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TRADE IN AGRICULTURE AND THE IMPACT OF WTO IN AGRICULTURAL TRADE BY: - MR. KAUSHIK DAS

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MR. KAUSHIK DAS
Journal IJLRA
ISSN 2582-6433
Published 2024/03/09
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Issue 7

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TRADE IN AGRICULTURE AND THE IMPACT OF WTO IN AGRICULTURAL TRADE
 
AUTHORED BY: - MR. KAUSHIK DAS
PRN: 23010341006
Class: LLM
Symbiosis Law School, Hyderabad, Symbiosis International (Deemed) University, Pune
Dated: 10TH October, 2023
 
 

CHAPTER 1: -

INTRODUCTION:

One prominent feature of economic progress in developing countries is the observed reduction in the agriculture sector. [1]In countries characterised by higher-than-average population densities, the competitive advantage of agriculture tends to diminish with the progression of capital accumulation and industrialization. Furthermore, the competitiveness of a country's agriculture sector in international markets may be diminished by the presence of export-driven growth in another industry or by substantial and consistent inflows of foreign aid. The net trade dynamics of a country are also influenced by changes in consumer behaviour, namely the increasing consumption of agricultural products and the movement away from cereals and other basic food items towards livestock and horticulture products in middle-income nations. The impact on food self-sufficiency and net exports of agricultural products is contingent upon the relative productivity growth in farming compared to non- agricultural production, as well as the patterns in government assistance provided to farmers in relation to producers of other tradable goods. The contemporary society has witnessed a growing disparity and divergence between individuals of high socioeconomic status and those of low socioeconomic status. The hierarchical disparity between individuals who possess resources and those who do not has been a prominent outcome of globalisation in the 20th century. While globalisation has facilitated the growth of industries, the establishment of laws, and the exchange of ideas among nations, it has predominantly favoured the privileged segment of society. The decision- making processes and agreements have consistently been orchestrated by leaders or individuals with authoritative power. This pattern persists to the present day. Agriculture, like other sectors, is subject to the dynamic and expanding global economy. In this context, the outcome of agricultural activities can have significant impacts, either positive or negative, on the overall economic trajectory. Therefore, it is crucial to maintain a delicate equilibrium to ensure sustainable economic growth. The everyday activities, decisions, and responsibilities of individuals are intrinsically linked to the consumption of food. It is widely acknowledged that all living organisms, including the Homo sapiens species, are reliant on sustenance for their survival. Furthermore, food serves as a vital source of energy that drives both the economy and the existence of human beings.
 
In the context of the food chain or economic structure, farmers play a crucial role as significant contributors. They are often underappreciated despite being essential to the functioning of every nation.[2] However, the unfortunate truth is that the actual outcomes of the World Trade Organisation (WTO) and the implementation of the Agreement on Agriculture (AOA), along with newer provisions aimed at facilitating fair trade, competition, equitable distribution of resources, and subsidies for farmers, do not align with the positive intentions outlined on paper. Instead, the reality presents a grim scenario where deceptive government initiatives fail to benefit farmers, but rather exploit them by pushing them towards rapid and excessive engagement with international demands and competition.
 
RESEARCH QUESTIONS:
Ø  What has been the historical development of agricultural trade agreements occurring imbalances and policies, and how has the WTO influenced this development?
Ø  What are the main WTO agreements (such as the Agreement on Agriculture) that expressly address agricultural trade, and how do these agreements affect patterns of international agricultural commerce?
 
HYPOTHESIS:
Ø  Small-scale farmers in poor nations have been disproportionately harmed by the liberalisation of agricultural trade brought about by WTO agreements, which has increased export prospects for wealthy countries.
RESEARCH METHODOLOGY:
Ø  The researcher will be abiding with the doctrinal method referring to articles, books, journals, case laws etc.
 
