The Agreement on Agriculture at the World Trade Organization (WTO) has recently made headlines due to criticism from India’s Commerce and Industry Minister. During the G-33 Virtual Informal Ministerial Meeting, the Minister highlighted how the agreement favors developed nations and expressed the need for it to be adjusted to create a fair and equitable system.
The Role of the G-33
Established during the Cancun ministerial conference of the WTO, the G-33 is a consortium of developing and least developed countries that aims to protect their interests in agricultural trade negotiations. As one of the 47 member nations of this collective, India plays an integral role in advocating for policy changes that can address the common challenges these countries face. Among the measures proposed by the G-33 is the allowance for developing countries to retain the right to limit access to their agricultural markets.
Overview of the Agreement on Agriculture
The WTO’s Agreement on Agriculture was designed with the purpose of eliminating trade barriers and fostering transparent market access and global market integration. Three primary pillars support this objective – domestic support, market access, and export subsidy.
Domestic Support
Through this pillar, the agreement mandates the reduction of domestic subsidies that can interfere with free trade and fair pricing. These subsidies are categorized into the Green Box, Amber Box, and Blue Box. The Green Box includes government-funded subsidies that do not distort trade and primarily support environmental protection and regional development programmes. The Amber Box encapsulates all domestic support measures considered as distorting production and trade. Finally, the Blue Box contains subsidies that require farmers to limit production.
Market Access
In terms of the WTO, market access pertains to the agreed upon conditions, tariffs, and non-tariff measures for the entry of specific goods into member countries’ markets. The goal of this pillar is to progressively reduce individual countries’ tariffs to allow free trade and to transition non-tariff barriers into tariff duties.
Export Subsidy
The final pillar, export subsidy, refers to subsidies on agricultural inputs that make exports cheaper or other incentives for exports. These can result in the dumping of heavily subsidized products in other countries, causing potential harm to their domestic agricultural sectors.
About the World Trade Organization
Established in 1995 as a successor to the General Agreement on Tariffs and Trade (GATT), the WTO aims to facilitate the smooth, free, and predictable flow of trade. With 164 member nations, it accounts for 98% of global trade. WTO’s rules, developed through series of trade negotiations under GATT, have evolved significantly since the original GATT agreement, particularly during the 1986-94 Uruguay Round negotiations.
Besides agriculture, the WTO also regulates several other trade-related aspects, including Intellectual Property Rights, Trade Facilitation Agreement, Trade in Services, and Trade Policy Review Mechanism. With its headquarters based in Geneva, Switzerland, the WTO continues to play a significant role in managing and shaping international trade policies.