Ieo2 Samir Report

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A

Study Of

DOHA DEVELOPMENT ROUND

AND

ITS IMPACT ON INDIAN AGRICULTURE

Under The Partial FulfilmentOf

The Requirement for MBA Programme

Submitted By:

Samir Dave (11M34)HardikPurohit (11F16)

NayanNadiyapara (11F23)

Submitted To:

Dr.Y.C.Joshi

Subject:

International Economic Organizations

G.H.Patel Post Graduate Institute of Business ManagementSardar Patel University

VallabhVidyanagar2011-13


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PREFACE

This study has been undertaken in order to fulfil the partial requirements of the MBAprogramme in G.H. Patel Post Graduate Institute of Business Management. This studywill give an understanding of the Doha Development round of WTO in detail and itsimpact on agriculture with special reference to India. The Doha DevelopmentRound or Doha Development Agenda (DDA) is the current trade-negotiation round ofthe World Trade Organization (WTO) which commenced in November 2001.Itsobjective is to lower trade barriers around the world, which will help facilitate the

increase of global trade. As of 2008, talks have stalled over a divide on major issues,such as agriculture, industrial tariffs and non-tariff barriers, services, and traderemedies. So this report contains information regarding the various aspects of theDoha Development round and its impact on agriculture. This report helps in findingthe information regarding the impact of Doha round on agriculture to the researcher.


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ACKNOWLEDGEMENT

The completion of this study would have been impossible without the valuable

contributions ofpeople from the academics, family and friends. We hereby wish toexpress our sincere gratitude to all those who supported us throughout the project.

We would like to express our profound gratitude to Dr.Yogesh Joshi, AssociateProfessor,G.H. Patel Post Graduate Institute of Business Management whose guidance and supportwas significant in the successful completion of the project.


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INDEX

Sr. No. Particulars Page

no.

Preface 2

Acknowledgement 3

1 Introduction To The Study 5

2 Literature Review 7

3 Objectives 14

4 Methodology 14

5 Scope 14

6 Limitations 14

7 Conclusion 29

8 Bibliography 29


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Chapter 1

Introduction

Toward the end of World War II representatives of the US and its allied forces endeavored towork out the arrangements for a new world order in the past war era. As a result of these

negotiations, the US & its allies planned to establish three important international institutions toliberalize trade and payment. They were IMF, IBRD and ITO.

The General Agreement on Tariffs and Trade (GATT) was originally created by the BrettonWoods Conference as part of a larger plan for economic recovery after World War II. TheGATTs main purpose was to reduce barriers to international trade. This was achieved throughthe reduction of tariff barriers, quantitative restrictions and subsidies on trade through a series ofdifferent agreements.

The role of GATT in integrating developing countries into an open multilateral trading system isalso of major consequence. The increasing participation of developing countries in the GATTtrading system and the pragmatic support provided to them through the flexible application of

certain rules helped developing countries to both expand and diversify their trade. It could nowIn 1993, the GATT was updated (GATT 1994) to include new obligations upon its signatories.One of the most significant changes was the creation of the World Trade Organization (WTO).The 75 existing GATT members and the European Communities became the founding membersof the WTO on 1 January 1995. The other 52 GATT members rejoined the WTO in thefollowing two years (the last being Congo in 1997). Since the founding of the WTO, 21 newnon-GATT members have joined and 29 are currently negotiating membership. There are a totalof 157 member countries in the WTO, with Russia and Vanuatu being new members as of 2012.

Of the original GATT members, Syriaand the SFR Yugoslavia has not rejoined the WTO.Since FR Yugoslavia, (renamed to Serbia and Montenegro and with membership negotiations

later split in two), is not recognized as a direct SFRY successor state; therefore, its application isconsidered a new (non-GATT) one. The General Council of WTO, on 4 May 2010, agreed toestablish a working party to examine the request of Syria for WTO membership. The contractingparties who founded the WTO ended official agreement of the "GATT 1947" terms on 31December 1995. Serbia and Montenegro are in the decision stage of the negotiations and areexpected to become the newest members of the WTO in 2012 or in near future.

Whilst GATT was a set of rules agreed upon by nations, the WTO is an institutional body. TheWTO expanded its scope from traded goods to include trade within the service sector andintellectual. Although it was designed to serve multilateral agreements, during several rounds ofGATT negotiations (particularly the Tokyo Round) plurilateral agreements created selectivetrading and caused fragmentation among members. WTO arrangements are generally a

multilateral agreement settlement mechanism of GATT.The Doha Development Round or Doha Development Agenda (DDA) is the current trade-negotiation round of the World Trade Organization (WTO) which commenced in November2001. Its objective is to lower trade barriers around the world, which will help facilitate theincrease of global trade. As of 2008, talks have stalled over a divide on major issues, such asagriculture, industrial tariffs and non-tariff barriers, services, and trade remedies. The mostsignificant differences are between developed nations led by the European Union (EU), theUnited States (USA), and Japan and the major developing countries led and represented mainly


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by Brazil, China, India, South Korea, and South Africa. There is also considerable contentionagainst and between the EU and the USA over their maintenance of agricultural subsidiesseento operate effectively as trade barriers.

The Doha Round began with a ministerial-level meeting in Doha, Qatar in 2001. Subsequentministerial meetings took place in Cancn, Mexico (2003), and Hong Kong (2005). Related

negotiations took place in Paris, France (2005), Potsdam, Germany (2007), and Geneva,Switzerland (2004, 2006, 2008);

The July 2008 negotiations broke down after failing to reach a compromise on agriculturalimport rules.After the breakdown, major negotiations were not expected to resume until2009. Nevertheless, intense negotiations, mostly between the USA, China, and India, were heldin the end of 2008 in order to agree on negotiation modalities. The impasse was not resolved and,in April 2011, director-general Pascal Lamy "asked members to think hard about 'theconsequences of throwing away ten years of solid multilateral work'. Though no significantprogress has eventuated from the negotiations, the WTO seems determined to persist with them.As of May 2012, the future of the Doha Round remains uncertain. A report to the WTO GeneralCouncil by Lamy in May 2012 advocated "small steps, gradually moving forward the parts of theDoha Round which were mature, and re-thinking those where greater differences remained."

Negotiations

Doha Round talks are overseen by the Trade Negotiations Committee (TNC), whose chair is theWTOs director-general, currently Pascal Lamy. The negotiations are being held in five workinggroups and in other existing bodies of the WTO. Selected topics under negotiation are discussedbelow in five groups: market access, development issues, WTO rules, trade facilitation and otherissues.

Before Doha

Before the Doha ministerial, negotiations had already been under way on trade in agriculture andtrade in services. These ongoing negotiations had been required under the last round ofmultilateral trade negotiations (the Uruguay Round, 19861994). However, some countries,including the United States, wanted to expand the agriculture and services talks to allow trade-offs and thus achieve greater trade liberalization.

The first WTO ministerial conference, which was held in Singapore in 1996, establishedpermanent working groups on four issues: transparency in government procurement, tradefacilitation(customs issues), trade and investment, and trade and competition. These becameknown as the Singapore issues. These issues were pushed at successive ministerials by theEuropean Union, Japan and Korea, and opposed by most developing countries. Since no

agreement was reached, the developed nations pushed that any new trade negotiations mustinclude these issues.

