Presentation to the IPC Seminar Challenges facing the Doha Development Round Trade Negotiations On Agriculture

1. Presentation tothe IPC SeminarChallenges facing the Doha Development Round Trade Negotiations On Agriculture By MR. DEVI DAYAL Former Secretary Deptt of Banking ,Ministry of Finance Government of India.

2. PART I Agriculture in India Current Scenario and Policy Framework

3. Indian Agriculture has made rapid strides since independence • From food shortages and import to self-sufficiency and exports. • From subsistence farming to intensive and technology led cultivation. • Today , India is the front ranking producer of many crops in the world. • Ushered in through the green, white, blue and yellow revolutions

4. IndianAgriculture- Some Facts • Total Geographical Area - 328 million hectares • Net Area sown - 142 million hectares • Gross Cropped Area – 190.8 million hectares • Major Crop Production (1999-2000) • Rice 89.5 million tonnes • Wheat 75.6 million tonnes • Coarse Cereals 30.5 million tonnes • Pulses 13.4 million tonnes • Oilseeds 20.9 million tonnes • Sugarcane 29.9 million tonnes

5. IndianAgriculture- Some Facts • Contributes to 24% of GDP • Provides food to 1Billion people • Sustains 65% of the population : helps alleviate poverty • Produces 51 major Crops • Provides Raw Material to Industries • Contributes to 1/6th of the export earnings • One of the 12 Bio-diversity centers in the world with over 46,000 species of plants and 86,000 species of animals recorded

6. Major Achievements India is • Largest producer in the world of pulses , tea , and milk • Second Largest producer of fruits, vegetables, wheat , rice, groundnut and sugarcane.

7. STRENGTHS Rich Bio-diversity Arable land Climate Strong and well dispersed research and extension system OPPORTUNITIES Bridgeable yield crops Exports Agro-based Industry Horticulture Untapped potential in the N.E. WEAKNESS Fragmentation of land Low Technology Inputs Unsustainable Water Management Poor Infrastructure Low value addition THREATS Unsustainable Resource Use Unsustainable Regional Development Imports IndianAgriculture Scenario

8. Current Concerns • Pressure of the Population on Land • Skewed distribution of operational holdings • Land Degradation • Water Balance • Low level of mechanization • Low Fertilizer Consumption

9. The First Ever National Agriculture Policy was announced in July 2000. The Policy seeks to overcome these constraints and achieve • A Growth rate in excess of 4 percent per annum in the agriculture sector. • Growth that is based on efficient use of resources, and conserves our soil, water , and bio diversity. • Growth with equity, i.e. growth which is widespread across regions, and different classes of farmers. • Growth that is demand driven and stabilizes domestic markets and maximizes benefits from exports in the face of Global Challenges. • Growth that is sustainable ,technologically , environmentally, and economically.

10. The Policy has indicated a nine-fold package of policy initiatives to achieve the objectives • Development of Sustainable agriculture • Food and Nutritional security • Generation and Transfer of Technology • Improvement of input efficiency • Provision of incentives for agriculture • Promotion of Investments in agriculture • Strengthening of institutional infrastructure • Better risk management • Introduction of Management Reforms

11. TARGETS • Food Grain Production will be doubled in ten years, so as to make India hunger free . • Special emphasis will be on horticulture production in order to achieve a quantum increase. • Allied sectors like live stock, dairy poultry, fisheries, will be promoted • Production of oilseeds and pulses will be raised substantially.

12. Strategies & Initiatives : Enhancing Value Addition - 98% of fruits and vegetables are sold as fresh products. • processing accounts for only 7% of agricultural value. • wastage levels are extremely high. • Improved post harvest interventions: price support mechanism, grading, handling, storage, packaging, marketing, processing.

13. Strategies & Initiatives : Enhancing Value Addition • Draft National Policy on Food Processing prepared. • Draft Processed Food Development Act formulated. • Package of promotional schemes available for infrastructure development and quality improvement. • To raise the processing level by 10% , an investment of approximately Rs 1400 billion required.

