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[Economy] WTO: Bali Summit, Trade Facilitation Agreement (TFA), De-minimus level, 10%
Subsidy Limit, Why Modi Opposed?
Prologue
Consider this a Fork of the Economic Survey chapter 9 on Agriculture and food production.
Institution
KEY IDEA
World
Cheap loans for development projects in third world
bank
IMF
Balance of payment and Exchange rates
GATT
WTO structure
MinisterialConference
GeneralCouncil
Roberto Azevdo
DirectorGeneral
WTO Functions
1. Ensure the developing countries benefit from world trade, especially the least
Developed countries.
2. Reduce barriers to international trade both tariff barriers and non-tariff barriers.
3. Get the members Enter into multilateral trade agreements to achieve above objectives.
4. Provide forum for negotiation and dispute settlement for the members, if the
agreements are violated.
5. Cooperate with UN, World and IMF for a global economic policy that improves
livelihood, protects environment and promotes sustainable Development.
Non-Tariff
Barrier
World Trade organization (WTO) aims to reduce such tariff and non-tariff barriers to
international trade.
But what if China starts manufacturing cheap cars with poor breaks, bad steering and
carcinogenic paint. Can Obama ban such dangerous foreign products? Does WTO
permit that?
Food Products
WTO agreements
To ensure that services import/export enjoys the same principles of free and fair
trade, just like the trade in goods.
T3: IPR
1. copyrights
industrial designs
2. patents
3. trademarks
Trade secrets
4. Geographical indicators
once a complaint is filed, first, the parties are allowed to sort the issue through mutual
consultation
T6: plurilateral
agreements
Not signed by all countries:
1. Civil aircrafts
2. government
procurement
3. Dairy Products
4. Bovine meat
~204 words
WTO has many other agreements but hard to memorize and fit into a 200 word answer
anyways.
For exams in 2014-17, the important agreement is AoA. (Because itll stay in news due to
10% food subsidy issue)
EXPORT SUBSIDIES
mostly by first world, to keep their MNC-corporatized
farmer lobby happy.
to capture Foreign market by flooding their cheaper
products
India doesnt give much export subsidies to
farmers- except a select horticulture and floriculture
Items
AoA wants members to reduce export subsides
1. GREEN
2. BLUE
Developing: by 24%
Just like traffic signal has three colors: green (GO), orange (caution) and red (STOP).
There is no RED box meaning WTO doesnt wish to completely STOP subsides,
because it is impractical anyways!
Box
GREEN
subsidies
BLUE
AMBE
R
Subsidies that dont increase with production. For example subsidies linked
with acreage or number of animals.
Very few countries use blue box- Iceland, Norway, Slovenia etc.
Amber box subsidies create trade distortion because they encourage excessive
production e.g. fertilizers, seeds, electricity and irrigation subsidies.
De Minimus is the Minimal amounts of Amber box subsides permitted by WTO, even
though they distort trade.
De minimus limits are calculated on the agriculture production of the given member
state in 1986-88.
Country
Developed
Developing
Least developed
India fears itll have to cut down its food subsidy to comply with WTOs De-minimus level
1. In 1986: USA agriculture production was far ahead of India. So, their 5% De-minimus
quota will be far bigger than our 10% quota (in absolute figures).
2. Input costs have skyrocketed in these decades. But, De-minimus doesnt consider
inflation factor.
3. So, if India has to limit its (Amber box) agro. subsides to a non-inflation adjusted 86s
production, we cannot continue the MSP to farmers or food security to poors.
4. These subsidized foodgrains are meant for feeding the poors only, they do not distort
international trade.
~190 words
Indias subsidy Expenditure in Crores (Rs.)
Subsidy component
RE-2013
BE-2014
Food
92000
115000
Petroleum
85480
63427
Fertilizer
67971
72970
Trade facilitation
agreement
LDC exports
food stockholding
as per the original Agreement on agriculture (AoA), the developed and developing
countries have to keep their Amber box subsidies within De-minimus level i.e. 5%
and 10% of their agriculture production in 1986-88 respectively.
India opposed this base year and limits, because itd make impossible to implement
the food security programs for the poor and MSP for the farmers.
Therefore, as a measure of temporary relief, Bali summit enacted a peace clause for
the AoA
LEVEL
Will meet at least once every year, review agreement every four
years.
NATIONAL
INTERNATIONAL
Benefits of TFA:
A simplified customs clearance mechanism will boost international trade, and thereby it will
WTOs Trade Facilitation agreement (TFA) aims reduce the redtape and bureaucratic
hassles in customs clearance and thereby facilitate international trade.