The negotiations were intended to start at the ministerial conference of 1999 in Seattle, USA, andbe called the Millennium Round but, due to several different events including protestactivityoutside the conference (the so-called "Battle of Seattle"), the negotiations were neverstarted. Due to the failure of the Millennium Round, it was decided that negotiations would notstart again until the next ministerial conference in 2001 in Doha, Qatar.


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Just months before the Doha ministerial, the United States had been attacked by terrorists on 11September 2001. Some government officials called for greater political cohesion and saw thetrade negotiations as a means toward that end. Some officials thought that a new round ofmultilateral trade negotiations could help a world economy weakened by recession andterrorism-related uncertainty. According to the WTO, the year 2001 showed "...the lowest

growth in output in more than two decades," and world trade contracted that year.

Doha, 2001

Began in November 2001, committing all countries to negotiations opening agriculturaland manufacturing markets, as well as trade-in-services (GATS) negotiations and expandedintellectual property regulation (TRIPS). The intent of the round, according to its proponents,was to make trade rules fairer for developing countries. However, by 2008, critics were chargingthat the round would expand a system of trade rules that were bad for development and interferedexcessively with countries' domestic "policy space".

Importance of US presidential 'fast-track' authority

The round had been planned for conclusion in December 2005 after two more ministerialconferences had produced a final draft declaration. The WTO pushed back its self-imposeddeadline to slightly precede the expiration of the U.S. President's Congressional Fast Track TradePromotion Authority. Any declaration of the WTO must be ratified by the U.S. Congress to takeeffect in the United States. Trade Promotion Authority prevents Congress from amending thedraft. It expired on 30 June 2007, and congressional leaders decided not to renew this authorityfor President George W Bush.

Cancn, 2003The 2003 Cancn talksintended to forge concrete agreement on the Doha round objectivescollapsed after four days during which the members could not agree on a framework to continuenegotiations. Low key talks continued since the ministerial meeting in Doha but progress wasalmost non-existent. This meeting was intended to create a framework for further negotiations.

Collapse of negotiations

The Cancn ministerial collapsed for several reasons. First, differences over the Singaporeissues seemed incapable of resolution. The EU had retreated on some of its demands, but severaldeveloping countries refused any consideration of these issues at all. Second, it was questioned

whether some countries had come to Cancn with a serious intention to negotiate. In the view ofsome observers, a few countries showed no flexibility in their positions and only repeated theirdemands rather than talk about trade-offs. Third, the wide difference between developing anddeveloped countries across virtually all topics was a major obstacle. The U.S.-EU agriculturalproposal and that of the G20 developing nations, for example, show strikingly differentapproaches to special and differential treatment. Fourth, there was some criticism of procedure.Some claimed the agenda was too complicated. Also, Cancn ministerial chairman, Mexicos
http://en.wikipedia.org/wiki/Agreement_on_Trade-Related_Aspects_of_Intellectual_Property_Rightshttp://en.wikipedia.org/wiki/Agreement_on_Trade-Related_Aspects_of_Intellectual_Property_Rights


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Foreign MinisterLuis Ernesto Derbez, was faulted for ending the meeting when he did, instead oftrying to move the talks into areas where some progress could have been made.

The collapse seemed like a victory for the developing countries. The failure to advance the roundresulted in a serious loss of momentum and brought into question whether the 1 January 2005deadline would be met. The North-South divide was most prominent on issues of agriculture.

Developed countries farm subsidies (both the EUs Common Agricultural Policy and the U.S.government agro-subsidies) became a major sticking point. The developing countries were seenas finally having the confidence to reject a deal that they viewed as unfavorable. This is reflectedby the new trade bloc of developing and industrialized nations: the G20. Since its creation, theG20 has had fluctuating membership, but is spearheaded by the G4 (the People's Republic ofChina, India, Brazil, and South Africa). While the G20 presumes to negotiate on behalf of all ofthe developing world, many of the poorest nations continue to have little influence over theemerging WTO proposals.

Geneva, 2004

The aftermath of Cancn was one of standstill and stocktaking. Negotiations were suspended forthe remainder of 2003. Starting in early 2004, U.S. Trade Representative Robert Zoellick pushedfor the resumption of negotiations by offering a proposal that would focus on market access,including an elimination of agricultural export subsidies. He also said that the Singapore issuescould progress by negotiating on trade facilitation, considering further action on governmentprocurement, and possibly dropping investment and competition. This intervention was creditedat the time with reviving interest in the negotiations, and negotiations resumed in March 2004.

In the months leading up to the talks in Geneva, the EU accepted the elimination of agriculturalexport subsidies by date certain. The Singapore issues were moved off the Doha agenda.Compromise was also achieved over the negotiation of the Singapore issues as the EU and others

decided. Developing countries too played an active part in negotiations this year, first by Indiaand Brazil negotiating directly with the developed countries (as the so-called non-party of five)on agriculture, and second by working toward acceptance of trade facilitation as a subject fornegotiation.

With these issues pushed aside, the negotiators in Geneva were able to concentrate on movingforward with the Doha Round. After intense negotiations in late July 2004, WTO membersreached what has become known as the Framework Agreement(sometimes called the JulyPackage), which provides broad guidelines for completing the Doha round negotiations. Theagreement contains a 4-page declaration, with four annexes (A-D) covering agriculture, non-agricultural market access, services, and trade facilitation, respectively. In addition, theagreement acknowledges the activities of other negotiating groups (such as those on rules,

dispute settlement, and intellectual property) and exhorts them to fulfill their Doha roundnegotiating objectives. The agreement also abandoned the 1 January 2005 deadline for thenegotiations and set December 2005 as the date for the 6th ministerial to be held in Hong Kong.

Paris, 2005

Trade negotiators wanted to make tangible progress before the December 2005 WTO meeting inHong Kong, and held a session of negotiations in Paris in May 2005.


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Paris talks were hanging over a few issues: France protested moves to cut subsidies to farmers,while the U.S., Australia, the EU, Brazil and India failed to agree on issues relating to chicken,beef and rice. Most of the sticking points were small technical issues, making trade negotiatorsfear that agreement on large politically risky issues will be substantially harder.

Hong Kong, 2005

The Sixth WTO Ministerial Conference took place in Hong Kong, 13 to 18 December 2005.Although a flurry of negotiations took place in the fall of 2005, WTO director-general PascalLamy announced in November 2005 that a comprehensive agreement on modalities would not beforthcoming in Hong Kong, and that the talks would take stock of the negotiations and wouldtry to reach agreements in negotiating sectors where convergence was reported.

Trade ministers representing most of the world's governments reached a deal that sets a deadlinefor eliminating subsidies of agricultural exports by 2013. The final declaration from the talks,which resolved several issues that have stood in the way of a global trade agreement, alsorequires industrialized countries to open their markets to goods from the world's poorest nations,

a goal of the United Nations for many years. The declaration gave fresh impetus for negotiatorsto try to finish a comprehensive set of global free trade rules by the end of 2006. Director-generalPascal Lamy said, "I now believe it is possible, which I did not a month ago."