14. India’s International Trade - 2001-02 Agriculture Non-Agriculture 2500 1 2 0 2000 2 8 9 1500 2 1 4 8 1000 1 7 3 6 500 0 Exports Imports Rs Billions

15. Strategies & Initiatives : Promotion of Exports • India’s competitive advantage - Diverse agro climatic conditions. - Sufficiency of Inputs. - Reasonable labour costs. • Agriculture exports from India account for less than 1% world trade in Agriculture commodities. - Target is to raise India’s share to 2% . • Thrust Areas • Improvement and maintenance of quality. • Consonance with International Standards. • Strengthening of Infrastructure. • Identification of niche products and markets.

16. India’s Agricultural Export Potentials • Marine Products • Rice • Wheat • Condiments and Spuces • Cashew • Tea • Coffee • Castor • Jute • Fruits and Vegetables- Onions, Mango, Grapes, Banana, Tomato , Potato , Lichchi ,etc.

17. PART II Negotiations on WTO Agreement On Agriculture

18. Uruguay Round Agricultural Negotiations • Prompted by surpluses in post-war period and consequent disarray in world agriculture. • Disciplines with regard to all measures affecting trade in Agriculture envisaged. • Including not only import access but also domestic policies, export subsidies , sanitary and phytosanitary measures.

19. Agreement on Agriculture (AOA) • AOA and Agreement of Application on Sanitary and Phytosanitary Measures were negotiated in parallel • Decision on measures concerning the possible negative effects of the reform programme o least developed and net food importing developing countries also a part of the package

20. Mandated Negotiations under Article 20 of AOA for continuation of the reform process • Negotiations to commence one year before the end of the implementation period i.e. in January 2000, taking into account: • Experience in implementing reduction commitments • Effect on world trade in Agriculture • Non Trade concerns, S&D treatment • Further Liberalization

21. Two Fold Approach • Experience in the implementation of the Agreement leads us to conclude that basically the problems can be tackled on two planes, namely; • Through positive efforts and binding commitments by Developed Countries in Undertaking substantive reductions in tariff levels, tariff escalation, trade distortive domestic support and elimination of export subsidies and tariff peaks,etc

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

23. India’s Priorities / Recommendations in Negotiations Domestic Support • Remove ambiguities in the calculation of AMS • Empty Blue Box and put a ceiling on all forms of direct payments and include these in AMS • Negative product specific support figures should be allowed to be adjusted against the positive non-product-specific AMS support figures

24. India’s Priorities / Recommendations in Negotiations Domestic Support • Product specific support provided to low-income resource-poor farmers should be excluded from AMS calculations • Total domestic support should be brought down below the de minimis level within a maximum period of three years by developed countries and five years by developing country members

25. India’s Priorities / Recommendations in Negotiations Food Security & Development Concerns • Strengthen mechanisms to deal with genuine food security concerns of developing countries through a “food security box” • Developed country members should not be allowed to use SPS measures for protectionist purposes by prescribing overly stringent trade restrictive SPS measure for denying market access to developing countries

26. India’s Priorities / Recommendations in Negotiations • All measures taken by developing countries for poverty alleviation from rural development, rural employment and diversification of agriculture should be exempted from any reduction commitments Market Access • Appropriate level of tariff bindings to be allowed to be maintained by developing countries as a Special & Differential Measure , keeping in mind their developmental needs and high distortions prevalent in international markets

27. India’s Priorities / Recommendations in Negotiations • Developing country members should be exempt from any obligation to provide any minimum market access. • A special safeguard mechanism including a provision for imposition of quantitative restrictions under specified circumstances to be made available to all developing countries in case of search in imports or decline in prices etc.

