DR.

SHAKUNTALA MISRA NATIONAL REHABILITATION

UNIVERSITY
LUCKNOW

‘ASSIGNMENT'

“An analysis on Agreement on Agriculture”

ASSIGNMENT REPORT
Submitted by

Vishal Singh(7th Sem.)

(Roll No: 184140070)

Under the guidance of

Shambhavi mam

(Faculty of Law)
In Partial Fulfillment for the Award of the Degree in
BACHELOR OF COMMERCE AND BACHELOR OF LAWS (HONOURS)
 ACKNOWLEDGMENT

I would like to express my special thanks of gratitude to teacher

Shambhavi ma’am who gave me the golden opportunity to do this
wonderful topic “An analysis on Agreement on Agriculture” in
international trade law , which also helped me in doing a lot of
Research and I came to know about so many new things I am really
thankful to them.
VISHAL SINGH
 Table of Content
1. Introduction....................................................................................1

2. Subsidies.........................................................................................1

3. MSPandWTO................................................................................2

4. INDIA and WTO.........................................................................2

5. MSPinIndia..................................................................................3

6. PEACE CLAUSE

7. Liberalisation of Indian Agriculture Sector- Farm bills 2020

8. APMC
 INTRODUCTION

The Agreement on Agriculture, (the “Agreement”), came into force on 1 January 1995. The
preamble to the Agreement recognizes that the agreed long-term objective of the reform
process initiated by the Uruguay Round reform program is to establish a fair and market-
oriented agricultural trading system. The reform program comprises specific commitments to
reduce support and protection in the areas of domestic support, export subsidies and market
access, and through the establishment of strengthened and more operationally effective
GATT rules and disciplines. The Agreement also takes into account non-trade concerns,
including food security and the need to protect the environment, and provides special and
differential treatment for developing countries, including an improvement in the opportunities
and terms of access for agricultural products of particular export interest to these Members.
SUBSIDIES
It is governmental financial support paid to the farmers and agribusiness to reduce their input
expenditures and supplements their income.
Farm subsidies in form of financial support to farmers are an integral part of governmental
budget as around 600 million people are dependent on agriculture.

DIRECT SUBSIDES
Direct for subsides are very common in most of the developed countries like U.S and Europe
but India provides direct subsidies in a very limited form like; Food subsidy, MSP based
procurement, Insurance etc.It calls for reduction in domestic subsidies that distorts free trade
and fair price. Under this provision, the Aggregate Measurement of Support (AMS) is to be
reduced by 20% over a period of 6 years by developed countries and 13% over a period of 10
years by developing countries. Direct subsidies come within Amber Box.
Example- Minimum Support Price
Green Box-
Subsidies that do not distort trade, or at most cause minimal distortion. They are government-
funded and must not involve price support. They also include environmental protection and
regional development programs. “Green box” subsidies are therefore allowed without limits,
provided they comply with the policy-specific criteria.
Blue box-
It is either done for certain time period or for certain amount of crops covid19 pandemic,
public emergency Blue box subsidies are somewhat considered less trade distorting, while
they directly link production to subsidies, they also set limits on production by imposing
quotas. This is the amber box with conditions. Such conditions are designed to reduce
distortion
Amber Box
All domestic support measures considered to distort production and trade (with some
exceptions) fall into the amber box as all domestic supports except those in the blue and
green boxes. These include measures to support prices or subsidies directly related to
production quantities.

MSP AND WTO

Earlier, the Indian system of MSP has been challenged at the World Trade Organization
(WTO) for violating multilateral trading grules.WTO rules cap government procurement for
subsidized food programs at 10 per cent of the total value of agricultural production based on
1986-89 prices. But the M S Swaminathan Commission for Farmers way back in 2016
suggested a 50 per cent profit loading to an average weighted cost of production (from state
to state).The target was to enhance the agricultural competitiveness of the small and marginal
farmers of the country. But the cream of MSP is devoured by the paddy and wheat growers,
comprising the large farmers of two smaller Indian states in terms of population, Punjab and
Haryana.

