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Since the beginning of the 1980s, the global economy has gathered an unconventional
momentum. The new liberalized multilateral trade arrangements under the World Trade
Organization (WTO) and union of many European currencies under the single umbrella
of Eurocurrency are the significant developments of the 1990s. The most significant
transformation that took place in the world economy in the 1990s was in the field
of trade, especially agricultural trade. In 1995, agricultural trade was included
as one of the areas in WTO. At the global level, WTO has an Agreement on Agriculture
(AOA) whose main objective is to establish a fair and market-oriented agricultural
trading system. A reform process would be initiated through the negotiation of commitments
on support and protection, and through the establishment of strengthened and more
operationally effective GATT rules and disciplines. Broadly, there are four areas
under the AOA, whereby member countries are required to adhere to commitments.
One such area is market access, in which AOA envisages the dismantling of all non-tariff
barriers such as quantitative restrictions, quotas, import licensing and export
subsidies on the exports of both developed and developing countries. The second
area of commitment relates to domestic support measures which are aimed at quantifying,
containing and then progressively reducing the high level of domestic support to
agriculture in the developed countries, known as AMS and designated as the amber
box. The third area of commitment under WTO relates to reduction in export subsidies.
Export subsidies were to be reduced by 36% in value and 24% in terms of subsidized
quantity by the developed countries, and 21% and 13%, respectively, by developing
countries. The fourth equally important issue is that of SPS measures. These measures
were supposed to be standardized and universalized both in terms of codex limits
and specifications as applicable to food standards, toxic residues, viral, bacterial
and fungal infection transmission, etc.
India has been a reasonably very conservative player in agriculture, and it was
feared that any exposure to outside economy will jeopardize its own markets. But
since the 1990s, India too saw an opportunity in liberalizing agricultural trade
(Sathe and Deshpande, 2006). Thus, the development policy of India registered a
thorough change from a physical control regime to a market-driven one (Singh and
Jain, 2003).
It is in this context of rapid transformation of trading environment in India and
the world as a whole, an attempt has been made to examine the impact of opening
up of agricultural sector on the commodity composition and structural changes in
agricultural and allied products’ exports and direction of agricultural exports
of India during post-WTO period (i.e., 1995-96 to 2005-06). |
