WTO and India

What is Agreement on Agriculture (AoA)?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : WTO, Agreement on Agriculture

Mains level : Read the attached story

The Agreement on Agriculture at the WTO is riddled with deep imbalances, which favour the developed countries and have tilted the rules against many developing countries, a Union Minister has said.

Agreement on Agriculture

  • The AoA is an international treaty of the World Trade Organization.
  • It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO on January 1, 1995.

Three pillars of AoA

The Agreement on Agriculture consists of three pillars—domestic support, market access, and export subsidies.

(1) Domestic support

  • AoA divides domestic support into two categories: trade-distorting and non-trade-distorting (or minimally trade-distorting).
  • It the classification of subsidies by “boxes” depending on consequences of production and trade:
  1. Amber (most directly linked to production levels)
  2. Blue (production-limiting programs that still distort trade)
  3. Green (minimal distortion)

(2) Market access

  • Market access refers to the reduction of tariff (or non-tariff) barriers to trade by WTO members.
  • The 1995 AoA consists of tariff reductions of:
  1. 36% average reduction – developed countries – with a minimum of 15% per-tariff line reduction in next six years.
  2. 24% average reduction – developing countries – with a minimum of 10% per-tariff line reduction in next ten years.
  • Least developed countries (LDCs) were exempt from tariff reductions, but they either had to convert non-tariff barriers to tariffs—a process called tariffication—or “bind” their tariffs, creating a ceiling that could not be increased in future.

(3) Export subsidies

  • The AoA required developed countries to reduce export subsidies by at least 36% (by value) or by 21% (by volume) over six years.
  • For developing countries, the agreement required cuts were 24% (by value) and 14% (by volume) over ten years.

Criticism of AoA

  • AoA has been criticized for reducing tariff protections for small farmers, a key source of income in developing countries, while simultaneously allowing rich countries to continue subsidizing agriculture at home.
  • In 2017 India and China jointly submitted a proposal to the WTO calling for the elimination – by developed countries – of the most trade-distorting form of farm subsidies,
  • They are known in WTO parlance as Aggregate Measurement of Support (AMS) or ‘Amber Box’ support as a prerequisite for consideration of other reforms in domestic support negotiations.

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