CHAPTER 2: -

TECHNOLOGICAL CHANGES AND TRADE COSTS, HISTORICAL IMPETUS AND SIGNIFICANCE AND ITS ILL EXPLOITATION:

In the modern realms of this world, every life is fuelled by the fruits we bear or the produce we bear from agriculture and with the modern implications and pathways of WTO, the world has converted or seems to be gradually converting to a global village and the exchange or the import and export of commodities nowadays seems seamless as compared to the yesteryears,[3] but there are a lot of ill effects or cons that seems to plague the modern agricultural communities or as a researcher can go to the distance so much as to say that with the modern advancements there still seems to be an economic impartiality globally and especially in developing countries where the average small scale farmers are further getting exploited with every passing decade with the international competition where a “x” commodity produced by several farmers or producers that have the same target consumers results in swift competition where even though some might have produced in a more formidable scale and better quality but some other’s commodity gets picked to be exported hence resulting in some biasness or unfairness which eventually leads to farmer suicides and mass protests, especially a resource rich developing country like India as is evident with the 3 bills like the Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, The Farmers Agreement of Price Assurance , the Farm Services Bill 2020 and the Essential Commodities Bill of 2020 were introduced but even then these were implemented from the perspective of the privileged haves and not from the perspective of the have not’s where the farmers turmoil will never be understood by the people on the throne. The primary factor contributing to the impact of these acts and bills is the World Trade Organisation (WTO). The implementation of these recent technological advancements and cost mechanisms has exacerbated the marginalisation of farmers. Consequently, the demand for agricultural products has multiplied significantly, while resources remain limited due to escalating tool costs and heightened competition.
 
Inherent trade barriers arise from the costs associated with transportation, information, and communication, as well as governmental trade restrictions. Transporting farm produce over long distances can be costly due to their huge size and perishable nature. Certain varieties are most desirable when consumed at their peak freshness, a state that can only be achieved during specific seasons. Food costs exhibit significant variability throughout different time periods and geographical locations due to a multitude of influencing factors.
 
The potential for farmers and food consumers to benefit economically from the increased pace of globalisation has been and continues to be there, particularly when considering the reduction in costs associated with conducting business across different geographical locations. The potential for significant improvement in global market integration arises from cost savings when the relevant space includes national borders. The trade-to-Gross Domestic Product (GDP) ratio serves as a widely used measure of economic integration. Throughout history, there has been a consistent trend of goods commerce outpacing output growth, except for the period between the two world wars. Notably, the 1990s had the most significant discrepancy between these two factors, as evidenced by credible data.
 
The digital revolution, also known as the Information and Communication Technology (ICT) revolution, is a relatively recent phenomena that began to manifest itself in the latter part of the 20th century. The deregulation and privatisation of telecommunications markets in numerous countries have resulted in a substantial decrease in the expenses associated with long-distance communication. This reduction in costs has been notably evident in the rapid accessibility and processing of knowledge, information, and ideas from any location worldwide. The advent of the digital revolution has yielded significant advantages for the field of science, hence contributing to the emergence of subsequent revolutions, such as those witnessed in the domains of biotechnology and nanotechnology.
 
On certain occasions, the process of trade liberalisation has been accompanied by the liberalisation of foreign direct investment (FDI). Nevertheless, poor nations have had a limited impact as recipients of foreign direct investment (FDI) in the processed food, beverages, and tobacco sectors. In 2007, their FDI inflow amounted to less than $3 billion, which pales in comparison to the substantial $46 billion inflow observed in high-income countries (HICs). The primary agricultural sector had a decrease in foreign direct investment (FDI), constituting less than 0.3% of capital creation in developing nation agriculture, in contrast to 13% for the overall economy of that country group (UNCTAD 2009, Ch. 3). According to Reardon and Timmer (2007), foreign direct investment (FDI) has had a significant role in transforming food value chains, particularly through the expansion of merger and acquisition activities in the supermarket retailing sector, throughout the past two decades. In the majority of high- income countries (HICs) at now, a limited number of corporations, typically no more than five, dominate the sales landscape. Moreover, in numerous HICs, the top four companies alone contribute to over two-thirds of the total sales.
 
