ISSN NO 2322-0147
COMMONWEALTH ASSOCATION FOR
EDUCATION, ADMINISTRATION AND
MANAGEMENT
FEBRUARY
2014
VOLUME 2 ISSUE 2
INDIA’S NEGOTIATIONS UNDER (WTO) IN CASE OF
A JOURNEY OF MODERN INDIAN ART: BENGAL SCHOOL
TO PROGRESSIVE ARTISTS GROUP
AGRICULTURE, NAMA AND SERVICES
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Research (Multi- subject journal)
Excellence International Journal Of Education And Research
VOLUME 2
ISSUE 2
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INDIA’S NEGOTIATIONS UNDER (WTO) IN CASE OF AGRICULTURE,
NAMA AND SERVICES
Dr. Shah Raziq Khalid
Asstt. Professor
Department of Law,
Shri Varshney P.G. College,
Aligarh, UP., India.
M. 09897753011
Email: sarkhalid70@gmail.com
ABSTRACT
I in my paper have taken up three prominent issues and have highlighted the position of India and pros and
cons of these issues on India, as these issues are agriculture, non-agricultural market access and services.
Firstly, I have taken up agriculture which is very important issue for india because about seventy percent of
India’s population is dependent on agriculture. In this regard the dispute is of subsidy which is provided by
developed country. They subsidies their farmers haviely and hence the cost of production very less and so,
the supply of agriculture product will be very cheap and the developing countries will not be able to compete
with them, so India should not compromise on this issue as it will result into catestrophe. The second issue
is non-agriculture market access (NAMA) which is related to teriff barriers and I have highlighted that here
lies the bargain and is estringent and it is clear that the main and substantial gain made by India so far
relates to having flexibility to protect certrain sensitive product by keeping them outside the scope of tariff
reduction formula. The third and the last issue under taken is services. Here India can negotiate
aggressively as when it comes to services specially in the field of information technology, business services,
human resource. India holds an edge over other country. And hence, these are the issues which will be
helpful in future bargaining.
Keywords: Non-agriculture market access (NAMA), World Trade Organization (WTO),General Agreement
on Trade and Tariff (GATT), European Union (EU), United States (US), Business Processing and
Outsourcing (BPO),
Introduction
India’s negotiating stand at the WTO should be viewed within this context. This article does
not question the rationale for India’s continued engagement at the WTO. Instead, it seeks to
explain developments in three areas of negotiation: agriculture, Non-Agricultural Market Access
(NAMA) and services. It also attempts to capture India’s negotiating position on these issues,
highlighting significant shifts on specific issues wherever these have occurred.1
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Doha negotiations: Agriculture, NAMA and services
Following up on the Doha Ministerial Declaration in november 2001, WTO members
launched an ambitious Work Programme covering negotiations on agriculture, Non-Agriculture
Market Access (NAMA), services, dispute settlement, antidumping duties, subsidies, etc. In
addition, intense work was envisaged in new areas of investment, competition policy, transparency
in government procurement and trade facilitation, with the objective of initiating negotiations in
2003. In the Doha Ministerial Declaration, WTO members expressed their resolve to find
appropriate solutions to the implementation-related concerns raised by developing countries.
These concerns emerged out of the problems encountered by developing countries in the
implementation of agreements finalised during the Uruguay Round.2
Expectations from the Hong Kong Ministerial meeting, held in December 2005, were scaled
down in advance of the meeting. Decisions on most of the contentious and substantive issues
were postponed until 2006. These included decisions on the formula, specific numbers and
timeframe (commonly referred to as modalities) for reduction in agricultural subsidies, and
agricultural and non-agricultural tariffs. Despite major players in the WTO negotiations meeting at
regular intervals, consensus on the modalities continues to be elusive. Since July 24, 2006, WTO
negotiations have gone into suspension mode.4
Agriculture
In GATT, agriculture was subject to ‘soft’ disciplines compared to industrial products. In
1955, the United States obtained a permanent waiver from substantial obligations in agriculture.
The European Union implemented an elaborate system of protection for its farmers through huge
subsidies. This resulted in severe distortions in the production and trade of agricultural products.
