue and yellow revolutionsgreen, white, blue and yellow revolutions

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IndianIndian Agriculture- Some FactsAgriculture- Some Facts

Total Geographical Area - 328 million hectaresTotal Geographical Area - 328 million hectares Net Area sown - 142 million hectaresNet Area sown - 142 million hectares Gross Cropped Area – 190.8 million hectaresGross Cropped Area – 190.8 million hectares Major Crop Production (1999-2000)Major Crop Production (1999-2000)

Rice Rice 89.5 million tonnes89.5 million tonnes WheatWheat 75.6 million tonnes75.6 million tonnes Coarse CerealsCoarse Cereals 30.5 million tonnes30.5 million tonnes PulsesPulses 13.4 million tonnes13.4 million tonnes OilseedsOilseeds 20.9 million tonnes20.9 million tonnes SugarcaneSugarcane 29.9 million tonnes29.9 million tonnes

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IndianIndian Agriculture- Some FactsAgriculture- Some Facts

Contributes to Contributes to 24%24% of GDP of GDP Provides food to Provides food to 1Billion1Billion people people Sustains 65% of the population : helps alleviate povertySustains 65% of the population : helps alleviate poverty Produces 51 major CropsProduces 51 major Crops Provides Raw Material to IndustriesProvides Raw Material to Industries Contributes to 1/6Contributes to 1/6thth of the export earnings of the export earnings

One of the 12 Bio-diversity centers in the world with over One of the 12 Bio-diversity centers in the world with over 46,000 species of plants and 86,000 species of animals 46,000 species of plants and 86,000 species of animals recordedrecorded

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Major AchievementsMajor Achievements

India isIndia is

Largest producer in the world of pulses , tea , and milkLargest producer in the world of pulses , tea , and milk

Second Largest producer of fruits, vegetables, wheat , rice, Second Largest producer of fruits, vegetables, wheat , rice, groundnut and sugarcane.groundnut and sugarcane.

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IndianAgriculture ScenarioIndianAgriculture Scenario

STRENGTHSSTRENGTHS Rich Bio-diversityRich Bio-diversity Arable landArable land ClimateClimate Strong and well dispersed Strong and well dispersed

research and extension systemresearch and extension system

OPPORTUNITIESOPPORTUNITIES Bridgeable yield cropsBridgeable yield crops ExportsExports Agro-based IndustryAgro-based Industry HorticultureHorticulture Untapped potential in the N.E.Untapped potential in the N.E.

WEAKNESSWEAKNESS Fragmentation of landFragmentation of land Low Technology InputsLow Technology Inputs Unsustainable Water Unsustainable Water

ManagementManagement Poor InfrastructurePoor Infrastructure Low value additionLow value addition

THREATSTHREATS Unsustainable Resource UseUnsustainable Resource Use Unsustainable Regional Unsustainable Regional

DevelopmentDevelopment ImportsImports

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Current ConcernsCurrent Concerns

Pressure of the Population on LandPressure of the Population on Land Skewed distribution of operational holdingsSkewed distribution of operational holdings Land DegradationLand Degradation Water BalanceWater Balance Low level of mechanizationLow level of mechanization Low Fertilizer ConsumptionLow Fertilizer Consumption

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The First Ever National Agriculture Policy was The First Ever National Agriculture Policy was announced in July 2000. The Policy seeks to announced in July 2000. The Policy seeks to

overcome these constraints and achieveovercome these constraints and achieve A Growth rate in excess of 4 percent per annum in the A Growth rate in excess of 4 percent per annum in the

agriculture sector.agriculture sector. Growth that is based on efficient use of resources, and Growth that is based on efficient use of resources, and

conserves our soil, water , and bio diversity.conserves our soil, water , and bio diversity. Growth with equity, i.e. growth which is widespread across Growth with equity, i.e. growth which is widespread across

regions, and different classes of farmers.regions, and different classes of farmers. Growth that is demand driven and stabilizes domestic markets Growth that is demand driven and stabilizes domestic markets

and maximizes benefits from exports in the face of Global and maximizes benefits from exports in the face of Global Challenges.Challenges.

Growth that is sustainable ,technologically , environmentally, Growth that is sustainable ,technologically , environmentally, and economically.and economically.

