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Introduction:

The World Trade Organization’s (WTO) Agreement on Agriculture (AoA) aims at reforming international agricultural trade, establishing a fairer trading system by removing trade barriers and reducing subsidized farming that distorts global agricultural markets. This agreement is particularly significant for developing countries like India, as it affects their agricultural policies and subsidy frameworks.

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Critical Analysis of AoA’s Subsidy Provisions for Developing Countries

• Subsidy Categories and Their Impact: The AoA categorizes subsidies into Amber, Blue, and Green boxes based on their potential to distort trade. Developing countries, including India, have expressed concerns about the practicality and fairness of these classifications. The Amber Box, which includes subsidies that must be reduced, poses significant challenges for countries that rely on agricultural subsidies to support their domestic farmers. However, the Green Box subsidies, considered non-trade-distorting, allow for unlimited support, offering some flexibility for developing countries to support their farmers without affecting trade​​.
• Special and Differential Treatment: The AoA provides some leniencies for developing countries, such as longer implementation periods and higher de minimis levels for domestic support. However, there’s an argument that these provisions are not sufficient to address the fundamental disadvantages faced by these countries in the global agricultural market. The development box provides additional flexibilities for domestic support aimed at encouraging agricultural and rural development in developing countries​​.
• India’s Stance and Proposals: India has been vocal about the imbalances in the AoA that favor developed countries. It has pointed out the necessity to correct historical asymmetries to ensure a rule-based, fair, and equitable order. Together with China, India proposed the elimination of the most trade-distorting form of farm subsidies (the Amber Box) by developed countries as a prerequisite for considering other reforms in domestic support negotiations​​. India also seeks positive outcomes on a permanent solution for Public Stockholding (PSH) for food security purposes, the finalization of a Special Safeguard Mechanism (SSM) quickly, and a balanced outcome on Domestic Support​​.
• Practical Challenges for India: India faces practical challenges in aligning its agricultural subsidy schemes, such as the Minimum Support Price (MSP) program, with AoA provisions. The AoA’s constraints on domestic support and export subsidies directly impact India’s ability to protect its farmers from global market fluctuations and ensure food security​​.

Conclusion:

While the AoA aims to create a more equitable global agricultural trading system, its current provisions pose challenges for developing countries like India. The need for reforms that more accurately reflect the needs and constraints of these countries is evident. Efforts by India and other developing countries to negotiate more favorable terms within the WTO framework reflect ongoing struggles to balance domestic agricultural development needs with international trade obligations.

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