INDIA AND WTO

With regard to the issue at hand, an MSP measure would fall in the Amber Box category and
would thus have to be capped at 10 per cent of the total value of the concerned product (de
minims level) as required under the AoA. If India’s domestic support exceeds the permissible
limit, it would stand in violation of this agreement. This year, India had to invoke the Bali
Peace Clause — which prevents WTO members from initiating complaints against a
developing country member for compliance with certain obligations—because India
exceeded “the ceiling on support it can offer farmers for rice for the marketing year 2018-
2019”. This was the first time any country has taken recourse to this safeguard. Food and
livelihood security, particularly India’s public stockholding program and MSP, have been
hotly debated at the WTO between the developed and developing blocs. The US and Canada
have been opponents of India’s food security and domestic support programs, and had
submitted a counter notification at the WTO in 2018 alleging that India “substantially
underreported its market price support” for five types of pulses. Canada has also asked
multiple questions to India on its food security program and market price supportpolicies1.
While there has been no case against India, in 2019, the US successfully won a case against
China at the WTO, which concerned China’s provision of domestic support in the form of
market price support(MPS)for producers of wheat, India rice, Japan rice and cornin2012,
2013, 2014, and 2015. The US “successfully argued that state buying at a guaranteed price
raised the whole market”, and established that China had exceeded its permitted de minims
level of support.
C2: Under C2, the estimated land rent and the cost of interest on the money taken for farming
are added to A2 and FL.

MSP IN INDIA
While many developed countries will remain critical of India’s agricultural subsidies
commitments, the MSP provision is not per se illegal under WTO law and can be included in
the text of the farm laws
However, in the long-term, the battle for adequate MSP and to ensure food and livelihood
security through agricultural subsidies will not be a domestic one. Compliance with WTO
laws and adhering to international obligations must be part of New Delhi’s considerations as
a responsible stakeholder, but reversing the inherent inequities and exploitative framework of
the AMS system—which ruefully stands codified in the form of WTO law—should be the
pressing objective moving forward. India has, however, consistently defended its position on
this issue and emphasized the need to priorities the food and livelihood security of its
population. A joint proposal by China and India at the WTO highlighted the vast difference in
the value of subsidies granted by developed economies like the US ,EU ,and Canada , and
those granted by developing economies. The proposal argued that “developed countries have
been consistently providing trade-distorting subsidies to their farmers at level much higher
than the ceiling applicable to developing countries. Developed countries have more than 90%
of global AMS [Aggregate Measure of Support] entitlements amounting to nearly 160 billion
USD” Proponents have argued that “elimination of AMS should be the starting point for
reforms rather than seeking reduction of subsidies by developing countries, some of which
provide a subsistence amount of about USD 260 per farmer per annum [in India] compared to
over 100 times more in some developed countries”
PEACE CLAUSE
Under the Peace Clause, if a developing country gives agricultural subsidies in excess of 10%
of its Agri-GDP,no member can challenge this until 2017.Inthemeanwhile,WTOwouldlook
for a permanent solution to address the developing countries food security concerns. This
meant that while peace clause would go till 2017, there was no guarantee that permanent
solution would be in place by then.
The peace clause too came with a plethora of conditions, such as submission of data on food
procurement, stockholding, distribution and subsidies (including their computation),etc.
These also included establishing that subsidies are not ‘traded is torting’which is nearly
impossible to comply. In other words, even in the interim, any member can challenge farm
support measures2.

Liberalization of Indian Agriculture Sector- Farm bills 2020

The government with the aim of transforming agriculture in the country and rising farmer’s
income has passed three important legislations from parliament. These legislations sought to
bring much needed reforms in the agriculture marketing system such as removing restrictions
of privates to chording of agriculture producer creating trading are as free of middleman and
take the market to the farmer. The reforms are expected to accelerate growth in the sector
through private sector investment in building in restructure and supply chains for farm
produce in national and global markets. They are intended to help small farmers who don’t
demeans to either bargain for their produce to get a better price or invest in technology to
improve the productivity of farms The legislation on contract farming will allow farmers to
enter into a contract with agri-business firms or large retailers on pre-agreed prices of their
produce However, for the middlemen and the state, it is not really good news as they will lose
their commission and Mandi taxes..Neither of the bills affect the Minimum Support Price in
any way as the MSP is an administrative decision not alas.
The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
Key features
It seeks to provide for the creation of an ecosystem where the farmers and traders enjoy the
freedom of choice relating to sale and purchase of farmers' produce. The Bill also proposes
an electronic trading in transaction platform for ensuring a seamless trade electronically. The
farmers will not be charged any cuss or levy for sale of their produce under this Act. Further
there will be a separate dispute resolution mechanism for the farmers.

Benefits

 Selling option:
The bill gives the long sought freedom to the farmers of selling their produce via more
than one channel of APMCs. However, APMC will still be available as a choice to sell their
products.

