WTO AGREEMENTS

WTO overseas about 60 different agreements which have the status of international legal texts. Member countries must sign and ratify all WTO agreements on accession. Important among the agreements are the following.

Agreement on Agriculture (AoA)

One of the most contentious issues that the Uruguay round addressed was agreculture. When the Marrakesh treaty was signed in 1994, AoA was resisted by the developing countries . They were won over with some concessional features and flexibilities . its three pillars are :

Domestic support

Export subsidies

Market access

Domestic support : It refers to the subsidies that governments give to the farmers like food , fertilizers, pawer ,water etc. The domestic subsidies are grouped into three classes called “boxes” GREEN BOX, AMBER BOX, and BLUE BOX.

GREEN BOX subsidies relate to research and development and infrastructure like university,roads in rural areas ets. Since they do not distort trade , there is no limit on them.

AMBER BOX includes those domestic subsidies that impact on market prices. For example, food subsidies. Therefore they need to be limited at an agreed level. Developed countries are allowed less than developing countries in percentage terms.

BLUE BOX contains subsidies that are direct payments to the farmers to limit their production as agriculture needs to play a multifunctional role that includes environmental stability ,leaving land etc.

SUBSIDIES given by USA and Europe make agricultural goods so cheap that their markets are virtually inaccssible to exports from developing countries. The earlier gains expected by the developing countries from an genuinely free international trade in agricultural goods have not come about as the advanced countries are least inclined to reduce the subsidies to the statutory levels. It is one of the ‘implementational concerns’ in WTO being discussed in the Doha round.

EXPORT SUBSIDIES: are to be limited by  the developed countries either in value or volume terms so that international prices are not lowered below a point and exports of  the developing countries are not priced out.

MARKET ACCESS: means all member countries should throw open their domestic market to agricultural imports by reduction of tarriffs and removal of or non tarriff barriers .Countries should undertake ‘tarriffication’ to convert non tarriff barriers (like qoutas) to tarriffs and bind the rates beyond them.The bounded rates are usually high.

AoA can be  expected to ,in the long run , benefit the developing countries that have cost advantages in production .However , any such benefits are conditional on the developed counties reducing their subsidies. CONTD…..