The conference pushed back the expected completion of the round until the end of 2006.

Geneva, 2006

The July 2006 talks in Geneva failed to reach an agreement about reducing farming subsidiesand lowering import taxes, and negotiations took months to resume. A successful outcome of theDoha round became increasingly unlikely, because the broad trade authority granted under

the Trade Act of 2002 to U.S. president George W. Bush was due to expire in 2007. Any tradepactwould then have to be approved by the U.S. Congress with the possibility of amendments,which would hinder the U.S. negotiators and decrease the willingness of other countries toparticipate.Hong Kong offered to mediate the collapsed trade liberalisation talks. Director-general of Trade and Industry, Raymond Young, says the territory, which hosted the last roundof Doha negotiations, has a "moral high-ground" on free trade that allows it to play the role of"honest broker".

Potsdam, 2007

In June 2007, negotiations within the Doha round broke down at a conference in Potsdam, as amajor impasse occurred between the USA, the EU, India and Brazil. The main disagreement wasover opening up agricultural and industrial markets in various countries and how to cut richnation farm subsidies.


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Geneva, 2008

On 21 July 2008, negotiations started again at the WTO's HQ in Geneva on the Doha round butstalled after nine days of negotiations over the refusal to compromise over the special safeguardmechanism. "Developing country members receive special and differential treatment withrespect to other members' safeguard measures, in the form of a de minimis import volume

exemption. As users of safeguards, developing country members receive special and differentialtreatment with respect to applying their own such measures, with regard to permitted duration ofextensions, and with respect to re-application of measures.Technical Information onSafeguard Measures WTO official site

Negotiations had continued since the last conference in June 2007.Director-general Pascal Lamysaid before the start of the conference that the odds of success were over 50%. Around 40ministers attended the negotiations, which were only expected to last five days but instead lastednine days. Kamal Nath, India's Commerce Minister, was absent from the first few days of theconference due to a vote of confidence being conducted in India's Parliament. On the second dayof the conference, U.S. Trade Representative Susan Schwab announced that the U.S. would capits farm subsidies at $15 billion a year, from $18.2 billion in 2006. The proposal was on thecondition that countries such as Brazil and India drop their objections to various aspects of theround. The U.S. and the EU also offered an increase in the number of temporary work visas forprofessional workers. After one week of negotiations, many considered agreement to be 'withinreach'. However, there were disagreements on issues including special protection for Chinese andIndian farmers and African and Caribbean banana imports to the EU. India and China's hardstance regarding tariffs and subsidies was severely criticized by the United States. In response,India's Commerce Minister said "I'm not risking the livelihood of millions of farmers.

Collapse of negotiations

The negotiations collapsed on 29 July over issues of agricultural trade between the United States,India, and China.In particular, there was insoluble disagreement between India and the United

States over the special safeguard mechanism (SSM), a measure designed to protect poor farmersby allowing countries to impose a special tariff on certain agricultural goods in the event ofanimport surge or price fall.

Pascal Lamy said, "Members have simply not been able to bridge their differences. He also saidthat out of a to-do list of 20 topics, 18 had seen positions converge but the gaps could not narrowon the 19th the special safeguard mechanism for developing countries. However, the UnitedStates, China and India could not agree on the threshold that would allow the mechanism to beused, with the United States arguing that the threshold had been set too low. The EuropeanUnion Trade Commissioner Peter Mandelson characterized the collapse as a "collectivefailure".On a more optimistic note, India's Commerce Minister, Kamal Nath, said "I would onlyurge the director-general to treat this [failure of talks] as a pause, not a breakdown, to keep on thetable what is there."

Several countries blamed each other for the breakdown of the negotiations. The United Statesand some European Union members blamed India for the failure of the talks. India claimed thatits position (i.e. that the U.S. was sacrificing the world's poor for U.S./European commercialinterests) was supported by over 100 countries. Brazil, one of the founding members of the G-20,broke away from the position held by India. Then-European Commissioner for Trade PeterMandelson said that India and China should not be blamed for the failure of the Doha round. In


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his view, the agriculture talks had been harmed by the five-year program of agriculturalsubsidies recently passed by the U.S. Congress, which he said was "one of the most reactionaryfarm bills in the history of the U.S."

Attempts to restore

In 2008, several countries called for negotiations to start again. LuizIncio Lula da Silva, formerpresident of Brazil, called several countries leaders to urge them to renew negotiations. Thedirector-general and chair of the Trade Negotiations Committee Pascal Lamy visited India todiscuss possible solutions to the impasse. A mini-ministerial meeting held in India on 3 and 4September 2008 pledged to complete the round by the end of 2010. The declaration at the end ofthe G20 summit of world leaders in London in 2009 included a pledge to complete the Doharound. Although a WTO ministerial conference scheduled in November 2009 would not be anegotiating session, there would be several opportunities in 2009 to discuss the progress. TheWTO is involved in several events every year that provide opportunities to discuss and advancetrade negotiations at a conceptual level.

In early 2010, Brazil and Lamy focused on the role of the United States in overcoming thedeadlock. President Lula urged Barack Obama to end a trade dispute between Brazil and the USover cotton subsidies after the WTO gave Brazil the formal go-ahead in 2009 to imposesanctions on imports of over 100 US goods. Lamy highlighted the difficulty of obtainingagreement from the US without the presidential fast-track authority and biennial elections. Oneof the consequences of the economic crisis of 20082009 is the desire of political leaders toshelter their constituents from the increasingly competitive market experienced during marketcontractions. Lamy hoped that the drop in trade of 12% in 2009, quoted as the largest annualdrop since the Second World War, could be countered by successful conclusion of the Doharound.

At the 2011 annual conference of the World Economic Forum in Davos, British primeminister David Cameron called for the Doha talks to conclude by the end of the year, saying that"We've been at this Doha round for far too long. It's frankly ridiculous that it has taken 10 yearsto do this deal." Peter Sutherland, a former WTO director-general, called for the talks to beconcluded in December that year.That hope having failed to eventuate, Pascal Lamy "reported tothe General Council on 1 May 2012 that on the Doha Round, 'my conversations over the pastfew weeks with Ministers and delegations have provided me with a sense that members wish tocontinue to explore any opportunities to gain the necessary traction and make tangible progresssoon'."

Issues

Agriculture has become the lynchpin of the agenda for both developing and developed countries.Three other issues have been important. The first, now resolved, pertained to compulsorylicensing of medicines and patent protection. A second deals with a review of provisions givingspecial and differential treatment to developing countries; a third addresses problems thatdeveloping countries are having in implementing current trade obligations.


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Agriculture

Agriculture has become the most important and controversial issue. Agriculture is particularlyimportant for developing countries, because around 75% of the population in developingcountries live in rural areas, and the vast majority are dependent on agriculture for theirlivelihoods. The first proposal in Qatar, in 2001, called for the end agreement to commit to

substantial improvements in market access; reductions (and ultimate elimination) of all forms ofexport subsidies; and substantial reductions in trade-distorting support.

