In News:

• World Trade Organization (WTO) is looking into resolving its rules that are making it difficult for India to export food-grains.
  
  
• This was announced by Ngozi Okonjo-Iweala, Director-General of WTO while speaking at the IMF Plenary meeting.
  
  

What’s in Today’s Article:

• Agreement on Agriculture – About, obligation under the agreement, three pillars of the agreement
  
  
• News Summary
  
  

In Focus: Agreement on Agriculture (AoA)

About

• AoA is a treaty of WTO. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade (GATT)
  • The WTO Agreement on Agriculture was one of the many agreements which were negotiated during the Uruguay Round.
    
    
  
  
  
• The implementation of the AoA started with effect from 1.1.1995.
  
  
• The agreement aims to remove trade barriers and to promote transparent market access and integration of global markets.
  
  
• The products which are included within the purview of this agreement are what are normally considered as part of agriculture.
  • It excludes fishery and forestry products as well as rubber, jute, sisal, abaca and coir.
    
    
  
  
  

Obligation under the agreement

• As per the provisions of the Agreement:
  • The developed countries were to complete their reduction commitments within 6 years, i.e., by the year 2000;
    
    
  • the commitments of the developing countries were to be completed within 10 years, i.e., by the year 2004.
    
    
  • The least developed countries were not required to make any reductions.
    
    
  
  
  

Three pillars of the agreement

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• Market Access
  • This includes tariffication, tariff reduction and access opportunities.
    
    
  • Tariffication means that all non-tariff barriers need to be abolished and converted into an equivalent tariff.
    • Quotas, variable levies, minimum import prices, discretionary licensing, etc. are termed as non-tariff barriers.
      
      
    
    
    
  • Special safeguard provision allows the imposition of additional duties when there are either import surges above a particular level or particularly low import prices as compared to 1986-88 levels.
    
    
  
  
  
• Domestic Support
  • It calls for reduction in domestic subsidies that distorts free trade and fair price.
    
    
  • The AoA classifies domestic subsidies into different types; under various boxes by assigning certain colours:
    
    
    
  
  
  

• Export Subsidies
  • The Agreement contains provisions regarding members commitment to reduce Export Subsidies.
    
    
  • Subsidy on inputs of agriculture, making export cheaper or other incentives for exports are included under export subsidies.
    
    
  
  
  

News Summary

• At the IMF Plenary meeting, the Director-General of WTO said the organisation was looking at the food export issues
  
  
• WTO has rules around the export of food by a country that had also procured food on a Minimum Support Price (MSP) basis.
  
  
• The WTO rules make it difficult for a country to export grains from official stocks if these have been procured from producers at a fixed price (minimum support price, in India’s case), instead of market rates.
  • Exports by private traders who buy grains from farmers at market rates are not impacted by the WTO norm.
    
    
  
  
  
• Issues of Quality: Fears remain that the quality of shipments and logistics could hold back the Indian economy from achieving its full market potential.
  
  
• If these rules are resolved, countries like India will be exporting food-grains to meet shortages in other countries, caused by the Russia-Ukraine war.
  
  

Food-grain export by India

• As per a Bloomberg report:
  • India has reached out to more than 20 countries regarding exporting wheat,
    
    
  • India is targeting a record 15 million tonnes of wheat for export this year.
    
    
  
  
  
• India is expected to have a surplus this year, producing more than 111 million tonnes of the crop.
  
  

Russia-Ukraine war: Opportunity for India

• The war has not just brought challenges to India, like having to deal with the global hike in commodity prices, but also opportunities.
  
  
• The opportunities included the export of food-grain — such as wheat.
  • Russia and Ukraine are the two biggest food-grain exporters in the world.
    
    
  • The disruption resulting from war is placing the onus of enduring global food supply on countries such as US, Australia and India, which is now a net food exporter.
    
    
  
  
  
• The current crisis also presents the possibility of manufactured goods being exported to destinations for which supplies had become unreliable.
  
  
• India, on the other hand, is trying to find markets for its product.
  • It is also trying to be of meaningful assistance, so that, where there is hunger, there are grains to go.