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The Policy has indicated a nine-fold package of The Policy has indicated a nine-fold package of policy initiatives to achieve the objectivespolicy initiatives to achieve the objectives

Development of Sustainable agricultureDevelopment of Sustainable agriculture Food and Nutritional securityFood and Nutritional security Generation and Transfer of TechnologyGeneration and Transfer of Technology Improvement of input efficiencyImprovement of input efficiency Provision of incentives for agricultureProvision of incentives for agriculture Promotion of Investments in agriculturePromotion of Investments in agriculture Strengthening of institutional infrastructureStrengthening of institutional infrastructure Better risk managementBetter risk management Introduction of Management ReformsIntroduction of Management Reforms

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TARGETSTARGETS

Food Grain Production will be doubled in ten years, so as to Food Grain Production will be doubled in ten years, so as to make India hunger free .make India hunger free .

Special emphasis will be on horticulture production in order to Special emphasis will be on horticulture production in order to achieve a quantum increase.achieve a quantum increase.

Allied sectors like live stock, dairy poultry, fisheries, will be Allied sectors like live stock, dairy poultry, fisheries, will be promotedpromoted

Production of oilseeds and pulses will be raised substantially.Production of oilseeds and pulses will be raised substantially.

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Strategies & Initiatives : Enhancing Value AdditionStrategies & Initiatives : Enhancing Value Addition

- 98% of fruits and vegetables are sold as fresh products.- 98% of fruits and vegetables are sold as fresh products.

- processing accounts for only 7% of agricultural value.processing accounts for only 7% of agricultural value.

- wastage levels are extremely high.wastage levels are extremely high.

Improved post harvest interventions: price support Improved post harvest interventions: price support mechanism, grading, handling, storage, packaging, mechanism, grading, handling, storage, packaging, marketing, processing.marketing, processing.

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Strategies & Initiatives : Enhancing Value AdditionStrategies & Initiatives : Enhancing Value Addition

Draft National Policy on Food Processing prepared.Draft National Policy on Food Processing prepared.

Draft Processed Food Development Act formulated.Draft Processed Food Development Act formulated.

Package of promotional schemes available for Package of promotional schemes available for infrastructure development and quality improvement.infrastructure development and quality improvement.

To raise the processing level by 10% , an investment of To raise the processing level by 10% , an investment of approximately Rs 1400 billion required.approximately Rs 1400 billion required.

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India’s International Trade - 2001-02India’s International Trade - 2001-02

500

0

1000

1500

2000

2500

Exports Imports

Agriculture

Non-Agriculture

2 8 9

1 7 3 62 1 4 8

1 2 0

Rs Billions

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Strategies & Initiatives : Promotion of ExportsStrategies & Initiatives : Promotion of Exports

India’s competitive advantageIndia’s competitive advantage

- - Diverse agro climatic conditions.Diverse agro climatic conditions.

- Sufficiency of Inputs.- Sufficiency of Inputs.

- Reasonable labour costs.- Reasonable labour costs. Agriculture exports from India account for less than 1% world trade in Agriculture exports from India account for less than 1% world trade in

Agriculture commodities.Agriculture commodities.

- Target is to raise India’s share to 2% .- Target is to raise India’s share to 2% .

Thrust AreasThrust Areas Improvement and maintenance of quality. Consonance with International Standards. Strengthening of Infrastructure. Identification of niche products and markets.

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India’s Agricultural Export PotentialsIndia’s Agricultural Export Potentials

Marine ProductsMarine Products RiceRice WheatWheat Condiments and SpucesCondiments and Spuces CashewCashew Tea Tea CoffeeCoffee CastorCastor JuteJute Fruits and Vegetables- Onions, Mango, Grapes, Banana, Fruits and Vegetables- Onions, Mango, Grapes, Banana,

Tomato , Potato , Lichchi ,etc. Tomato , Potato , Lichchi ,etc.

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PART IIPART II

Negotiations on WTO AgreementNegotiations on WTO Agreement

On On

AgricultureAgriculture

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Uruguay Round Agricultural NegotiationsUruguay Round Agricultural Negotiations

Prompted by surpluses in post-war period and Prompted by surpluses in post-war period and consequent disarray in world agriculture.consequent disarray in world agriculture.

Disciplines with regard to all measures affecting trade Disciplines with regard to all measures affecting trade in Agriculture envisaged.in Agriculture envisaged.

Including not only import access but also domestic Including not only import access but also domestic policies, export subsidies , sanitary and phytosanitary policies, export subsidies , sanitary and phytosanitary measures. measures.

