Impact of WTO on Indian agriculture

Abstract

In the 1980s, the highly protectionist agri-business in industrial countries fuelled by the agricultural export subsidies were dumping surplus production and was thus distorting the world markets. There was a need to negotiate a new set of multilateral trade agreements. As the Uruguay Round concluded in December 1993, the WTO designed an Agreement on Agriculture to minimize the distortion and maximize the agricultural trade across multiple nations. It was aimed to utilize the food surplus effectively and minimize both the extremes - food dumping and hunger. It was intended to make the agricultural markets more accessible to the farmers around the world by cutting down on tariffs, reducing domestic support and eliminating export subsidies. The act was ratified in Morocco next year and was implemented from January 1, 1995. The agreement called for reduction commitments by both developed and developing countries over a fixed deadline(Year 2000-Developed and Year 2004- Developing), whereas LDCs-Least developed countries were exempted. There was a special and differential treatment clause to address the concerns raised by developing countries. However, the implementation did not turn out to be a fair deal for the developing nations. Although Developed countries were asked to reduce the tariffs by 36% in 6 years as compared to 24% for developing countries in 10 years, the former was starting from a soaring high level as compared to latter. Instead of an equal trading market which was proposed, the lopsided Agreement on agriculture was drifting developing nations in an unjust state. Worst affected by this development were the farmers with small landholdings and peasants with their income dependent on agriculture from developing countries since their products can now be substituted with cheaper imports. Industrialized economies were able to protect their producers with the existing support whereas the relatively behind-markets of developing nations were opened for trade liberalization.