The expansion of supermarkets in developing nations has occurred at a faster rate compared to their proliferation in high-income countries. The repercussions of this situation are being experienced at higher levels of the value chain. In order to enhance their bargaining power, primary processors, manufacturers of food and beverages, and distributors are also engaging in consolidation, albeit typically within specific market segments rather than throughout the whole supermarket retailing industry. The supermarkets' capacity to establish proprietary brands and assume control over processing and distribution activities imposes limitations on their agency. The impact of these developments on the agricultural industry is substantial, as they require farmers to meet the demands of markets that prioritise prompt delivery of consistently superior products with specific attributes (Reardon & Timmer, 2007; Swinnen, 2007; Reardon et al., 2009). According to Swinnen and Vandeplas (2009), the intense competition that arises among intermediaries within the food value chain implies that consumers and potentially farmers in developing nations are reaping advantages from the trade and investment liberalisation as well as the information and communication technology (ICT) revolution that have instigated these transformations.
 
 
 
 
 
 
 
 
 
 
CHAPTER 3: -
THE AGRICULTURAL REFORM PROGRAMME, ITS PROGRESS AND SHORTCOMINGS, THE OUTSTANDING DEVELOPMENT ISSUE OF FOOD SECURITY, AND HOW THE WTO POLICIES ARE HARMING THE SMALL- SCALE FARMERS IN POORER COUNTRIES:
The Uruguay Round[4] has successfully accomplished a significant portion of the agricultural trade liberalisation reform programme by ensuring that all agricultural tariffs are now bound, meaning they cannot be increased without providing compensation to affected suppliers. Additionally, the round has imposed limitations on export subsidies and domestic trade-distorting support. Nevertheless, a brief examination of the three pillars of the Agreement on Agriculture (AoA) presents an image of a mission that, at most, has achieved only a fraction of its objectives and is currently in a state of decline. It is imperative to bear in mind that exporters of agricultural commodities have consistently lobbied for the elimination of export subsidies and the imposition of comprehensive tariff restrictions over the course of the last five decades. The process of agricultural tariffication has reached an advanced stage of completion. Despite the inclusion of certain controversial tariffication measures during the negotiations and verifications of the Uruguay Round, as well as the imposition of significantly high ceiling bindings on the tariff rates of certain less developed developing nations, it is noteworthy to consider these outcomes from a systemic perspective and in relation to industrialised goods. Nevertheless, it is noteworthy that numerous agricultural taxes continue to exhibit exorbitantly high levels, despite the marginal decreases observed in tariffs. The phenomenon known as "tariff overhang" refers to the situation where applied rates are often significantly lower due to regional or preferential trade agreements, or unilateral measures. This state of affairs is deemed undesirable because there is always the possibility of a subsequent increase to the bound levels, without incurring fines from the World Trade Organisation (WTO). [5]The absence of pledges pertaining to aspirational market access is unlikely to result in a reduction of consumer costs or an improvement in food security through the promotion of commerce. Furthermore, the discrepancies in domestic subsidies highlight the primary challenges. At present, there exists a limitation on any agricultural subsidies that have the potential to disrupt commercial activities. Nevertheless, given that an only 20% decrease in worldwide spending from previously elevated levels is necessary, affluent sponsors possess ample opportunity to protect domestic farmers against international rivalry. Following the reconfiguration of support in the agricultural sector and the decline in global market prices since 1995, a significant number of developed nations have shifted a substantial proportion of their agricultural subsidies away from market and price interventions. Instead, they have redirected their focus towards publicly-funded government programmes and measures that aim to have negligible or minimal trade-distorting effects, as well as minimal impact on production. The user's text lacks any content or information. In the forthcoming decade, Brazil is anticipated to overtake its counterparts and emerge as the leading global provider. It is anticipated that by the year 2024, there may be a decrease in real prices compared to the levels observed