GATT, WTO and agriculture

GATT,WTO AND AGRICULTURE

  • To facilitate increased flow of commodities across international border is to eliminate completely some of the non-tariff barriers. Non-tariff barriers (NTB) in AoA are quantitative restriction, giving preference to domestic supplies in government purchases, providing subsidy or advantageous taxation allowance to domestic producer, minimum import prices, discretionary licensing, variable import levies, voluntary export restrictions, etc.,

GATT

  • General Agreement on Tariffs and Trade (typically abbreviated GATT) was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO).
  • GATT was formed in 1947 and lasted until 1994, when it was replaced by the World Trade Organization during the final round of negotiations in early 1990s.
  • The history of the GATT can be divided into three phases:
    • The first, from 1947 until the Torquay Round , largely concerned which commodities would be covered by the agreement and freezing existing tariff levels.
    • A second phase, encompassing three rounds, from 1959 to 1979, focused on reducing tariffs.
    • The third phase, consisting only of the Uruguay Round from 1986 to 1994, extended the agreement fully to new areas such as intellectual property, services , capital , and agriculture . Out of this round the WTO was born.

WTO

  • World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations.
  • At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments.
  • The goal is to help producers of goods and services, exporters, and importers who conduct their business
  • In 1993 the GATT was updated (GATT 1994) to include new obligations upon its signatories.
  • One of the most significant changes was the creation of the World Trade Organization (WTO). The 75 existing GATT members and the European Communities became the founding members of the WTO on 1 January 1995.
  • The other 52 GATT members rejoined the WTO in the following two years (the last being Congo in 1997).
  • Since the founding of the WTO and 21 new non-GATT members have joined, 29 are currently negotiating membership. There are a total of 153 member countries in the WTO.
  • Whereas GATT was a set of rules agreed upon by nations, the WTO is an institutional body. The WTO expanded its scope from traded goods to trade within the service sector and intellectual property rights .
  • Although it was designed to serve multilateral agreements, during several rounds of GATT negotiations (particularly the Tokyo Round) plurilateral agreements created selective trading and caused fragmentation among members. WTO arrangements are generally a multilateral agreement settlement mechanism of GATT.

Agriculture

  • The WTO’s Agriculture Agreement was negotiated in the 1986–94 Uruguay Round and is a significant first step towards fairer competition and a less distorted sector.
  • It includes specific commitments by WTO member governments to improve market access and reduce trade-distorting subsidies in agriculture.
  • These commitments are being implemented over a six year period (10 years for developing countries) that began in 1995.
  • Participants have agreed to initiate negotiations for continuing the reform process one year before the end of the implementation period, i.e. by the end of 1999.
  • These talks have now been incorporated into the broader negotiating agenda set at the 2001 Ministerial Conference in Doha, Qatar.
  • WTO members agreed to initiate negotiations for continuing the agricultural trade reform process one year before the end of the implementation period, i.e. by the end of 1999.
  • These talks began in early 2000 under the original mandate of Article 20 of the Agriculture Agreement.
  • At the November 2001 Doha Ministerial Conference, the agriculture negotiations became part of the single undertaking in which virtually all the linked negotiations were to end by 1 January 2005.

Tariff Barriers
  • Tariff is a set of proportion of the price of good to increase the price at the border of importing countries. Aim of levying tariff is to stimulate in import-competing industries and depressing demand by reducing imports. This is needed to safeguard the domestic producer. It is specified in money term per unit in the form of excise and custom duties.
  • This is of two type ie. optimum tariff and prohibitive tariff.
    • Optimum tariff - Tariff which maximizes country's welfare.
    • Prohibitive tariff - It is the increased level of tariff when there is no trade.
  • Tariff rate Quota (TRQ) - is two tiered tariff structure where minimum access quantity is charged a low tariff (within quota tariff) while imports above minim access quota are charged higher tariff (out of quota tariff) which experience prohibitive tariff.
  • Special Safeguard Clause (SSC) provides imposition of additional import duty if import exceeds their average of three preceding years by no more than 5% or if CIF import price of shipment falls below 90% of average reference price.

Non-Tariff Barriers
  • Changes in the form of fees for loading and unloading important products, port charges, custom processing fees, consular charges to imports are in the form of non-tariff barriers.
  • Other specific type of non-tariff barriers are technical barrier to trade (TBT) and sanitary and phyto-sanitary (SPS) measure.
  • TBT covers all technical regulations, voluntary standards and conformity assessment procedures. Many TBT can result in unnecessary costs increase to exporters. TBT measures focus on ensuring imported products satisfy domestic taxes, preferences and requirements with respect to quality, safety or appropriate consideration of environmental concern during manufacturing, processing and or shipment of product.
  • SPS covers all measures whose purpose is to protect human or animal health from food borne risks, human health from animal or plant carried diseases.
  • Remedy for this barrier is to harmonise such requirements or standards within union members.
Last modified: Saturday, 2 June 2012, 7:22 AM