 Promote trade:
It will also promote barrier-free inter-state and intra-state trade and commerce outside the
physical premises of markets notified under State Agricultural Produce Marketing legislations.

 BBetter price:

It will also help farmers of regions with surplus produce to get better prices and consumers of
regions with shortages, lower prices.
It will open more choices for the farmer, reduce marketing costs for the farmers and help
them in getting better prices.

One India, One Agriculture Market:

The Bill basically aims at creating additional trading opportunities outside the APMC market
yards to help farmers get remunerative prices due to additional competition. This will
supplement the existing MSP procurement system which is providing stable income to
farmers. It will certainly pave the way for creating One India, One Agriculture Market and
will lay the foundation for ensuring golden harvests for our hard working farmers.
APMC’s
An Agricultural Produce Market Committee (APMC) is a marketing board established by a
state government in India to ensure farmers are safeguarded from exploitation by larger
entailers, as well as ensuring the farm to retail price spread does not reach excessively high
levels. It seeks to provide for a national framework on farming agreements that protects and
empowers farmers to engage with agri-business firms ,processors, whole salvers, export error
large retailers for farm services and sale of future farming produce at a mutually agreed
remunerative price framework in a fair and transparent manner and for matters connected
therewith or incidental thereto.

The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm
Services Bill, 2020

Benefits

Selling option:
The bill gives the long sought freedom to the farmers of selling their produce via more than
one channel of APMCs. However, APMC will still be available as a choice to sell their
products.
Promote trade:
It will also promote barrier-free inter-state and intra-state trade and commerce outside the
physical premises of markets notified under State Agricultural Produce Marketing legislations.
Better price:
It will also help farmers of regions with surplus produce to get better prices and consumers of
regions with shortages, lower prices. It will open more choices for the farmer, reduce
marketing costs for the farmers and help them in getting better prices.
One India, One Agriculture Market:
The Bill basically aims at creating additional trading opportunities outside the APMC market
yards to help farmers get remunerative prices due to additional competition. This wills
supplement the existing MSP procurement system which is provide in getable in come to
farmers. It will certainly pave the way for creating One India, One Agriculture Market and
will lay the foundation for ensuring golden harvests for our hard working farmers.
APMC’s
An Agricultural Produce Market Committee (APMC) is a marketing board established by a
state government in India to ensure farmers are safeguarded from exploitation by large
retailers, as well as ensuring the farm to retail prices plead do eons teach excessively high
levels. It seeks to provide iforanational frame work on farming agreements that protects and
empowers farmers to engage with agri-business firms, processors, who leasers, exporter so
large retailers for farm services and sale of future farming produce at mutually agreed
remunerative price frame work in a fair and transparent manner and for matters connected
therewith or incidental there to.

Benefits
 L
evil playing field:
The new legislation will empower farmers for engaging with processors, wholesalers,
Aggregators, wholesalers, large retailers, exporters etc., on a level playing
field without any fear of exploitation.
 TTransfer the risk:
It will transfer the risk of market unpredictability from the farmer to the sponsor and
Also enable the farmer to access modern technology and better inputs.
 A
attract private sector:
This legislation will act as a catalyst to attract private sector investment for building
supply chains for supply of Indian farm produce to national and global markets, and
in agricultural infrastructure.
 Elaminate intermediaries:
Farmers will engage in direct marketing thereby eliminating intermediaries resulting
in full realization of price.
Sale, lease or mortgage of farmers’ land is totally prohibited and farmers’ land is also
protected against any recovery.
 CONCLUSION
The government must work towards the welfare of farmers as they are our annotate. It is the
farmer’s right to get at least am minimum support price, which should be calculated as per the
C2 formula of the Swaminathan Commission smallest of Indian peasants would be even more
vulnerable. According to provisional numbers from the 10th Agriculture Census 2015–2016,
in India, “smallholder and marginal farmers” (those with less than two hectares of land)
accountfor86.2percentofallcultivators—that is, almost 126 million people. For them, it is in
conceivable to carry the reproduce to other states or far-off places to sell. They will not easily
resist the deals “proposed” by agribusiness firms. A major study that we at ICRIER
conducted withOECDshowedthatovertheperiod2000-01to2016-17, Indian agriculture was
implicitly taxed to the tune of almost 14 per cent of its value. This was primarily due to
restrictive trade and marketing policies, ranging from export controls and stocking limits to
the restrictive mandi system. The way to improve farmers’ price realization, therefore, was to
liberate agriculture from these various controls.