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Tamanna Chaturvedi Consultant Indian Institute of Foreign Trade

Tamanna Chaturvedi Consultant Indian Institute of Foreign Trade. ….. WTO Agreement on Agriculture: an Impact analysis for India . Where does Indian Agricultural stand in World?. 1. Understanding WTO Agreements affecting Agriculture exports from India. 2. Implementation issues under AoA. 3.

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Tamanna Chaturvedi Consultant Indian Institute of Foreign Trade

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  1. Tamanna ChaturvediConsultantIndian Institute of Foreign Trade ….. WTO Agreement on Agriculture: an Impact analysis for India

  2. Where does Indian Agricultural stand in World? 1 Understanding WTO Agreements affecting Agriculture exports from India 2 Implementation issues under AoA 3 India’s negotiating stand ……. 4 Unlocking issues…..

  3. Net Trade in Food

  4. Net agri exporter or importer?

  5. Comparative Analysis of India versus major Agri Trading Countries

  6. India’s position in the World Agricultural Trade

  7. Our Production Strengths…..

  8. Export basket of Indian Agriculture

  9. 1 24% 2 15% 3 12% 5 8% 4 9% Who’s won the race?

  10. 4% Sectors lagging behind….

  11. Loosing Competition in International market…. Netherlands(24.45), Spain(23.51), Mexico(19.65),USA(4.79) USA(58.67), Brazil(23.64), Argentina(7.06), Paraguay(4) France(19.55),USA(14.83),Italy(10.56),Chile(8.66) Spain(35.89),USA(15.68),Mexico(5.39),Greece(5.14) Ecuador(22.85),Costa Rica(13.65),Colombia(11.05) USA(26.68), Australia(16.22), Canada(13.3), Netherlands(9.19)

  12. Constraints in Exports

  13. Composition of World Food Trade

  14. India Are we catering to shifts in the World markets?

  15. Are we loosing our niche?

  16. Where are our processed products going?

  17. Major Fruit Importers in the World Market

  18. Market Analysis: need for export diversification

  19. Trade Flows for major agro exports from India Basmati Rice Cashew nut

  20. Marine products

  21. Are we trying to capture developed markets: a tug of war…

  22. Lets answer these questions… • Is Trade liberalization responsible? • Should we follow open market approach or closed door approach? • What should be the strategy for right Product Market Identification? • What is Indian Government doing ?

  23. History of WTO • Two world wars: 1914-1919 & 1939-45 followed by great depressions… trade wars!!..∴GATT formed in 1945 • Then why WTO was not formed in 1920/1930 or 1940 or even 1970? • League of nations:- 1920; ILO:- 1919; WHO, FAO,UNESCO, UNICEF:-1945 • Monopoly of G-7 countries: US, UK, Canada, Germany, France, Japan and Italy versus USSR • WTO formed when Soviet Union collapsed in 1989

  24. US UK India Brettons Wood meeting after IInd World War 1944 IMF IBRD ITO GATT

  25. WTO establishment. • Agriculture • Textiles and Clothing • TRIPS • Services • Dispute Settlement body

  26. WTO GENESIS • The General Agreement on Trade and Tariff (GATT) came into existence in 1947 • It sought substantial reduction in tariff and other barriers to trade and to eliminate discriminatory treatment in international commerce. • India signatory to GATT 1947 along with twenty two other countries • Eight rounds of negotiations had taken place during five decades of its existence

  27. Australia 13 Lebanon • Belgium 14 Luxembourg • Brazil 15 The Netherlands • Burma (now Myanmar) 16 New Zealand • Canada 17 Norway • Ceylon (now Sri Lanka) 18 Pakistan • Chile, 19 Zimbabwe • China 20 Syria • Cuba 21 Czechoslovakia • France 22 South Africa • India 23 United States • United Kingdom

  28. Afghanistan Algeria Belarus Bhutan Bosnia Ethipoia Iran Iraq Kazakastan Lao PDR Libya Russian Federation Saudi Arabia Serbia Seychelles Sudan Tazakistan Tonga Ukraine Uzbekistan Yemen Observer Status “Apart from Vatican, observer nations must start the process of becoming members within five years of becoming observers.”

