Ulhasnagar 421001

Name: - Riddhi Mukesh chugh Class:- M.com-IRoll No:-Subject:- Economics Topic:- Agriculture And Market AccessSemester:- 1stGuidance:- sharmila karveAcademic Year:- 2015-16

Index:-Sr No.Title

1Introduction

2Implications of AOA on India

3Measures increase in market access

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J.WATUMALL. SADHUBELLA GIRLS COLLEGE

UNIVERSITY OF MUMBAI

CERTIFICATEThis is to certify that PINAAZ MULRAJANIMaster of commerce (semester I) for the academic year 2015-16 has completed the project onAgriculture And Market Access under the guidance of PROF. SHARMILA KARVE

Prof. sharmila karve Prof.Rajesh Singh (Project Guide) (Co-ordinator)

DR.M.M.HOSALKAR (Principal)

External examiner

CERTIFICATEI,PROF, SHARMILA KARVE hereby certify that PINAAZ MULRAJANI of M.COM PART I Master of commerce of J.W.SADHUBELLA GIRLS COLLEGE Ulhasnagar 421001 has completed the project entitled AGREECULTURE AND MARKET ACCESSin this academic year 2015-16 under my guidance.

The information submitted is true and original to the best of my knowledge

PROF.SHARMILA KARVE Signature

INTODUCTION:-

Trade in agriculture got its due recognition under World Trade Organization (WTO). Prior to this, GATT has by and large concentrated on trade in manufactures and has kept agriculture out of its ambit. Agriculture has always been covered by the GATT, prior to the WTO there were several important differences with respect to the rules that applied to agricultural primary products as opposed to industrial products. The GATT 1947 allowed countries to use export subsidies on agricultural primary products whereas export subsidies on industrial products were prohibited. However, in practice many non-tariff border restrictions were applied to imports without any effective counterpart limitations on domestic production and without maintaining minimum import access. Agricultural trade remains in many countries an important part of overall economic activity and continues to play a major role in domestic agricultural production and employment. The trading system plays also a fundamentally important role in global food security, for example by ensuring that temporary or protracted food deficits arising from adverse climatic and other conditions can be met from world markets. Under the reform programme, members have converted their non-tariff measures to equivalent bound tariffs. Some additional market access is provided through tariff rate quotas, and the tariffs are being reduced. Contingency protection is provided through special safeguards, and transparency works through notifications. This was some information related to what about the agriculture and market access is and it is connected to World trade organization (WTO), Common agriculture policies (CAP) and the agreement on agriculture (AOA).

IMPLICATIONS OF AGREEMENT ON AGRICULTURE (AOA) ON INDIAMarket access:- Developing countries like India who had not converted their quantitive restrictions into tariff, were allowed to have ceiling bindings, which were not subjected to reduction commitments. India had bound its tariff as 100% for primary products, 150% for processed products and 300% for edible oils. India has not taken any commitment to provide minimum market access opportunities which other countries who had tariff there had to undertake 5%of domestic consumption at the end of implementation period Thought India is not entitled to use the special safeguard mechanism of the agreement, it can safeguard action under WTO Agreement of safeguard, if there is a surge in import causing serious injuries (or threats) to the domestic producers.

MEASURES OF INCREASE IN MARKET ACCESS1) Tariff reduction and tariff binding 2) Reduction in export subsides3) Reduction in domestic subsides.

TARIFF REDUCTION AND TARIFF BINDING Under GATT, trade in agriculture was restricted by quotas, import and export licensing and some other types of Non-Tariff Barriers (NTBs). Such non-tariff barriers are very often not clear and transparent and hence difficult to measure.The Agreement on agriculture (AOA) under W.T.O requires that all NTBs on agriculture trade be replaced by a single tariff rate which offers the same level of protection given by the existing NTBs. The new rate established after converting NTBs into tariff is called the bound tariff rate. The conversion is worked out on the basis of the difference between internal and external prices existing during the period 1986-88. The bound tariffs cannot be increased without notification and compensation.The Agreement on Agriculture (AOA) requires that the bound tariff rate be reduced over a period of time. It was expected that the developed countries would reduce the un-weighed bound rate by 36 percentages, with a minimum reduction of 15 percent for each commodity over a period of 6 year.The developing countries were expected to reduce the bound tariffs by 24 percent with a minimum reduction of 10 percent for each commodity over a period of 10 years. The least developed countries are exempt from any tariff reduction. The obligation of tariffcation of NTBs did not apply to restrictions maintained by developing countries having balance of payments difficulties. However they were required to bind their tariffs.