Some degree of discipline in agriculture was introduced through the Uruguay Round Agreement
on Agriculture. When the Doha Round was launched, it was expected that a significant reduction,
if not full elimination of the distortions, would be achieved in the negotiations. These hopes may
be belied.5
Opinion on the utility and effectiveness of the WTO as a forum for negotiating rules on
agricultural tariffs and subsidies is split. According to one view, in most developing countries
agriculture is not so much a matter of commerce as one of livelihood. It may, therefore, not be
appropriate to treat it on a par with industrial goods. Accordingly, disciplines on agriculture should
not be included in trade agreements at the WTO. However, a contrary view also exists which
perceives WTO negotiations as the only available vehicle for seeking a reduction in developedcountry subsidies, which have significantly distorted global trade and agricultural production.
Negotiations towards an Agreement on Agriculture are being undertaken on what are called three
pillars -- domestic support, market access, and export competition. With respect to each of these
pillars, different developing countries have differing interests, often conflicting in nature. The July
Framework and the Hong Kong Ministerial Declaration leave open a wide range of options within each
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pillar of the agriculture negotiations, which provide both risk and opportunity for developing countries.
This has brought a considerable degree of complexity to the negotiations.6
Domestic support
It is generally accepted that the agricultural subsidies provided by developed countries not
only restrict the access of developing-country exports, but have also depressed world food prices.
Subsidised exports by developed countries also pose a threat to food and livelihood security in
developing countries by depressing domestic market prices. Reduction of agricultural subsidies by
developed countries is, therefore, a crucial goal that is being pursued by developing countries.7
The on-going agriculture negotiations also provide an opportunity for review and
clarification of criteria of ‘green box subsidies’ -- the so-called non-trade-distorting subsidies -- with
a view to ensuring that these subsidies have no, or at most minimal, trade-distorting effects, or
effects on production. Under the Uruguay Round commitments, countries can provide green box
subsidies without any ceiling, provided these subsidies have no trade- or production-distorting
effects.9
A point that bears highlighting is that even if the most ambitious proposal of reducing tradedistorting domestic support is agreed upon -- which appears to be an unlikely outcome -- it would
still provide considerable leeway to developed countries to grant billions of dollars of farm support.
Further, the absence of strict disciplines on green box could undermine gains that may be
achieved through a reduced ceiling on trade-distorting subsidies. This should be a matter of
concern for developing countries.10
Market access
Developed countries have consistently demanded that developing countries, including
India, reduce their agricultural tariffs. However, it is widely understood that tariff liberalisation by
developing countries could have severe consequences -- such as large-scale unemployment,
poverty and hunger -- unless they are accompanied by a substantial reduction in, if not removal of,
developed-country farm subsidies.11
Export competition
The export competition pillar includes various forms of direct and indirect export subsidies,
export credits, export insurance, food aid, etc. The most significant development in the export
competition pillar has been the decision at the Hong Kong Ministerial meeting to eliminate export
subsidies by 2013. However, the actual impact of the elimination of export subsidies may be rather
limited, given the fact that the amount of these subsidies -- less than $ 10 billion per year -- is
significantly less than the amount of domestic support.13
Agriculture negotiations: India’s stand
The agricultural sector is India’s most vulnerable sector. With the livelihood of around 650
million people in the country being dependent on agriculture, India’s interests in the negotiations
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on agriculture are mainly defensive. India’s offensive interests lie in reducing the heavy
subsidisation in developed countries.14
India’s interests in agriculture have always been dictated by the need to safeguard millions
of small farmers who operate the majority of farm holdings in the countryside. Agriculture
determines the very social fabric of India and is more a way of life and means of livelihood than a
question of commerce. Further, India has 25 agro-climatic zones that, on the one hand, provide
diversity to crop cultivation and, on the other, make crop rotation within a farm extremely difficult.
Given these complexities in agriculture, India has essentially defensive interests in agriculture.
India’s bound rates and applied agricultural tariffs are among the highest in the world.15
Non-Agricultural Market Access(NAMA)
In GATT / WTO, the term ‘tariff’ is used to refer to a customs duty levied at the time a
product is imported into the territory of any country. Tariffs generally have three functions: (i) to
provide revenue to the government; (ii) to protect the domestic product from competition with the
imported product, as the latter becomes more costly because of the tariff; and (iii) to function as an
instrument of development policy in discouraging non-priority imports (such as luxury goods), while
encouraging priority imports like capital goods and industrial intermediates. As the imported
product becomes more expensive with the levy of a tariff than it would be without it, tariffs have a
restraining effect on imports.17
NAMA negotiations: Doha and beyond
Paragraph 16 of the Doha Declaration, which is on NAMA, has the following four
elements:
1.
