Discussion on Agricultural subsidies at WTO and Indian Interests

Disclaimer: What I'm blogging here are just impressions formed from the discussions at OpenForum. I may be loose in my language and hence, this material can at best be used as a quick summary; it is definitely not intended as an authoritative summary.

Doha round of WTO is currently stuck on the topic of agricultural subsidies. India is leading a group of developing nations in pressurizing EU and US on reducing the subsidies they give to their farmers and agri firms. EU and US are of course not very eager to give in. Who's losing out in this battle of wits? What is India's interest in this negotiation? Is it really true that India and other developing nations are losing out as a result of past WTO accords? These were the questions that were discussed by the OpenForum.

I'm attaching at the end of this blog the notes I made during the discussion. The points that stand out are:

1. India's trade in agriculture is very small compared to overall agricultural production in India. In other words, India neither exports nor imports much of farm products.
   
2. Given this, India may not really have too much stake in the agri subsidies debate. Seems like India is really using this issue to gain concessions in other discussions and this seems to be a common practice in WTO.
   
3. Contrary to popular opinion, Indian government seems to be playing its cards well, with about a 100 member delegation in geneva
   
4. WTO has enabled quite a few developing countries to safeguard their interests. Ecuador's banana example is funny. Ecuador won its dispute with EU on banana trade by threatening to suspend TRIPS and allow piracy of EU IP in Ecuador. Similarly, India seems to have bartered (outside of WTO?) opening up of legal services market in India in exchange for opening up of US market for India's mangoes.
   
5. It's important that WTO succeeds in increasing world trade. It's not really an evil as it is often made out to be. Ignorance on how WTO is really structured is creating unnecessary paranoia.
   

Running notes from discussion on "WTO Doha Round - agri subsidies and indian interests"

• Notes made before meeting
  • Are we producing as much as we can?
    • Is land available?
      • Total land area: 328 million hectares
      • 140 mh of sown land - roughly same since 1970
      • 122 mh is unavailable - forests/grazing/other uses/barren
      • 13 mh - culturable waste land
      • 27 mh of fallow land
      • Cropping intensity - 135%
    • Is water available?
      • 55 mh of net irrigated area
      • 77 mh of total irrigated area
  • How much is available for export after internal consumption?
    • Rice: 3.4 million tonnes exported out of 85.72 million tonnes!
    • Oil seeds: 3.1 million tonnes exported out of 22.6(?) mt
    • Wheat: 4mt out of 70mt
    • Total exports: 25 mil tonnes excluding marine and paper/wood, out of about 545 mt?
  • Impact of subsidies in other countries
    • Impact on our exports
    • Impact on competitiveness in india
    • Impact on consumers in india
  • Impact on our subsidies
    • Impact on our exports
• Discussion Notes

  • WTO's core principles

    • Bilateral MFN agreements cannot impinge on a third country
    • Outsiders will be treated as insiders
    • Act as a dispute settler

      • Example: Ecuador/Gautemala vs. EC

        where EC wanted to prefer north-african suppliers of bananas

        More than 400 disputes argued

        • 300 settled
    • Periodic negotiations

    Reverse consensus

    • Proposal is accepted unless there is consensus for dumping the proposal

    India maintains a 100 member delegation in geneva

    Uruguay (1995) round - formed WTO

    Singapore (1999) issues raised by developed countries

    • Trade and investment, e.g. limitation on foreign ownership
    • Trade and competition, e.g. MRTP like anti-monopoly laws
    • Trade facilitation
    • Government procurement

    Doha (2001) Development agenda proposed as a retaliation to Singapore issues

    • Till doha round is consummated, singapore issues are not to be taken up

    Novartis - gleevec

    Agriculture

    • Domestic support
    • Export subsidies
    • market access

    mango market access bartered for access to law services mkt

    even on imports, we want to reduce subsidies as otherwise monopoly can come into place on the supplier side

    why is india interested in lower agri subsidies although there is little direct benefit

    • india - wants to delay NAMA
    • india - better bargaining power in services
    • Afro-carribean parties (acp) coming together for cotton subsidy reduction

    Why are indian farmers against wto?

    • Once subsidies are ruled out, india also cannot subsidize its farmers
    • red subsidies - direct incentive to producer for exporting
    • amber subsidies - those that may have an injurious impact on others

    Non-trade concerns

    • Food security
    • Allied activities - crop insurance scheme, may get hit