The United States is being asked by the European Union (EU) and the developing countries, ledby Brazil and India, to make a more generous offer for reducing trade-distorting domesticsupport for agriculture. The United States is insisting that the EU and the developing countriesagree to make more substantial reductions in tariffs and to limit the number of import-sensitiveand special products that would be exempt from cuts. Import-sensitive products are of mostconcern to developed countries like the European Union, while developing countries areconcerned with special products those exempt from both tariff cuts and subsidy reductionsbecause of development, food security, or livelihood considerations. Brazil has emphasizedreductions in trade-distorting domestic subsidies, especially by the United States (some of whichit successfully challenged in the WTO U.S.-Brazil cotton dispute), while India has insisted on alarge number of special products that would not be exposed to wider market opening.

Access to patented medicines

A major topic at the Doha ministerial regarded the WTO Agreement on Trade-Related Aspectsof Intellectual Property Rights (TRIPS). The issue involves the balance of interests betweenthepharmaceutical companies in developed countries that held patents on medicines and thepublic health needs in developing countries. Before the Doha meeting, the United States claimedthat the current language in TRIPS was flexible enough to address health emergencies, but othercountries insisted on new language.[1]

On 30 August 2003, WTO members reached agreement on the TRIPS and medicines issue.Voting in the General Council, member governments approved a decision that offered an interimwaiver under the TRIPS Agreement allowing a member country to export pharmaceuticalproducts made under compulsory licenses to least-developed and certain other members.

Special and differential treatment

In the Doha Ministerial Declaration, the trade ministers reaffirmed special and differential(S&D) treatment for developing countries and agreed that all S&D treatment provisions ...bereviewed with a view to strengthening them and making them more precise, effective and

operational.

The negotiations have been split along a developing-country/developed-country divide.Developing countries wanted to negotiate on changes to S&D provisions, keep proposalstogether in the Committee on Trade and Development, and set shorter deadlines. Developedcountries wanted to study S&D provisions, send some proposals to negotiating groups, and leavedeadlines open. Developing countries claimed that the developed countries were not negotiatingin good faith, while developed countries argued that the developing countries were unreasonable
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in their proposals. At the December 2005 Hong Kong ministerial, members agreed to five S&Dprovisions for Least Developed Countries (LDCs), including the duty-free and quota-free access.

Research by the ODI sheds light on the priorities of the LDCs during the Doha round. It isargued that subsidies to agriculture, especially to cotton, unite developing countries in oppositionmore than SDT provisions and therefore have a greater consenus.

Duty-free and quota-free access (DFQFA) currently discussed covers 97% of tariff lines and ifthe USA alone were to implement the initiative, it would potentially increase Least DevelopedCountries (LDCs) exports by 10% (or $1bn). Many major trading powers already providepreferential access to LDCs through initiatives such as the Everything but Arms (EBA) initiativeand theAfrican Growth and Opportunity Act.

Implementation issues

Developing countries claim that they have had problems with the implementation of theagreements reached in the earlier Uruguay Round because of limited capacity or lack of technical

assistance. They also claim that they have not realized certain benefits that they expected fromthe Round, such as increased access for their textiles and apparel in developed-country markets.They seek a clarification of language relating to their interests in existing agreements.[

Before the Doha ministerial, WTO members resolved a small number of these implementationissues. At the Doha meeting, the Ministerial Declaration directed a two-path approach for thelarge number of remaining issues: (a) where a specific negotiating mandate is provided, therelevant implementation issues will be addressed under that mandate; and (b) the otheroutstanding implementation issues will be addressed as a matter of priority by the relevant WTObodies. Outstanding implementation issues are found in the area of market access, investmentmeasures, safeguards, rules of origin, and subsidies and countervailing measures, among others.

Benefits

All countries participating in the negotiations believe that there is some economic benefit inadopting the agreement; however, there is considerable disagreement of how much benefit theagreement would actually produce. A study by the University of Michigan found that if all tradebarriers in agriculture, services, and manufactures were reduced by 33% as a result of the DohaDevelopment Agenda, there would be an increase in global welfare of $574.0 billion.A 2008study by World Bank Lead Economist Kym Anderson found that global income could increaseby more than $3000 billion per year, $2500 billion of which would go to the developingworld. Others had been predicting more modest outcomes, e.g. world net welfare gains ranging

from $84 billion to $287 billion by the year 2015. Pascal Lamy has conservatively estimated thatthe deal will bring an increase of $130 billion.

Several think tanks and public organizations assess that the conclusion of the trade round willresult in a net gain . However, the restructuring and adjustment costs required to prevent thecollapse of local industries, particularly in developing countries, is a global concern. Forexample, a late 2009 study by the Carnegie Endowment for International Peace, the UnitedNations Economic Commission for Africa (UNECA), the United Nations DevelopmentProgramme and the Kenyan Institute for Research and Policy Analysis found that Kenya would


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see gains in its exports of flowers, tea, coffee and oil seeds. It would concurrently lose in thetobacco and grains markets, as well as manufacturing of textiles and footwear, machinery andequipment.

The Copenhagen Consensus, which evaluates solutions for global problems regarding the cost-benefit ratio, in 2008 ranked the DDA as the second-best investment for global welfare, after the

provision of vitamin supplements to the world's 140 million malnourished children.

Literature review

1. India and the Doha Development RoundBy: StenTolgfors

As a leading member of the G20, India has an extremely important role to play in thenegotiations. Much is at stake and time is short.

Sweden has a long history of excellent relations with India. Despite the geographicaldistance between our countries, our trade relations date far back in time and have grownrapidly in recent years. Current figures show an all-time high in our two-way trade. Butmoving beyond our bilateral relations, I believe India and Sweden are very similar in theimportance our countries accord to multilateralism in the international system.

2. Doha Round Dilemmas: What Stakes India holds in the WTO?Dr.NabeelAMancheri, Postdoctoral Associate, NIAS, Bangalore

The Doha round of WTO is one of the most contentious and prolonged round in thehistory of global trade talks and has been facing a roadblock since July 2008 when the

talk failed in Geneva. There is a new found interest among the officials to conclude theRound at least by the end of 2011. Under these circumstances, this paper examines whythe process of trade negotiation has run into so much trouble in the Doha Round? Is it theround provides only limited scope for the developing countries like India. So this paperexplores the available estimates of welfare gains accruing to India form the existingsimulations on the DDA, and analyses Indias stakes particularly the agriculture sector,the issues of non agricultural market access (NAMA) and service sectors in themultilateral trading system.

3. WTO Doha Round: India falls in line

By Devinder Sharma

India appears to be backtracking on its earlier tough stand of insisting that massiveagricultural subsidies in developed countries be removed, in order to push through thestalled Doha Round of trade negotiations


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The writing is on the wall. With India succumbing to pressure and the G33 group ofdeveloping countries unlikely to stand in the way, the controversial Doha DevelopmentRound of the World Trade Organisation (WTO) seems set to sail through.

Objectives of the study

To study about different ministerial conferences of Doha Development Round. To study about the effect of Doha Round of WTO on Indian Agriculture.

Research methodology

Sources of Data: In order to fulfill our objectives, we are using secondary sources for the purposeof information and data collection.