  29. WTO Objectives • WTO Came into existence for the purpose of : • Transparent, free and rule-based trading system • Provide common institutional framework for conduct of trade relations among members • Facilitate the implementation, administration and operation of Multilateral Trade Agreements • Rules and Procedures Governing Dispute Settlement • Trade Policy Review Mechanism • Concern for LDCs and NFIDCs • Concern on Non-trade issues such as Food Security, environment, health, etc.

  30. BASIC PRINCIPLES • 1. NON-DISCRIMINATION • MFN (Most Favored Nation) Members are bound to grant to the products of other members treatment not less favorable than that accorded to the products of any other country. • National Treatment Once goods have cleared customs, imported goods must be treated no less favorably than the equivalent domestically produced goods.

  31. 2. PREDICTABLE AND GROWING ACCESS TO THE MARKETS • Prohibition of Quantitative Restrictions • Binding of Tariffs • Bound Tariffs cannot be increased • Progressive reduction in the protection. • Exceptions: Safeguards, BOP. 3. FAIR COMPETITION 4. TRANSPARENCY 5. ENCOURAGE DEVELOPMENT

  32. World Agricultural Trade: Pre UR. • Existence of very high tariff rate • Impenetrable non tariff barriers • High level of production and export subsidies in developed countries • Depressed prices for agricultural goods • Price Fluctuations.

  33. WTO Agreements affecting Indian Agriculture • Agreement on Agriculture • Agreement on SPS/TBT • TRIPS • Antidumping

  34. Different Components of AGREEMENT ON AGRICULTURE

  35. MARKET ACCESS • AoA requires that all NTBs on the import of an agricultural product have to be replaced by a single tariff rate. • This tariff rate is called the ‘bound tariff rate’. Bound tariff rate acts as a ceiling rate. • AoA also requires that this bound tariff rate has to be reduced over a period of time.

  36. Tariff Reduction Schedule Least Developed Countries do not have to undertake any tariff reduction

  37. Problems of Market Access Rules • ‘Dirty Tariffication’ resulted in very high tariff rates. • Tariff Reduction is based on simple average. • Selected Tariff Reductions • Tariff peaks and dispersions • Tariff Escalation

  38. IMF Price Index for Agricultural Products

  39. Tariff Reductions for selected food items

  40. What does this Tariff Rate Quota mean to an exporter? Decision making for Exporter on the basis of TRQ: case for rice exporter Mr. X is a rice exporter from your country. He is a consistent player in the rice trade with export capacity of 20,000 tons, however faces tough competition from Mr. Luan Hay of Thailand. He is looking for a right destination for his export consignment. As per the past trends of TII , he shortlists three markets i.e Singapore, Middle East and Srilanka. Now considering the parameters under TRQ, which market will you suggest him to finally choose for his rice exports why?

  41. Let’s use TRQ for identifying our target export market

  42. India’s TRQ structure • A tariff quota of 10,000 MT at an in quota tariff rate of 15% applicable cumulatively to both the tariff lines 0402.10 & 0402.21(SMP & WMP) • India establishes a global TRQ at an in-quota rate of 15% for the following quantities • Year 1: 350,000 Tonnes • Year 2: 400,000 Tonnes • Year 3: 450,000 Tonnes • Year 4 and beyond: 50,00,000 Tonnes • Out of quota rate: 60% • Rape, colza or mustard oil, other Tariff quota of 1,50,000 MT at in-quota tariff rate of 45% • Sunflower-seed or safflower oil and fractions thereof Tariff quota of 150000MT at an in-quota tariff rate of 50% out of quota rate 300%

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