Economics

World Trade Organisation

Agriculture

Aditya Kalia March ‘21

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 WTO: What is?
• Why need Open trade?
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• Definite link with economic growth and well-being yshub
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• Sharpen competition, motivate innovation – creative
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• An organization – meant for enforcement of rules
• A multilateral negotiating platform – meant for countries to negotiate and lay down the rules
of trade in various items
• A set of rules – at its core, it is a set of agreements (starting from the GATT, 1948)
negotiated through various rounds of talks between members
• A body to settle disputes – countries may be seen to be violating the rules that they have
signed up on. WTO also settles any disputes that arise as a result of this.
 WTO: Principles of a rule based trading system
Freer trade, Predictability: Encouraging
Trade without Promoting
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gradually, through through binding a i l. development and
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Most Favoured On
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Nation (MFN ) – considerations
Treating everyone Allowing levying
for developing
as equally of barriers in
and least
favoured Reduction of Binding case there is developed
Tariff & Non- commitments on unfair practice:
countries:
tariff barriers to ceilings of tariff Anti-Dumping
National Special Safeguard
trade (NTB) & NTB Duties
Treatment – mechanisms
Countervailing (SSM)
treating duties
foreigners and Special Products
locals equally (SPs)
WTO: Principles – Some MFN exceptions
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• General exceptions for environmental protection,
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security, and other
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• Exceptions to developing countries Only
• *Regional Free trading agreements* - A way to integrate
 Economic Integration: fall of trade barriers
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A Multilateral Complete
Customs Common Economic and
preferential Free Trade economic
Union Market Union monetary
trade Area Area: integration
Union

• Preferential terms • Tariffs completely • FTA has common • Free movement • Customs Union + • Economic Union • Common
of trade for some eliminated for tariffs with rest of of all goods, Common Market with same
goods. India- most goods the world. E.g. services, people, • European Union currency – Fiscal Policy
Nepal, India- traded. E.g. EU Customs capital in the CU Common
MERCOSUR ASEAN Union • E.g. Switzerland Monetary Policy
with some EU • Eurozone area
counntries
 WTO: Major Agreements
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• Goods – GATT
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• Services – GATS
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• Agriculture – AoA
• Intellectual property – TRIPS
• Investment – TRIMS
• And many more….
Intellectual Property - Types

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 TRIPS Agreement – Protection of IPRs
• Agreement to protect intellectual property – Discovery of mind – intangible creations of human intellect
• IPR- Right to exclusively use intellectual property – i.e. right to exclude others
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• IP is one of the biggest components of price/revenue of most
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ygoods being sold today – therefore needs
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• Without protection, no incentive to produce intellectual property, i.e. to research & innovate.
• Some examples of IP – patents, copyrights, trademarks, industrial designs, etc.
• Under TRIPS, countries have to make domestic laws that recognise & protect intellectual property – not just IP
in their own country, but of other members as well.
• Unjust extension of IP rights – evergreening of patents – prohibited under India Patents Act (Section 3(d)).
• TRIPS+ - Agreement amongst some developed countries for even more stringent protection of IP. Goes beyond
TRIPS. It is not part of WTO, India is neither a signatory, nor is bound by it.
 More on Intellectual Property
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• Patents extension – Evergreening of patents- extend patents, usually throughmaillegitimate
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• Compulsory licensing – Govt may, in special circumstances, allow
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a another producer to produce a patented good by
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providing them a license to do so. This is usually done inOthose
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a critical good, such as life-saving medicines, at an affordable price. The licensee has to pay royalty to the patent
holder and has to compulsorily provide the good at the government determined affordable price.
• Parallel Imports – A country may choose to import a good patented in their country but available in another
country at a cheaper price. E.g. Somebody imports iPhones for sale in India from USA. May be able to sell at a
cheaper price, if the import is legal. (in iPhones case it is not possible though).
 GATS
• services supplied from one
member to another (e.g.
international telephone calls)

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• services supplied to consumers of
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another member(e.g. tourism)
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• a foreign company setting up
subsidiaries or branches to provide
services in another country (e.g.
foreign banks setting up
operations in a country)

• individuals travelling from their

own country to supply services in
another (e.g. fashion models or
consultants),
 WTO: Agreement on Agriculture
• Deal with three main aspects: i l. co
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• Market Access – trade restrictions confronting imports →Tariffication
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of barriers
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• Domestic Support – subsidies/programs that guaranteer haprices
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• Export Subsidies – methods to make exports artificially
On competitive → Reduce
• The agreement does allow governments to support their rural economies, but preferably through
policies that cause less distortion to trade.
• Flexibility - Developing countries do not have to cut their subsidies or lower their tariffs as much
as developed countries, and they are given extra time to complete their obligations. Least-
developed countries don’t have to do this at all.
• Special provisions deal with the interests of countries that rely on imports for their food supplies,
and the concerns of least-developed economies.
 Aggregate measures of Support in WTO -
BOXES
• Amber Box - Nearly all domestic support measures considered tol.codistort
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include measures to support prices, or subsidies directly related gm to production quantities. These
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supports are subject to limits: “de minimis” minimal supports u b ha are allowed (generally 5% of
agricultural production for developed countries, 10%hafor p yshdeveloping countries);
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• Green Box- Support which must not distort trade, On or at most cause minimal distortion. Programmes
that are not targeted at particular products, and include direct income supports for farmers that are
not related to (are “decoupled” from) current production levels or prices. They also include
environmental protection and regional development programmes. “Green box” subsidies are
therefore allowed without limits.
• Blue Box - “amber box with conditions” — conditions designed to reduce distortion. Any support
that would normally be in the amber box, is placed in the blue box if the support also requires
farmers to limit production. At present there are no limits on spending on blue box subsidies
• PEACE CLAUSE??
 Agriculture
Production Marketing Processing & Distribution
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• Support for inputs – Seeds, • Infrastructural support – roads, mail.co • Distribution – PDS System,
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Fertilizer, Electricity, Irrigation, mandis, warehouses h a@ buffer stock, storage
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etc. • Institutional support –ppysh • Processing – Food Processing
• Institutional and infrastructural ha
marketing freedom/protection. Industry -
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Support – E-NAM On • Importance – Employment,
• Credit, • Price support – MSP – growth, exports, wastage
• Insurance • determination, • Scope
• Technology in aid of farming, • implementation, • Challenges
• mechanisation, • coverage, • Measures – Krishi Sampada
• Structure of Farming in India – • expansion (PM-AASHA), Yojana
Land holding pattern benefits v/s costs –
monocultural cropping
pattern, inequity in execution
• Contract Farming
Agriculture: Distribution of land Holding
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 Agriculture Production
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Aditya Kalia (aditya.kalia01@gmail.com)

 Agriculture Incomes
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Aditya Kalia (aditya.kalia01@gmail.com)

 Post Harvest Activities- Agri Marketing
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Issues with MSP (apart from 2500 a i l. co
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issues with Agri-markets): h a @
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- Awareness 2000 p ysh
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- Long distance to On1500
procurement center Cost
1000
- Irregular timing of MSP
procurement 500
- Inadequate storage 0
capacity
- Delays in payments

Aditya Kalia (aditya.kalia01@gmail.com)

 Miscellaneous Agriculture
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• PM-Fasal Bima Yojana
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• PM- Krishi Sinchai Yojana
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• Fertilizer Subsidy
• Agriculture Income tax