in 2014.In contrast to previous studies, it is observed that engagement in the General Agreement on Tariffs and Trade/World Trade Organisation experiences a substantial increase following the implementation of agricultural liberalisation measures, despite the fact that the volume of real trade remains relatively limited. The food crisis, along with the concurrent financial crisis, exerted an impact on the agribusiness sector, thereby revealing certain limitations associated with global trade. Based on a recent study utilising newly established datasets, it has been shown that the growth of global trade has not yet attained its pre-crisis magnitude. Utilising data pertaining to export incentives that transcend industry-specific boundaries, as well as information on domestic subsidies that explicitly impede commerce. Today, a self- governing specialist in United Nations human rights issued a cautionary statement regarding the prevailing global trade system, which is endorsed by the World Trade Organisation (WTO). The expert highlighted the detrimental impact of this system on small-scale farmers in the least developed countries (LDCs), leading to a substantial escalation in their vulnerability to food insecurity and a heightened dependence on large-scale producers. In accordance with the perspective of Olivier De Schutter, the Special Rapporteur on the Right to Food, it can be argued that the phenomenon of globalisation engenders significant disparities between those who benefit greatly and those who suffer considerable setbacks. Particularly within the context of food systems, experiencing such setbacks implies a descent into destitution and malnutrition. Having a perspective on food security that perpetuates disparities between regions characterised by surplus and scarcity, exporters and importers, and those who benefit and suffer is deemed unacceptable. Mr. De Schutter underscored the necessity for the international trade regime to recognise the potential hazards associated with developing nations excessively depending on trade. This overreliance exposes them to fluctuating grain prices, which can swiftly lead to a state of destitution and food insecurity experienced by both urban and rural populations. The prices of food in less developed countries (LDCs) had a threefold increase from 1992 to 2008, resulting in a rise of around five to six times. According to Mr. De Schutter, the emphasis on trade as a central policy, supported by the World Trade Organisation (WTO), is imposing constraints on the capacity of Least Developed Countries (LDCs) to maintain their food security. There is a tendency to overlook the most apparent chances that offer mutual benefits. According to the speaker, individuals engaged in small-scale agricultural activities within developing countries often belong to the most economically disadvantaged demographic. Consequently, providing assistance to these farmers could potentially contribute to the fulfilment of local food requirements, facilitate their socioeconomic upliftment, and alleviate poverty. In this particular scenario, it is anticipated that trade would have a stimulative effect on local production, as opposed to diminishing it. Access to fresh and nutritious meals would be provided to individuals residing in metropolitan areas who are experiencing poverty, while the disparity in pricing between farmgate and retail prices would diminish. Nevertheless, the facilitation of policy space is vital to achieve this objective. The detrimental consequences of the limitations imposed by the World Trade Organisation (WTO) constraints on policy space are evident. According to Mr. De Schutter, less developed countries (LDCs) find themselves in a disadvantaged position due to the increasing strain on their land, water, and natural resources, which are crucial for their sustenance. These countries are increasingly forced to engage in competition with the agro-export sector, rather than capitalising on the potential benefits that arise from accessing global markets. Mr. De Schutter emphasised the importance of the World Trade Organisation (WTO) considering these variables and ensuring adherence to the food security agenda as a means to mitigate the prevalence of chronic poverty and hunger among susceptible areas. Providing sustenance to economically disadvantaged nations heavily reliant on food imports does not yield substantial long-term benefits. It would be beneficial for individuals to possess the ability to sustain their own nourishment. The opinion among global leaders, including the G20, is that the current state of affairs represents a post- global food price crisis international consensus. It is regrettable that the World Trade Organisation (WTO) continues to be engaged in longstanding conflicts.
 
