The World Trade Organization came into being in 1995 as the successor organization to the General Agreement on Tariffs and Trade (GATT) established in the wake of the Second World War. It is a multilateral framework (an agreement among governments) for conduct of international trade in goods and services and also for protection of intellectual property rights, i.e., patents, copyrights, trademarks, etc and for discussion of trade related issues. The WTO has a set of multilateral agreements primarily on the rights and obligations (of governments) that prescribes for governments in formulation of rules, procedures and practices related to international trade.
Agriculture was originally kept outside the purview of GATT till 1995. However, Uruguay Round has succeeded in bringing agriculture on the main track of GATT and agriculture trade is now firmly within the multilateral trading system. All the member countries of WTO are committed to follow set of rules embodied in WTO Agreement on Agriculture which covers:
(i) Domestic support,
(ii) Market access i.e., tariffs, and restrictions on imports and exports, and,
(iii) Export subsidies. The agreement-sought reduction in trade distorting domestic policies like price interventions and subsidies; reduction in export subsidies; replacing quantitative restrictions on trade with tariffs and reduction in tariffs to encourage more and freer trade.
India has always demanded that developed countries must bring down their bound tariff rates, and suggested the creation of a separate safeguard mechanism, for food security in developing countries. In fact, India continued to emphasize on food security as a prime Non Trade Concern and wanted that any measures adopted for its poverty alleviation programmes, food security and other social objectives, be exempt from any reduction commitments, while it demanded that developed countries should cut back their domestic farm support below the de-minimis levels.
Non-product specific subsidy is calculated by taking into account subsidies given for fertilizers, water, seeds, credit and electricity. The ‘Green Box’ covers subsidies must not involve price support that is expected to cause minimal or no trade distortions.