Transcript Agriculture in India - International Policy Council

Presentation to the
IPC Seminar
Challenges facing the Doha Development Round
Trade Negotiations On Agriculture
By
MR. DEVI DAYAL
Former Secretary Deptt of Banking ,Ministry of Finance
Government of India.
1
PART I
Agriculture in India
Current Scenario
and
Policy Framework
2
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
3
Indian Agriculture- 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
Wheat
Coarse Cereals
Pulses
Oilseeds
Sugarcane
89.5 million tonnes
75.6 million tonnes
30.5 million tonnes
13.4 million tonnes
20.9 million tonnes
29.9 million tonnes
4
Indian Agriculture- 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
5
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.
6
IndianAgriculture Scenario
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
7
Current Concerns






Pressure of the Population on Land
Skewed distribution of operational holdings
Land Degradation
Water Balance
Low level of mechanization
Low Fertilizer Consumption
8
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.
9
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
10
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.
11
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.
12
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.
13
India’s International Trade - 2001-02
Agriculture
Non-Agriculture
2500
2000
120
289
1500
1000
2148
1736
500
0
Exports
Imports
Rs Billions
14
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.



15
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.
16
PART II
Negotiations on WTO Agreement
On
Agriculture
17
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.
18
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
19
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
20
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;
a)
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
21
Two Fold Approach
b.
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
22
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
23
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
24
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
25
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
26
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.
27
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
28
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
29
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 & cosponsored proposals on market access and export subsidies
30
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
31
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
32
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
33
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
34
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
35
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
36
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
37
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
38
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

39
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
40
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
41
THANK YOU
42