The widening gap between individuals with economic resources and those without has become increasingly pronounced as we approach the new millennium. This trend is driven by the growing international exposure, which has facilitated the exchange of specific products between countries through exports and imports. However, this process has also been influenced by the World Trade Organisation (WTO), which has established guidelines, tariff barriers, and agreements. While the WTO has had positive effects on trade, it has also resulted in numerous negative consequences. One such consequence is the exploitation of small-scale farmers in economically disadvantaged countries. These farmers face challenges such as immediate demand and supply pressures, intensified competition, and limited access to domestic raw materials. These issues contradict the initial promises made by various schemes and initiatives, which were intended to support farmers in these countries but have not been effectively implemented.
 
CHAPTER 4: -

CONCLUSIONS AND SUGGESTIONS:

The WTO has failed to live up to its promises that it has been implementing foe the past couple of decades which also reveals a wide systematic gap in the global village. [6]Every perspective is being looked at from the nations leaders as a strong arm exercise to promote their country and enter into trade agreements just to be in the good books with that specific nation, unfortunately it is never from the perspective of the small scale farmers and for the demands and ugly unfair demand and competition which they face unjustly resulting in their products or produce going overlooked and rejected because of the upper layer of farmers would be getting the top priority for the export of goods and considered for the international level which eventually led to mass farmers agitation and suicides especially in a country like India where in the past couple of years farmers suicides have gone manifold that is worrysome and bleak picture that shows that the influence of WTO was and still is very one dimensional where eventually indirectly what it has ended up doing in the developing countries that power of attorney and rights to use or profess techniques or produce certain commodities was taken away from the farmers and given to the corporate houses to fill up their corporate greed and belly, eventually making the farmers vulnerable and exploited to unrealistic demands just to maintain a balanced relation trade wise with a particular developed nation. In addition to that the journey so far to deliver on the developmental promises of Doha has been full of administrative failures and missed deadlines. The lack of substantive movement towards development of trade laws and barriers with regards to developing nations is pretty evident.
 
To further suggest there needs to be a new amendments regarding trade laws and barriers and AoA s regarding trade between developed and developing countries and adding new clauses and conditions for the addresses of the small scale farmers to be brought to the forefront, where the farmers would have the right to produce according to their will and according to the seasons and making local raw materials to make it more accessible, cheap and make agricultural tools be made more locally to reduce the cost of it.Adding to that, new government schemes and help line centres needs to be implemented in backward areas especially to make those farmers voices being heard. In the case of India ‘Maan ki Baat’ was just an political exercise to show on the global scale that the government cares about the marginalised but does it. The market access should also be concerning the small-scale farmers and should not cater to the capitalists, where the ideas and produce, techniques, seasons and domestic materials all should be taken into advice from the farmers rather than the corporate houses and the ministers from the government. The WTO should create farmers community and distress groups in every district and state accompanied by a board of people who has expertise in agriculture and decisions should be reviewed and carried over from there on.
 
BIBLIOGRAPHY
Ø  Agriculture and the WTO: Creating a Trading System for Development (Trade and Development) 1st Edition by John D Nash
Ø  WTO, Globalization & Indian Agriculture by Mohammed Iqbal Ali


[1] Shalini Pandey, WTO agreement on agriculture and its impact on Indian Agricultural Trade, Research gate, Vol 10, February
[2] R. Ullamudaiyar, Impact of WTO on Indian agricultural Sector, vol 4, September 2014https://www.shanlaxjournals.in/pdf/ECO/V2N4/ECO_V2_N4_003.pdf
[3] Will Martin, Agricultural trade and food security, ADBI working paper series , vol no 664, February
[4] Merlinda D Ingco, Agricultural liberalization in the Uruguay round, Finance and development, September 1995file:///C:/Users/user/Downloads/022-article-A012- en%20(1).pdf
[5] Christian Häberli, Agricultural Trade: How Bad is the WTO for Development?, World trade institute, vol 2,
[6] Dr. Promodita Sathish, Dr P Babu, Agricultural Situation in India, Vol.LXXVIII, February

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International Journal for Legal Research and Analysis

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