28. India’s Priorities / Recommendations in Negotiations • Low tariff bindings in developing countries as could not be rationalized in earlier negotiations should be allowed to be raised to the ceiling bindings for similar category of products, committed during the Uruguay Round

29. India’s Priorities / Recommendations in Negotiations Export Competition • Bring down excessively high tariffs to moderate levels in developed countries through an appropriate formula • Tariff reductions for developing countries should commensurate with their developmental needs • Abolish TRQ’s. Restrictions on trade only in the form of tariffs and tariffs only • If not possible ,then make their administration transparent , fair and equitable

30. Status of Negotiations • Negotiations in agriculture commenced with the first special session of the Committee on Agriculture held in March 2000 • The first phase of the negotiations ended in March 2001 • India also filed its proposals in the areas of market access, food security, domestic support and export subsides & co-sponsored proposals on market access and export subsidies

31. Status of Negotiations • The second phase began in May 2001 and has concluded with the Special Session meeting of February 2002 • Country positions fairly well defined during this phase of negotiations • A non paper on S&D presented by India in the Special Session held in February 2002

32. Developed Country Positions • EU against fast track approach to liberalization • Nordic Countries and Japan for continuation of subsidy regimes in agriculture • Australia , New Zealand and Canada (of Cairns Group) favor a totally market oriented approach and oppose trade distorting subsidies and protectionist regimes of EU and Japan • US , opposing EU, but not completely with Cairns Group either, aggressively seeks market access in other WTO member countries

33. Cairns Group Position • Demands elimination of export subsidies and domestic subsidies as goals of on going agricultural negotiations • Calls for better information and analysis of tariff rates tariff quota administration • Supports transparent and targeted S&D for developing countries

34. Developing Country Positions • India, Pakistan, Sri Lanka, ASEAN etc highlight significance of role of agriculture in their economies and seek to preserve domestic policy flexibility to guard food security concerns • Developing Cairns Group Countries (Argentina, Brazil ,South Africa) favour a market oriented & non trade distortive approach • Net Food Importing Countries (Single Crop economies) like Egypt, Mauritius, etc favour gradual and phased reduction in export subsidies

35. India’s Objectives / Strategy in the Negotiations • Extend the use of SSGs to all countries and make their use more transparent • Get rid of special clauses and bilateral commodity specific arrangements • Eliminate discretion in application of SPS standards • Abolish export subsidies completely within a time frame of 3 to 5 years. Include all forms of export subsidies in the calculation of total subsidies

36. India’s Objectives / Strategy in the Negotiations • Flexibility to pursue our domestic support policies for agriculture to protect our food security and livelihood concerns • Retaining appropriate level of bound tariffs for protecting our farmers • Seek additional opportunities for increasing our exports

37. Doha Ministerial Declaration • The long term objective of establishing a fair and market oriented trading system reaffirmed • Need for fundamental reform through strengthened rules and specific commitments on support and protection reiterated • Comprehensive negotiations sought for affecting: • substantial improvements in market access • Reductions leading to eventual phasing out of all forms of export subsidies

38. Doha Ministerial Declaration • Substantial reduction in trade distorting domestic support • Special & Differential treatment to be an integral part of the negotiations • Modalities for further commitments to be finalised by 31March 2003 • Comprehensive draft schedules to be submitted by the 5th Session of the Ministerial Conference

39. Some Elements of Indian Work Programme • Market Access • Tariff line wise analysis required to be undertaken to formalize our position with regard to tariff reductions • In depth study with regard to the utility and application of the special safegaurd mechanism for developing countries like India • Formulate our position on Tariff Rate Quotas (TRQs)with a view to increasing our market access through the same

40. Some Elements of Indian Work Programme • Domestic Support and Export Subsidies • Review of the Green Box measures to make them more development oriented • An analysis of the current level of trade distorting support and subsidies which are required to be disciplined in view of the prevalent distortions in the international market • Developing disciplines on export credits ,export guarantees, insurance , etc

41. Some Elements of Indian Work Programme • Special and Differential provisions • Specific modalities under the 3 areas of market access , domestic support and export subsidies would need to be developed • This would involve development of sound economic justification for seeking either differential rate of reduction or specific measures so as to safegaurd food and livelihood security objectives in developing countries’ agricultural sector

42. THANK YOU