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Agreement on Agriculture (AOA)Agreement on Agriculture (AOA)

AOA and Agreement of Application on Sanitary and AOA and Agreement of Application on Sanitary and Phytosanitary Measures were negotiated in parallelPhytosanitary Measures were negotiated in parallel

Decision on measures concerning the possible Decision on measures concerning the possible negative effects of the reform programme o least negative effects of the reform programme o least developed and net food importing developing developed and net food importing developing countries also a part of the packagecountries also a part of the package

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Mandated Negotiations under Article 20 of Mandated Negotiations under Article 20 of AOA for continuation of the reform processAOA for continuation of the reform process

Negotiations to commence one year before the end of Negotiations to commence one year before the end of the implementation period i.e. in January 2000, taking the implementation period i.e. in January 2000, taking into account:into account:

- Experience in implementing reduction commitmentsExperience in implementing reduction commitments- Effect on world trade in AgricultureEffect on world trade in Agriculture- Non Trade concerns, S&D treatmentNon Trade concerns, S&D treatment- Further LiberalizationFurther Liberalization

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Two Fold ApproachTwo Fold Approach

Experience in the implementation of the Experience in the implementation of the Agreement leads us to conclude that basically the Agreement leads us to conclude that basically the problems can be tackled on two planes, namely;problems can be tackled on two planes, namely;

a)a) Through positive efforts and binding commitments by Through positive efforts and binding commitments by Developed Countries in Undertaking substantive Developed Countries in Undertaking substantive reductions in tariff levels, tariff escalation, trade reductions in tariff levels, tariff escalation, trade distortive domestic support and elimination of export distortive domestic support and elimination of export subsidies and tariff peaks,etcsubsidies and tariff peaks,etc

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Two Fold ApproachTwo Fold Approach

b.b. Through specific and targeted S&D provisions within the Through specific and targeted S&D provisions within the existing framework of AOA , which would go beyond existing framework of AOA , which would go beyond longer transition periods and reduced rates of reduction, longer transition periods and reduced rates of reduction, keeping in view the developmental objectives in keeping in view the developmental objectives in developing countriesdeveloping countries

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India’s Priorities / Recommendations in India’s Priorities / Recommendations in NegotiationsNegotiations

Domestic SupportDomestic Support• Remove ambiguities in the calculation of AMSRemove ambiguities in the calculation of AMS

• Empty Blue Box and put a ceiling on all forms of direct Empty Blue Box and put a ceiling on all forms of direct payments and include these in AMSpayments and include these in AMS

• Negative product specific support figures should be allowed to Negative product specific support figures should be allowed to be adjusted against the positive non-product-specific AMS be adjusted against the positive non-product-specific AMS support figuressupport figures

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Domestic SupportDomestic Support

• Product specific support provided to low-income resource-Product specific support provided to low-income resource-poor farmers should be excluded from AMS calculationspoor farmers should be excluded from AMS calculations

• Total domestic support should be brought down below the Total domestic support should be brought down below the de de minimis minimis level within a maximum period of three years by level within a maximum period of three years by developed countries and five years by developing country developed countries and five years by developing country membersmembers

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Food Security & Development ConcernsFood Security & Development Concerns

• Strengthen mechanisms to deal with genuine food security Strengthen mechanisms to deal with genuine food security concerns of developing countries through a “food security concerns of developing countries through a “food security box”box”

• Developed country members should not be allowed to use SPS Developed country members should not be allowed to use SPS measures for protectionist purposes by prescribing overly measures for protectionist purposes by prescribing overly stringent trade restrictive SPS measure for denying market stringent trade restrictive SPS measure for denying market access to developing countriesaccess to developing countries

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• All measures taken by developing countries for poverty All measures taken by developing countries for poverty alleviation from rural development, rural employment and alleviation from rural development, rural employment and diversification of agriculture should be exempted from any diversification of agriculture should be exempted from any reduction commitmentsreduction commitments

Market AccessMarket Access• Appropriate level of tariff bindings to be allowed to be Appropriate level of tariff bindings to be allowed to be

maintained by developing countries as a Special & Differential maintained by developing countries as a Special & Differential Measure , keeping in mind their developmental needs and high Measure , keeping in mind their developmental needs and high distortions prevalent in international markets distortions prevalent in international markets

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• Developing country members should be exempt from any Developing country members should be exempt from any obligation to provide any minimum market access.obligation to provide any minimum market access.