Type of Research: Exploratory Research Design

SCOPE

This is a micro-level study of the organization operations in India which means that this studywill be focusing on the activities, functions and processes of the WTO(through DohaDevelopment Round), undertaken in India. The study will be covering the impacts of the DohaDevelopment Round on the Indian agriculture.

Limitations

The first limitation of our study is that the study totally relies on the data collected through theofficial website of the organization. This means that the ground realities of the organization,which could have been gathered through personnel interaction is not available. Therefore, theexact measurement of its effectiveness cannot be realized.


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Chapter 2

The events occurred in Doha Development Round in the Agriculture sector

AGRICULTURE

Globalization manifesting in progressive integration of economies and societies has assumedincreasing significance in the lives of common people all over the world. In the field of the trade

the World Trade Organization (WTO) is the principal international institution responsible forlaying down rules for the smooth conduct of trade in goods and services among nations in thisglobalized world. This is achieved by developing a set of rules of multilateral trading systemwhich aims to remove, inter alia, trade barriers (tariff and non tariff) as well as reduce andeventually remove domestic support and system of export subsidies that distort internationaltrade between nations. These problems of trade distortion are most conspicuous in agriculturesector.

WTO policies impact agriculture principally through the following agreements:

1. Agreement on Agriculture(AOA)2.

Agreement on Application of sanitary and Phytosanitary standards (SPS)3. Agreement on technical barriers to trade

4. Agreement on trade related aspects to intellectual Property Rights (TRIPS)Activists cry foul that Indian agriculture, already reeling under severe drought and fall in cashcrop prices, will die once the import curbs are removed and free flow of food items are allowedinto India.

"There is going to be 'madness' in the agriculture sector. Farmers will be hit hard by the WTOregime. What happens to our vegetable oils, rice, rubber, coconuts and fruits, if similar items canbe imported cheaply from other countries," asks K Sundaran, a social activist espousing farmerscauses in South India.

Currently at present there is a massive distortion in the international trade in agriculture.Industrialised countries have been giving huge domestic subsidies to their agricultural sector thatthere is excessive production, import restrictions and dumping of agri-products in internationalmarkets. But despite the concerns of farmers, many believe the WTO rules will not adverselyaffect the Indian agriculture as it is made out. Developed nations have committed to the WTO


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that they would reduce subsidies and tariff. So then better overseas markets will be available forIndian agricultural products

The inclusion of agriculture in the Uruguay Round (UR) of multilateral negotiations heldprospects of achieving significant progress on reducing the policy induced trade distortions in

agricultural products. The Agreements on (AOA) aims to eliminate distortions in agriculturaltrade through reducing exports and productions subsidies and import barriers including non tariffbarriers. With the implementation of (AOA) the exports were risen and international prices hadincreased prices of agricultural commodities would improve the export potential. Here the mainaspects of (AOA) are include into the following context

A) Market access:Under Market access two basic elements needed to be taken care of where non tariff barrierssuch as quantitative restrictions and export import licensing are to be replaced by tariffs toprovide the same level of protection which is called as tarrification. Tariffs in such case have to

be reduced at the rate of 36% over 6 years in the case of developed countries and 24 % in thecase of developing countries.

B) Import and share:The second element relates to setting up of minimum level of imports of agricultural productsand members as a share of domestic consumption. Countries are required to maintain a currentlevel (1986-88) of access for each individual product. Where the current level is negligible .Herethe minimum access should not be less than 3% of the domestic consumption during the baseperiod and tariff quotas are to be established when imports constitute of less than 3% of domesticconsumption. This minimum level is to be increased by 5% by year by developing countries.However special safeguards Provision allow for the application of duties when shipments are tobe made at prices below creating reference level or when there is sudden import surge .Themarket question doesnt apply when commodity in question of a traditional staple of developingcountry.

Domestic support:

Under the (AOA), member countries are required to compute an aggregate measure of support(AMS) for the base period 1986-88).All the payments deemed to be decoupled (green boxmeasure) together with so called blue box measure are deducted from the AMS. The residualmade up of most couple d traded distorting measures, has been placed in Amber box(porter andBurney 2202) The domestic support that come under green box, blue box categories areexempted from requirement of reductions. Further domestic supports in developing country thatmeet the criteria set out in Para of article 6 of the agreement special and differential treatmentor the S & D box) are also exempted from reduction commitment. Examples of these areinvestment subsidies which are available to agriculture developing countries

Agriculture input services available to low income and poor developing countries. Here theexpectations under the blue box were included in (AOA) has been bilaterally negotiated between


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EU and US .The blue box measures direct payments under production limiting programme. Theblue box is an important tool for supporting and reforming agriculture and for achieving non-trade objectives and argues that it should be not restricted as it distorts less than the support.

C) Export subsidies:The commitment on export subsidies is on two counts 1) reduction in total budgetary outlays onexport subsidies. 2) Reduction on total quantity of export covered by subsidy. Export subsidiesdeveloped countries severely limit the export potential of developing countries .Most of thedeveloping countries are not in position to provide export subsidy to agriculture products due tosevere budget constraints. India doesnt provide for restrictions on reduction commitment in theAgreement. The only agreement which is available to exporters is in the form of a) exemptionfrom profit from the exports sales tax in income tax. (Under section 80-HCC) b) subsidies oncost of freight, marketing and international and internal transport on export shipments oflivestock products (GOI 2002b)

Current Scenario of Agriculture in India

India is the seventh largest country in geographical level and second largest country inpopulation wise and twelfth largest country in economic wise .The economy of India is asdiverse as it is large, with a number of major sectors including manufacturing industries,agriculture, textiles and handicrafts, and services. Agriculture is a major component of the Indianeconomy, More than 75 % of our people have their live hood as agriculture and agricultureoriented works. Mahatma Gandhi said "Indian economy lives in rural villages", and many of theindustries getting their raw material from agriculture sector.

Indian agriculture began by 9000 BCE as a result of early cultivation of plants, and

domestication of crops and animals. Settled life soon followed with implements and techniquesbeing developed for agriculture. Indian agricultural products are traded around the world viaexisting trading networks and foreign crops were introduced to India.

The five plans are give importance to the agriculture sector and rural development and ruralpeople's employment.Land and water management systems were developed with an aim ofproviding uniform growth. Our agriculture sector achived green reveloution during 1970s afterthat we create white revolution in milk production.Despite some stagnation during the latermodern era the policy makers was not concentrate the development of comprehensiveagricultural program and rural development compare to urban development and industrialdevelopment. Nearly 21.1% of the entire rural population of India exists in difficult physical and

financial predicament. But rate of poverty in urban population is 15%. In general, theGovernment controls the Indian economy, and there remains a great disparity between the richand the poor.

However, the service sector is greatly expanding and has started to assume an increasinglyimportant role. The fact that the English speaking population in India is growing by the daymeans that India has become a hub of outsourcing activities for some of the major economiesof the world including the United Kingdom and the United States. Outsourcing to India has been


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primarily in the areas of technical support and customer services. Other areas where India isexpected to make progress include manufacturing, construction of ships, pharmaceuticals,aviation, biotechnology, tourism, nanotechnology, retailing and telecommunications. Growthrates in these sectors are expected to increase dramatically. But the other side the slowdown inagricultural growth has become a major cause for concern. India's rice yields are one-third of

China's and about half of those in Vietnam and Indonesia.