Reduction/elimination of tariffs, including tariff peaks, high tariffs and tariff escalation, as
well as non-tariff barriers, in particular on products of export interest to developing
countries.
2.
Comprehensive product coverage without any a priori exclusions.
3.
Special needs and interests of developing countries and Least Developed Countries
(LDCs) to be taken fully into account.
4.
Less than full reciprocity by developing countries and LDCs in reduction of tariffs.
NAMA negotiations: India’s stand
From India’s submissions on NAMA to the WTO, it would appear that India’s negotiating
position has evolved considerably and changed significantly from its initial approach to tariff
reduction and its earlier stand on how unbound tariff lines should be treated for purposes of tariff
reduction.22
The Doha mandate provided for developing countries to make less than fully reciprocal
commitments. This is likely to be reflected through developing countries retaining the option to
keep a certain percentage of products outside the scope of tariff reduction, or subjecting them to
less than formula cuts. While the exact percentage of these tariff lines remains to be agreed upon,
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this should provide a certain amount of breathing space to India for protecting sensitive products
from the adverse impacts of tariff reduction.24
It is clear that the main and substantial gain made by India so far in the NAMA negotiations
relates to having the flexibility to protect certain sensitive products by keeping them outside the
scope of the applicable tariff reduction formula.25
Implications for India of NAMA negotiations
Empirical evidence suggests that the integration of a country into the global economy
provides both benefits and challenges for consumers, business and the government. In a scenario
where India’s economy no longer faces a foreign exchange shortage, it would be crucial for the
country to leverage NAMA negotiations in order to generate employment through the expansion of
trade. Given the relatively high level of NAMA bound tariffs in India, compared to developed
countries, tariff reduction through the non-linear Swiss Formula would require India to make
deeper tariff cuts than developed countries. In other words, the extent of percentage points by
which India would be required to reduce its bound tariffs would far exceed the corresponding
number for developed countries. Herein lies the imbalance in the possible outcome of NAMA
negotiations for India. Domestically, one possible way of mitigating the adverse effects of tariff
reduction could be by designing appropriate safety nets for sectors likely to be adversely affected
by reduced tariffs.26
Services
While India has defensive interests in agriculture and NAMA, in services it can afford to be
on the offensive, given the edge that it has in most areas in this sector over other countries, both
developed and developing.31
India’s offensive interests in services
From India’s point of view, services present a different picture from agriculture and
industrial tariffs. As an emerging global power in IT and business services, the country is, in fact, a
demander in the WTO talks on services as it seeks more liberal commitments on the part of its
trading partners for cross-border supply of services, including the movement of ‘natural persons’
(human beings) to developed countries, or what is termed as Mode 4 for the supply of services.
With respect to Mode 2, which requires consumption of services abroad, India has an offensive
interest.32
Some experts are of the view that under the Uruguay Round commitments, developed
countries already have a liberal trade regime in Mode 1 (which covers Business Processing
Outsourcing or BPOs) with regard to some of the service sectors of interest to India. Further
research needs to done to assess the extent of autonomous liberalisation undertaken by
developed countries, which can be locked in during the negotiations, and consequent gains that
can accrue to India. Further, even in the absence of additional liberalisation, India’s service
exports would continue to grow in view of its cost advantage and demography. India could also
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explore the possibility of finalising mutual recognition agreements with the main importers of
services, so that differences in national regulatory systems do not act as barriers to its exports.34
Conclusions
As far as agriculture negotiations are concerned, the playing field may be tilted further
against India if it is required to undertake deep tariff cuts without any concurrent elimination of farm
subsidies by developed countries. Even the most ambitious proposal would permit the US and the
EU to together provide trade-distorting subsidies to the extent of $ 30 billion. Further, without
strengthened disciplines on green box, developed countries may be in a position to increase
subsidies under this category beyond the present levels of $ 90 billion. Such high levels of farm
subsidies in developed countries, accompanied with deep tariff reductions in India, could severely
threaten the livelihood of India’s farmers as well as the food security of its people. There is no
requirement for India to reduce bound rates to address the current food shortage.
As far as NAMA is concerned, without a steep reduction in tariffs in the textiles and clothing
sector in developed countries, India may not stand to gain significantly. In respect of services,
India would need to balance the incremental gains that might accrue to it from liberalisation in
developed-country markets with the adverse consequences of making commitments to liberalise
sensitive sectors.
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