• A special safeguard mechanism including a provision for A special safeguard mechanism including a provision for imposition of quantitative restrictions under specified imposition of quantitative restrictions under specified circumstances to be made available to all developing countries circumstances to be made available to all developing countries in case of search in imports or decline in prices etc.in case of search in imports or decline in prices etc.

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• Low tariff bindings in developing countries as could not be Low tariff bindings in developing countries as could not be rationalized in earlier negotiations should be allowed to be rationalized in earlier negotiations should be allowed to be raised to the ceiling bindings for similar category of products, raised to the ceiling bindings for similar category of products, committed during the Uruguay Roundcommitted during the Uruguay Round

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Export CompetitionExport Competition

• Bring down excessively high tariffs to moderate levels in Bring down excessively high tariffs to moderate levels in developed countries through an appropriate formuladeveloped countries through an appropriate formula

• Tariff reductions for developing countries should Tariff reductions for developing countries should commensurate with their developmental needscommensurate with their developmental needs

• Abolish TRQ’s. Restrictions on trade only in the form of Abolish TRQ’s. Restrictions on trade only in the form of tariffs and tariffs onlytariffs and tariffs only

• If not possible ,then make their administration transparent , If not possible ,then make their administration transparent , fair and equitablefair and equitable

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Status of NegotiationsStatus of Negotiations

• Negotiations in agriculture commenced with the first special Negotiations in agriculture commenced with the first special session of the Committee on Agriculture held in March 2000session of the Committee on Agriculture held in March 2000

• The first phase of the negotiations ended in March 2001The first phase of the negotiations ended in March 2001

• India also filed its proposals in the areas of market access, India also filed its proposals in the areas of market access, food security, domestic support and export subsides & co-food security, domestic support and export subsides & co-sponsored proposals on market access and export subsidiessponsored proposals on market access and export subsidies

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Status of NegotiationsStatus of Negotiations

• The second phase began in May 2001 and has concluded with The second phase began in May 2001 and has concluded with the Special Session meeting of February 2002the Special Session meeting of February 2002

• Country positions fairly well defined during this phase of Country positions fairly well defined during this phase of negotiationsnegotiations

• A non paper on S&D presented by India in the Special A non paper on S&D presented by India in the Special Session held in February 2002Session held in February 2002

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Developed Country PositionsDeveloped Country Positions

• EU against fast track approach to liberalization EU against fast track approach to liberalization • Nordic Countries and Japan for continuation of Nordic Countries and Japan for continuation of

subsidy regimes in agriculturesubsidy regimes in agriculture• Australia , New Zealand and Canada (of Cairns Australia , New Zealand and Canada (of Cairns

Group) favor a totally market oriented approach and Group) favor a totally market oriented approach and oppose trade distorting subsidies and protectionist oppose trade distorting subsidies and protectionist regimes of EU and Japanregimes of EU and Japan

• US , opposing EU, but not completely with Cairns US , opposing EU, but not completely with Cairns Group either, aggressively seeks market access in Group either, aggressively seeks market access in other WTO member countriesother WTO member countries

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Cairns Group PositionCairns Group Position

• Demands elimination of export subsidies and Demands elimination of export subsidies and domestic subsidies as goals of on going agricultural domestic subsidies as goals of on going agricultural negotiationsnegotiations

• Calls for better information and analysis of tariff rates Calls for better information and analysis of tariff rates tariff quota administrationtariff quota administration

• Supports transparent and targeted S&D for Supports transparent and targeted S&D for developing countriesdeveloping countries

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Developing Country PositionsDeveloping Country Positions

• India, Pakistan, Sri Lanka, ASEAN etc highlight India, Pakistan, Sri Lanka, ASEAN etc highlight significance of role of agriculture in their economies significance of role of agriculture in their economies and seek to preserve domestic policy flexibility to and seek to preserve domestic policy flexibility to guard food security concernsguard food security concerns

• Developing Cairns Group Countries (Argentina, Developing Cairns Group Countries (Argentina, Brazil ,South Africa) favour a market oriented & non Brazil ,South Africa) favour a market oriented & non trade distortive approachtrade distortive approach

• Net Food Importing Countries (Single Crop Net Food Importing Countries (Single Crop economies) like Egypt, Mauritius, etc favour gradual economies) like Egypt, Mauritius, etc favour gradual and phased reduction in export subsidiesand phased reduction in export subsidies