Due to urbanization and industrialization use of agriculture land is reduced during the last onedecade agriculture lands are converted in to residential houses and factories hence the number ofagriculture labors lost their work and move to urban areas. This leads to low out put inagricultural products, insufficiency and rise in food articles prices. Number of surveys said thatthe world will go to face food insufficiency in near future.

In India Maximum of landholders are fall under the category of Small farmers, so they are notable to meet out the increasing input cost and not able to introduce any new technologicalmachineries in their farms, due to this reason our "farmers are born in debt, live in debt and died

in debt".

Infrastructure is also a significant factor in the process of development but country like our ruralIndia has not posses the infrastructure such as roads, electricity, fertilizer and pesticidesavailability which caused the vulnerable damage to the growth of agriculture. While India has awide network of rural finance institutions, many of the rural poor remain excluded, due toinefficiencies in the formal finance institutions, the weak regulatory framework, high transactioncosts, and risks associated with lending to agriculture.

Farmers' access to markets is hampered by poor roads, rudimentary market infrastructure,

excessive regulation and middlemen intervention in selling the products is very big problem inmarketing the products. Hence the Indian farmers need easily accessible and highly structuredmarkets with out middleman interventions.

Indian agriculture policy allow some foreign companies to introduce Dangerous geneticengineering technologies in seeds (GMS) and shift towards food grains to cash crops it mayhelpful to the farmers in one way in initial periods but using this type of GMS and shiftour production system from food grains to cash crops in future we will loose our traditionalseeds. Now we are seriously talking about fuel and its importance hereafter there is seriousarguments and problem will come for "food or fuel". An estimated 100 million tonnes of grainper year are being redirected from food to fuel. (Total worldwide grain production for 2007 was

just over 2000 million tonnes. As farmers devoted larger parts of their crops to fuel productionthan in previous years, land and resources available for food production were reducedcorrespondingly. This has resulted in less food available for human consumption,

Irrigation is key to agricultural production. Irrigation facilities are inadequate, as revealed by thefact that only 52.6% of the land was irrigated in 2003-04, which result in farmers still beingdependent on rainfall, specifically the monsoon season. A good monsoon results in a robust


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growth for the economy as a whole, while a poor monsoon leads to a sluggish growth. Thegovernment must allocate funds to start the new irrigation projects to increase the cultivation.

Agricultural reforms and increased private investment is must, especially small farmers. Createa viable model of public-private partnership that allows private investors to invest in agriculture

infrastructure in partnership with banks and financial institutions. This will help the farmers toaccess the high quality technologies and increase the output with international standards to meetthe global market requirements.

The policy makers in India have a high responsibility on reducing poverty by raising agriculturalproductivity and developing the rural population economic status from deprived condition.However, bold action from policymakers will be required to shift away from the existingsubsidy-based regime that is no longer sustainable, to build a solid foundation for a highlyproductive, internationally competitive, and diversified agricultural sector.

The government should instruct to the all universities, colleges, private and Government offices

and manufacturing industry canteens to sell agricultural products like tender coconut, cucumber,watermelon, fruits etc, to enhance and promote the agricultural products in these areas it willhelp the formers to get good demand and price for their products.

We need more number of Agriculture universities and agriculture colleges in India to promoteresearch and development in this area because majority of the population depending this sectorfor their live hood. So the government should concentrate and give more importance to theresearch and developments in rural and agricultural sector.

Total population of India as well as total population of the world has rapidly increasing There isno question that improving standards of living for the current poor of the world, plus providing

for the billions still to come, will increase global demand for food and levels of per capitaconsumption are so high. But the rate of food grain growth is substantially slower than theaverage population growth rate. Worldwide about two billion people are lack food security and825 million people are chronically malnourished, according to a recent estimate by UN Food andAgriculture Organization (FAO). Hence the very urgent need is the policy makers andgovernment should take responsible steps to improve the agricultural sector and eradicatepoverty and food starvation in the world.


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Agriculture in India: current scenario and policy framework

India has made one of the most comprehensive submissions on agriculture to theWTO. It has submitted its initial negotiating proposals in the areas of marketaccess, domestic support, export competition and food security with the objectiveof protecting its food and livelihood security and creating increased market accessopportunities with a view to promote its agricultural exports.

Indian proposals submitted to WTO on 15.01.2001 can broadly be classified intothe following two categories:

Increasing the flexibility enjoyed by developing countries by creation of aFoodSecurity Box for providing domestic support to the agriculture sectorunder thespecial and differential provisions as also further strengthening oftrade defencemechanisms with a view to ensuring the food security and totake care oflivelihood concerns.

Demanding of substantial and meaningful reductions in tariffsincludingelimination of peak tariff and tariff escalation, substantialreductions in domesticsupport and elimination of export subsidies by thedeveloped countries so as toget meaningful market access opportunities.

Indias submission was well taken into account while finalising the Doha WorkProgramme on agriculture. Although, there is no explicit mention of food security

box, elements of it like food security and rural development are included in thelanguage.

After the formation of G-20 at Cancun, the member countries of the allianceabandoned individual submission. India too, being one of the leaders of G-20,made its submissions through G-20 on the issue of agriculture.

Reverting back to the Uruguay Round commitments under WTO Agreement onAgriculture (AoA), out of three pillars of market access, domestic support andexport competition, India only had to fulfil some commitments under marketaccess.

Market Access


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Under market access all NTBs to agricultural trade were to be tariffed andconverted into their tariff equivalents. Further, tariffs resulting from thistariffication process were to be reduced by a simple average of 36% over a

period of 6 years in the case of developed and 24% over a period of 10 years in thecase of developing countries. In addition to this, for countries, which had tariffed,there was also an obligation to maintain current and minimum access opportunitiesand to establish a minimum access tariff quota of a minimum of 3% of domesticconsumption in the base period 1986- 88. This was to be gradually increased to 5%of base period consumption over the implementation period.

Along with many developing countries, India was permitted to offer ceilingbindings instead of tariffication. These bindings were not subject to the reductioncommitments. India was also allowed to maintain quantitative restrictions (QRs)on account of balance of payment problems. But since India had not tariffed and

was, instead allowed to bind its tariffs, it did not have any market accesscommitment. But like many developing countries, which decided to bind theirtariffs, India was also not entitled to use the Special Safeguard Measures (SSG) ofthe AoA, which can be used by only a few (36)developed countries, which hadtariffed.

Since, AoA allowed members either to tariff in all cases or to bind their tariffs,during the Uruguay Round, India chose to follow the latter route and bound itstariffs for 3375 tariff lines which constituted 65% of Indias total tariff linesdefined at 6-digit HS level. Out of these 3375 commodity groups, 683 commoditylines at 6-digits of HS classification belong to the agricultural sector.Simultaneously, India continued to have QRs, which it was permitted to impose

because of balance of payment reasons (BoP) reasons. Like many other developingcountries, except for a few commodities, India bound its tariffs at 100% for

primary products, 150% for processed products and 300% for edible oils.

