Commercial Overtones In Agri-Trade

Global trade in agricultural products has come under international surveillance and discipline for the first time after the signing of the Gatt agreement and the setting up of the World Trade Organisation (WTO). Though this has opened up new vistas for trade, it has also created new problems some of which are proving to be quite formidable for the developing countries. Agricultural exports have been severely constrained due to tariff barriers, export subsidies and quotas. Products from many developing countries including India, often suffer from non-competitiveness on account of export subsidies in other countries.

While tariff-related barriers have either been lifted or are on their way out in the post-WTO era, many non-tariff trade barriers have been invented by various countries to impede smooth trade. Plant, animal and human health has suddenly become a matter of major concern having strong commercial overtones. Trade negotiators are now increasingly shifting their attention to areas like plant and animal health regulations and food safety standards. Developing countries are especially in a disadvantageous position where sanitary and phytosanitary provisions are concerned. Patenting norms and issues relating to intellectual property rights and plant variety protection are the other main concerns that India would have to address immediately. Apart from the controversial issue of easing quantitative restrictions on the import of agricultural products and the broader subject of obligatory market access, that is.

The government would have to take a considered view and finalise Indias position on all these issues quickly. The existing provisions of the global agreement on agricultural trade are slated to come up for fresh scrutiny in the next round of international negotiations scheduled to begin by the end of 1999. Firming up of the countrys stand early is important also because the differences between nations on these issues are too wide to be sorted out easily. The interests of each nation are at a variance with each other. Under these circumstances, it becomes extremely difficult to make others agree to a particular viewpoint. The two-year period between now and the beginning of fresh negotiations, therefore, is not very long.

The experience of the functioning of the new international agreement on agricultural trade has so far left much to be desired. Major developed nations, which hitherto had a strong hold over the global farm trade, like several smaller ones, have not yet done away with export subsidies. For instance, Hungary is providing export subsidies on a broad group of products, including fruits, vegetables and dairy products.

While India came under tremendous pressure in the recent negotiations at Geneva to lift quantitative restrictions on the import of a large number of farm products, many other countries are continuing with such trade barriers. Canada, for instance, has not yet removed curbs on the import of dairy, poultry, eggs and many other agro-products.

Armed with provisions of the agreement on sanitary and phytosanitary norms, many countries have started monitoring and aggressively challenging other countries use of these standards. Even the USA, which is by far the biggest player in the international agricultural market, has expressed concern over the way these standards are being interpreted by some countries. In a recent official statement, the US government described these as bogus concerns about plant, animal and human health. But at the same time the US is using sanitary and phytosanitary provisions to the disadvantage of many developing countries that are still struggling to get a foothold in the international agricultural bazaar.

India, too, has on occasions tasted the bitterness of stipulations regarding sanitary and phytosanitary standards in its bid to boost agricultural exports. New threats are likely to emerge continuously as the country is striving to expand its agricultural export basket by including more horticultural items, including fresh and processed fruits, vegetables and flowers. The country has already nudged passed Brazil to become the worlds largest producer of fruits. It is the second largest producer of vegetables, next only to China. But it remains a debutante in the field of horticultural exports.

Indeed, a two-pronged action is needed to improve the countrys position as an exporter of agro-produce: arming itself with suitable domestic legislation in conformity with the broad principles of the international agreement on agricultural trade; and taking a tough stand at the on-going as well as future negotiations on farm trade at the international level. The country would have to prepare itself adequately for this purpose.

India, fortunately, has some inherent advantages in the field of agriculture. Availability of wide agro-climatic variability makes it possible to gainfully exploit our rich resources and diversity of agro-products. Besides, the country has good natural endowments of soil and water resources, copious sun shine and cheap labour. The cost of production of agricult- ural goods in India is genera- lly far lower than in most other countries.

Indian agricultural goods, therefore, can be price competitive in the global market. If the other barriers could be overcome and the quality of the produce could be improved upto the desired level, the country could emerge as an agricultural force to reckon with. For this, the government must act right away. There is no room for any complacency on this front.While India came under tremendous pressure in the recent negotiations at Geneva to lift quantitative restrictions on the import of a large number of farm products, many other countries are continuing with such trade barriers.