EXPORT SUBSIDIES

Export subsidies are the special incentives provided to the exporters to encourage sales abroad. Export subsidies help exporters to charge competitive or lower price in the world market. They are more important if the domestic prices are higher than international market prices. It also acts as incentives even when domestic prices are not higher than international market prices. Subsidies, both export and domestic are considered as the main cause of distortion in international trade in agriculture products.The Agreement on Agriculture (AOA) prohibits export subsidies on agriculture products unless they are listed in a members commitments wherever they are listed in a member country would reduce both the amount of money spent on export subsidies and the quantities of export that receive subsidies. Taking 1986-90 as the base period, the developed countries were expected to cut the valve of export subsidies by 36 over six years starting from 1995. Developing countries were expected to reduce them by 24 percent over 10 years. Least developed counties were exempted from making any such reductions.U.S.A. and Europe are major subsidies of their export. Inspite of the cuts administered, these countries account for more than half the worlds export subsidies.

DOMESTIC SUPPORT (SUBSIDIES)

Domestic support to agriculture through various subsidies or other measures distorts market forces. Imports are squeezed out as other countries find it difficult to complete. Domestic support also takes the form of export subsidies to enable the domestic exporters to complete in the world market. W.T.O. has calculated the domestic support and expressed it in total aggregate measurement of support (AMS). Here too the calculation was in terms of the base years 1986-88.Domestic support mainly in the form of subsidies as well as other measures is categorized into red box, amber box, blue box and green box.Red box subsidies are those which are banned outright. A subsidy is treated as red when the fact demonstrate that granting a subsidy, without having been made legally contingent upon export performance, is in fact tied to actual or anticipated exportation or export earnings.Amber Box Subsidies are those subsidies that are not banned, but against which action can be taken. According to W.T.O, no member should cause through the use of any subsidyadverse effect to the interest of other members. Adverse effects are caused when (a) total ad valerorem subsidization of a product exceeding 5 percentage, (b) subsidies to cover operating losses sustained by an enterprise (d) direct forgiveness of debt i.e. forgiveness of government held debt, and grants to cover debt replacement.Adverse effects may also arise when the effect of subsidy leads toi) Displace or impede the imports of a like product of another member into the market of subsidizing memberii) Displace the export of a like product of another member from a third country market.iii) A significant price undercutting by the subsidized product iv) An increase in the world market share of the subsidizing member as against average share it had during the previous period of three years.

IMPACT OF W.T.O ON AGRICULTURE TRADE Indian is no exception to these general trends, with a few special features. During last two decades Indias agricultural exports as a part of total merchandise exports have continued to decline from the preponderant position they occupied in the pre-independence. But with the achievement of self-sufficiency in food grains and some other major agricultural commodities, which used to account for large portion of import bill, overall imports of agricultural commodities have sharply declined. The outlay on agricultural imports as a proportion of earnings from agricultural exports has progressively declined, and all the balance has become progressively more favorable. Discussion on these issues has, naturally, to take into account the new trade regime as the stated objective of firstly to study the performance of Indias agricultural exports under WTO regime. secondly, to analyze the competitiveness of top agri-exports of India under WTO regime. Finally, to suggest policy measures in the identified Indias agricultural. In the first part of discuss briefly introduce, the developments in agricultural trade specially the agricultural exports at the world level in the recent years and discuss the performance of Indian agriculture in this respect finally shaped the shifts in this policy. Final part, I will try to spell out the ingredients of a strategy to augment agricultural exports in the changing, and more demanding, global economy.