The USA and some other countries in the Dispute Settlement Body (DSB) of WTOchallenged Indias continuation of QRs on the plea of BoP position. In view of itsimproved position in the matter of foreign balances, India lost the plea for retention

of QRs on account of BoP position both at the DSB as well as at the AppellateBody. According to the understanding arrived at between the parties regarding thereasonable period of time latest by March 2001, India removed the QRs on 714items including 142 commodities belonging to the category of agriculturalcommodities during 1999-00. On the occasion of Export and Import Policyannouncement on 31st March 2001, the Minister announced the removal of QRs on


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the remaining 715 items, thereby ending the much-maligned License PermitRegime.

With the removal of 715 items from the list, which include 42 groups belonging toagriculture, quantitative restrictions on imports have been completely abolishedand the obligation to replace QRs by tariffs has by and large been fulfilled (exceptfor a few strategic commodities). After the decision to remove QRs, India wasunder General Agreement on Tariffs and Trade (GATT) Article XXVIII, allowedto renegotiate the tariffs bindings on those commodities for which it had very lowor zero tariff bindings.

Consequently, in December 1999 India successfully negotiated and the bindingslevels were suitably revised upward to provide adequate protection to the domestic

producers. Out of these low bound tariff lines, bindings on 15 tariff lines, which

included skimmed milk powder, spelt wheat, corn, paddy, rice, maize, millet,sorghum, rapeseed, colza and mustard oil, fresh grapes etc. were revised to a levelranging between 45% and 75%.

Export Competition

Export subsidies were subject to reduction commitment, in the area of exportcompetition, though several kinds of direct payments were exempted. The exportsubsidy commitment is either in the form of budgetary outlay reductioncommitments or in the form of export quantity reduction commitments. Exportsubsidy outlays in budgets are to be reduced by 36%for developed countries and24% for developing countries over a period of 6 and 10 years respectively. Thevolume of exports receiving subsidies is to be reduced by 21% per product orgroup of products for developed countries and by 14% for developing countriesover the same time period. These reductions are to be made by taking 1986-90 asthe base period. The least developed countries (LDCs) are not subject to anyreduction commitments. The commitments are defined over commodity aggregatesrather than individual lines.

Export subsidies of the kind listed in the AoA, which attract reductioncommitments, are not extended in India. Indian exporters of agriculturalcommodities do not get direct export subsidy. The only subsidies available toexporters of agricultural commode ties are in the form of: (i) income taxexemptions on profits from export sales and (ii) subsidies on costs of freight(export shipments) of certain products like fruits, vegetables and floricultural

products. Since these payments are exempt for developing countries from


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reduction commitments during the implementation period, they will not cause anyadverse impact on agricultural exports from India, at least during this period.Therefore, India is making use of these subsidies in certain schemes of Agricultural& Processed Food Products Export Development Authority (APEDA), especiallyfor facilitating export of rice, wheat and horticulture products. But once the exportsupplies become self-sustaining during the adjustment period, these will have to bewithdrawn.

Domestic Support

The AoA distinguishes between three types of production support, grouped into

boxes, which are given the colours of traffic l ights: green (permitted), amber(slow downi.e. to be reduced), blue (subsidies that are tied to programmes thatlimit production). There are also exemptions for developing countries in the formof Special and Differential Treatment (S&DT).

Domestic support measures, according to the Agreement, are meant to identifyacceptable measures of support to farmers and curtailing unacceptable tradedistorting support to farmers. The trade distorting domestic support is measured interms of what is called the Total Aggregate Measurement of Support, which isexpressed as a percentage of the total value of agricultural output and includes both

product specific and non-product specific support.

According to the AoA, all non-exempt domestic support calculated as AggregateMeasure of Support (AMS), has to be reduced by 20% by developed countries in 6years (1995-2000) and by 13-1/3% by the developing countries in 10 years (1995-2004), taking 1986-88 as the base period. However, domestic support given to theagricultural sector up to a de minimus level of 10% of the total value of agricultural

produce in developing countries and 5% in developed countries is allowed.

AMS is further classified into product-specific and non-product specific support.All the support/policies directed at producers of various agricultural products and

provided on product-by-product basis constitute the product specific AMS. Thesesupport measures can be classified into three broad categories namely Market PriceSupport, the Non-exempt Direct Payments and other Product Specific Support. Theonly one measure that is relevant for the calculation of product specific support inIndia is the market price support since the other two namely the Non-exempt


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Direct Payments and other Product Specific Support do not constitute a significantproportion of support in India. The market price support in the form of minimumsupport prices is announced by the government for different commodities, basedon the recommendations of the Commission for Agricultural Costs and Prices(CACP).

The non-product specific support is the measure of support given to agriculture byway of subsidised supply of inputs such as fertilizers, irrigation, electricity, creditand seeds.It has been calculated that in case of India the product specific support in the year1995- 1996 was negative to the extent of 38.5%. However, the non-product supportthat is input subsidies is positive. But they do not exceed the de minimus leveleither individually or in the aggregate. Since Indias total product supportcontinues to be negative it has proposed to the WTO that the negative support

should be offset against positive non-product support while calculating the AMS.No final decision has yet been taken on this issue.

This notwithstanding, as of now India does not need to have any reductioncommitment regarding its domestic support to agriculture. This is in sharp contrastwith the developed countries that provide very high levels of support to theirfarmers.

Current Negotiating Position on Agriculture

India has a highly diversified agricultural economy, the condition of whichinextricably affects the livelihoods of about 60-70% of Indias population. Theinterests of agriculture need to be placed above the interests of the services andindustrial goods sectors in WTO negotiations. While all three pillars of thenegotiations Market Access, Domestic Support and Export Competition wereclosely linked it is the Market Access issue that is most critical to India. Someagricultural products are vulnerable even with the existing levels of protection.Even though there is water between the bound and the applied tariff rates in severalcommodities, this was required for developmental space and hence negotiations

should only be made on bound rates.

The SPs and SSMs were identified as important instruments to protect foodsecurity, livelihood concerns and rural development needs. SPs could bedetermined with the aid of several objective parameters that relate to livelihoodsecurity. Given that global trade in agriculture is highly volatile, and thatsubsidized products could result in import surges and/or depressing domestic


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prices, 35 crops on which 5m populations is dependent should be safeguarded. TheSSMs could be a generic defensive mechanism to safeguard Indias interests; itwas however important to ensure that SSMs could be used for all agricultural

products. Given the large heterogeneity of agricultural produce on which large tosignificant sections of population were dependant, the primary way of safeguardinginterests would be to ensure that the tariff reduction formula did not result intariffs, which were below applied levels.

In Market Access, a smaller number of tiers for tariff reductions by developingcountries and a large number of tiers for developed countries would be more

beneficial to India. The harmonization of tariffs was not desirable on grounds ofequity; tariffs are by and large the only effective developmental trade policyinstruments those developing countries have for protecting the interests of

populations dependent on agriculture as a source of food and employment.

Movement of India on the Market Access pillar needed to be contingent on the realand effective movement of developed countries on the Domestic Support andExport Competition pillars.