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India’s Objectives / Strategy in the India’s Objectives / Strategy in the NegotiationsNegotiations

• Extend the use of SSGs to all countries and make their use Extend the use of SSGs to all countries and make their use more transparentmore transparent

• Get rid of special clauses and bilateral commodity specific Get rid of special clauses and bilateral commodity specific arrangementsarrangements

• Eliminate discretion in application of SPS standardsEliminate discretion in application of SPS standards• Abolish export subsidies completely within a time frame of 3 Abolish export subsidies completely within a time frame of 3

to 5 years. Include all forms of export subsidies in the to 5 years. Include all forms of export subsidies in the calculation of total subsidiescalculation of total subsidies

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India’s Objectives / Strategy in the India’s Objectives / Strategy in the NegotiationsNegotiations

• Flexibility to pursue our domestic support policies for Flexibility to pursue our domestic support policies for agriculture to protect our food security and livelihood agriculture to protect our food security and livelihood concernsconcerns

• Retaining appropriate level of bound tariffs for Retaining appropriate level of bound tariffs for protecting our farmersprotecting our farmers

• Seek additional opportunities for increasing our Seek additional opportunities for increasing our exportsexports

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Doha Ministerial DeclarationDoha Ministerial Declaration

The long term objective of establishing a fair and The long term objective of establishing a fair and market oriented trading system reaffirmedmarket oriented trading system reaffirmed

Need for fundamental reform through strengthened Need for fundamental reform through strengthened rules and specific commitments on support and rules and specific commitments on support and protection reiteratedprotection reiterated

Comprehensive negotiations sought for affecting:Comprehensive negotiations sought for affecting: substantial improvements in market accesssubstantial improvements in market access Reductions leading to eventual phasing out of all forms Reductions leading to eventual phasing out of all forms

of export subsidiesof export subsidies

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Doha Ministerial DeclarationDoha Ministerial Declaration

Substantial reduction in trade distorting domestic Substantial reduction in trade distorting domestic supportsupport

Special & Differential treatment to be an integral part Special & Differential treatment to be an integral part of the negotiationsof the negotiations

Modalities for further commitments to be finalised by Modalities for further commitments to be finalised by 31March 200331March 2003

Comprehensive draft schedules to be submitted by Comprehensive draft schedules to be submitted by the 5the 5thth Session of the Ministerial Conference Session of the Ministerial Conference

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Some Elements of Indian Work ProgrammeSome Elements of Indian Work Programme

Market AccessMarket Access Tariff line wise analysis required to be undertaken to Tariff line wise analysis required to be undertaken to

formalize our position with regard to tariff reductionsformalize our position with regard to tariff reductions

In depth study with regard to the utility and application of In depth study with regard to the utility and application of the special safegaurd mechanism for developing countries the special safegaurd mechanism for developing countries like Indialike India

Formulate our position on Tariff Rate Quotas (TRQs)with Formulate our position on Tariff Rate Quotas (TRQs)with a view to increasing our market access through the samea view to increasing our market access through the same

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Domestic Support and Export SubsidiesDomestic Support and Export Subsidies

Review of the Green Box measures to make them more Review of the Green Box measures to make them more development orienteddevelopment oriented

An analysis of the current level of trade distorting support An analysis of the current level of trade distorting support and subsidies which are required to be disciplined in view and subsidies which are required to be disciplined in view of the prevalent distortions in the international marketof the prevalent distortions in the international market

Developing disciplines on export credits ,export Developing disciplines on export credits ,export guarantees, insurance , etcguarantees, insurance , etc

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Special and DifferentialSpecial and Differential provisions provisions Specific modalities under the 3 areas of market access , Specific modalities under the 3 areas of market access ,

domestic support and export subsidies would need to be domestic support and export subsidies would need to be developeddeveloped

This would involve development of sound economic This would involve development of sound economic justification for seeking either differential rate of reduction justification for seeking either differential rate of reduction or specific measures so as to safegaurd food and livelihood or specific measures so as to safegaurd food and livelihood security objectives in developing countries’ agricultural security objectives in developing countries’ agricultural sectorsector

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1 presentation to the ipc seminar challenges facing the doha development round trade negotiations on...

Documents

tonnes rice

tonnes wheat75

tonnes pulses13

tonnes oilseeds20

tonnes sugarcane29

major crops

tonnes coarse cereals30

hectares net area