Indias agricultural exports may be modest in absolute terms, but have beengrowing well over the last few years. Tariff peaks by developed countries inseveral agricultural products of export interest to India need to be addressed.Building domestic preparedness on Sanitary and Phytosanitary (SPS) andTechnical Barriers to Trade (TBT) measures is of the essence as the imposition ofthese measures by developed countries is expected to rise significantly. Substantialand effective reductions in domestic support of developed countries wereconsidered essential and a pre-requisite to any market access commitments bydeveloping countries. Cascading effects of depressed prices, owing in part tosubsidization by developed countries, resulted in lower prices and returns tofarmers in India. The current practice in developed countries of box shifting andshifting product specific subsidies should be limited. It must also be ensured thatthe green box remains least trade distorting. The need to discipline absolute levelsof subsidy as well as the subsidy levels relative to domestic production was equallyimportant. The 20% reduction in AMS, deminimisand Blue Box would not

translate in to any meaningful reduction in domestic support as the commitmentlevel for AMS and de minimisare much higher than the support actually provided.An important outcome in domestic support reduction should be harmonization,

product specific support caps, tightening of blue box and green box criteria andimproved monitoring mechanisms.


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All forms of export subsidies would need to end by a credible end date (2013 asper the Hong Kong Ministerial Declaration). Developing countries should be givenan additional grace period for providing certain types of export subsidies. In thecase of specific products, such as cotton and sugar, both domestic and exportmarkets were affected by export subsidies of developed countries and henceemphasis needed to be place on the elimination of support for these products on a

priority basis. A product wise approach in elimination of export subsidies bydeveloped countries would help developing countries.

Non-Agricultural Market Access

Background

Reducing tariffs and NTBs on industrial goods was the core of multilateral trade

negotiations under the GATT. Paragraph 16 of the Doha Ministerial Declaration onMarket Access for Non-agricultural Products provides a clear mandate fornegotiations on this important subject. It require members to aim to reduce oras appropriate eliminate tariffs, including the reduction or elimination of tariff

peaks, high tariffs and tariff escalation, as well as NTBs, in particular onproductsof export interest to developing countries. These negotiations further are to takefully into account the special needs and interests of developing and LDCs,including through less than full reciprocity in reduction commitments.

In its first submission (October 2002), India had offered its preliminary thoughts incarrying forward the Doha mandate for the negotiations. The paper had inter aliadrawn attention to the various elements of the mandate, as seen from a developingcountry perspective, and emphasized that the negotiations this time should bringforth substantial gains to developing countries. Following further consideration, asalso after extensive domestic consultations with the various concernedstakeholders, India makes this second submission, proposing certain specificmodalities for the negotiations.

India in its submission emphasised that any approach decided upon for carrying

forward the Doha mandate on NAMA will have to address its essential elements.From a developing country perspective, it will be important to ensure that:

the approach fully integrates the less than full reciprocity concept inallaspects, not merely in a longer implementation period;

tariff peaks, tariff escalation and non-tariff measures are effectively dealtwithin products of particular export interest to developing countries;


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The fiscal, developmental, strategic and other needs of developingcountriesare fully taken into account.

Special needs of economic development of developing countriesincludingwhere there are labour intensive small scale enterprises are kept in

view.

Current Negotiating Position on NAMA

Under the NAMA negotiations, Indias objectives include enhancing market accessin developed countries; retaining flexibility to accord tariff protection to sensitive

products where the need arises in future, and; obtaining adequate flexibilities fordeveloping countries to address developmental sensitivities.

On the most important and contentious issue of formula for tariff reduction Indiaalong with Argentina and Brazil (ABI) have jointly proposed a modified Swisstype formula based on the average tariffs of the members. It was also pointed outthat this formula is more flexible, while cutting tariff peaks, tariff escalations andhigh tariffs. It was highlighted that the ABI proposal is development friendly, as itrequires concessions commensurate with each members present tariff profile.Explained differently, the differences in tariff structure of various WTO membersare a reflection of ground realities and policy options adopted by such countries.The best solution, therefore, would be for each country to use as a coefficient the

average of that countrys tariff. As for the unbound tariff lines, it was highlightedthat developed countries and countries that have bound 100% of tariffs want alltariff lines to be bound as in Agriculture. The countries with unbound tariff lineswant to keep them unbound because they are sensitive; it was also desired thatsome lines have to be retained unbound even after the Doha Round. It wastherefore stated that while binding is a desirable objective, flexibilities should beaccorded in determining the binding level.

On NTBs, India feels that while developed countries have very low tariffs; NTBsare increasingly becoming front- stage market access concerns. Indias negotiating

strategy should include a framework for classification, identification and reductionof NTBs. India attaches great significance to the removal of specific NTBs ontariff lines of particular export interest to developing countries. Compilation ofcomprehensive data with regard to NTBs is an essential requirement for furtheringdiscussion in this area.


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As regards sectoral initiative under Doha Round, the recent proposal by certaincountries includes Gems and Jewellery, Footwear, Chemicals, EnvironmentalGoods, Electrical and electronic products and raw materials in the sectoralinitiative. However, it was pointed out that many developing countries and, in

particular, African countries are opposed to initiative on sectoral. Therefore, if thisinitiative was to move forward, the participation in sectoral initiatives should bevoluntary.

Conclusion

India is one of the few members of the WTO, which has well defined negotiatingposition on most of the WTO issues. It is also true about India that its position isbased on a broad national consensus. That is why India seldom takes any proactivestand in negotiations. Many feel that this type of attitude does not bear much fruit

when trade negotiations are based on mutual give and take. But, for Indiangovernment it is more a compulsion rather than a choice.

In India, the major stakeholders are industry chambers; farmers, whose voices aremainly aired by the State governments; and civil society groups, which are a few innumber. Overall, in India the degree of awareness on WTO issues is still very low.One reason could be that the India economy is still a closed one. Exports contributeonly 10% to the national income of India. So far, only business chambers haveshown some amount of activism in their part and they have really tried to influencegovernment policies on WTO.

As regards State governments their main concern is agriculture. They also have toface the heat out of the misinformation campaign being run by anti-WTO, anti-globalisation lobby. At the Central level, it seems that there is a broad consensuson most of the WTOissues among different ministries. The major ministries whichare involved in policy making on WTO issues are Ministry of Agriculture,Ministry of External Affairs, Ministry of Information and Broadcasting, Ministryof Environment and Forests, Ministry of Finance and of course Ministry ofCommerce and Industry, which has the prime responsibility.

Agriculture sector in India is not well organised. Moreover, India is not a majorfarm exporter. Its main concern is food security. State governments and sometimeindustry chambers do try to influence national policy making on WTO. But, hereagain, the State governments role is limited, as most of them do not have any

permanent departments to work on WTO issues. As regards farmers organisations,


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which are a few in number, they are more apprehensive about the impact of WTOissues rather than proactive.

Indian government has to take care of this internal dynamics while framing anypolicy or proposing anything to the WTO. By taking into considerations of theabove situations India has identified agriculture and services (movement of natural

persons) as major areas of their interests. That is why India has verycomprehensive submission on these two issues.

As regards services, again Indias current stand is based on its comparativeadvantage and enough domestic support. Almost all industry chambers aresupportive of India asking for greater market access under mode 4 of servicesupply.

Documents

Ieo2 Samir Report