But, TFA maintains that it doesnt diminish the rights and obligations of members
under other agreements of WTO.
2013: In Bali Summit, the then UPA Government agreed to sign TFA, after WTO
Peace clause, which gave temporary exemption to developing countries from 10%
de-minimus provision until 2017.
Modi Government has refused to sign TFA before deadline (31st July 2014), because:
1. Once India has signed TFA, the developed countries may stonewall her demands for a
rational change in base year and ceiling limits on agro. Subsidies.
2. Then India will have to cut down agro. Subsidies in MSP and food security programs,
else theyll put sanctions on us, soon as Peace-clause temporary deadline is over in
2017!
3. And yet, well have to keep giving them easy customs clearance because we signed
the TFA!
Therefore, Government has decided to use TFA signature as a Bargaining Chip for a
permanent solution of food subsidies issue.
~220 words
Tags: EcoPill4-BoP, Rajtanil
Mrunal recommends
SBI/IBPS Bank Exams
1. IIBF: Principles of Banking & Finance
2. Fast-track to Arithmetic Rajesh Verma
3. MK Pandeys Analytical Reasoning
4. Objective General English SP Bakshi
5. Marketing Aptitude by Arihant
6. Previous BankPO Paperset by Arihant
UPSC Civil Service
1. (free) NCERT, NIOS, TN-Books
2. Indian Polity M.Laxmikanth (Hindi | English)
3. Spectrum: Modern History (Hindi | English)
4. Bipin Chandra: Post Independence
5. Spectrum Geography (selective) (Hindi | English)
6. Fast-track to Arithmetic Rajesh Verma
7. MK Pandeys Analytical Reasoning
8. Dishas Topicwise Paperset (Hindi | English)
9. Oxford School Atlas with Census 2011
10. Mains: Language papers
o Samnya Hindi by Unique Publication
o Compulsory English by AP Bhardwaj (TMH)
Kirti, you can visit the upsc link (to download the admit card) again. It shows
the instructions first before proceeding to the admit card, even if you have
already downloaded the card.
4. Reply
Ageya
Plz help!!!
Two trains for Mumbai leave Delhi at 6am and 6.45am and travel at 100kmph and
136kmph respectively.how many kilometers from Delhi will the two trains be
together?
1. Reply
Maharaj
train 1 100 km/hr @ 6 AM
train 2 136 km/hr @6:45 AM
Relative speed = 136-100 = 36 km/hr
Train 1 at 6:45 AM would have already covered 75 km (100 * 45/60)
So this is the distance that train 2 has to cover with relative speed of 36 km/hr
So time taken by it in covering it = 75/36 = 2.0833hr = 125 minutes(multiply
by 60 for minutes)
So to calculate the distance at which they meet = take any trains speed and
multiply with 125 minutes
so lets take train 1: 100 km/hr for 125 minutes = 208.33
to this 208.33 km add 75 km as we took time after 6:45 AM(so we will have to
add distance traveled by train 1 in those 45 minutes) = 208.3+75 = 283.33 km
or simply calculate distance traveled by train 2 in 125 minutes = 136*125/60 =
283.33 km
1. Reply
Hriti
i think the simpler way wud be(no need to cal time and then dist)..
Let X be the dist wen they meet from Delhi..Train A travelled
X+75(Dist traveled from 6 am to 6.45 am) and train B travelled X dist,
so
X+75/100 = x/136
x=283.3 km
1. Reply
Maharaj
@Hriti
I was just explaining in very simple terms taking concept of
relative speed.
As per ur concept of time equality
If they meet at X Km distance
equation would be: (X-75)/100 = X/136 = 283.3 (as we are
equating the time since you have already taken X km as a
variable)
1. Hriti
yeah..i got ur intention of making it simple..
also..actually i solved it with equation X+75/136 =
X/100 , but while putting up here..i made it
incorrect..thanks for pointing out..
ur explainations are very good.
2. Ageya
Thnxzz @maharaj n @hriti
@maharaj how u know everything abt everything ????
amazed by ur knowledge n ofcourse ur initiative to
help everyone.
5. Reply
Mallikarjuna
Mrunal sir, it is said that De Minimus is the Minimal amounts of Amber box subsides
permitted by WTO. i.e., 10% is minimum. So, we can give more than 10% na?, then
whats the problem?. It should be maximum 10% allowed.
1. Reply
Ritu
Hi Mallikarjuna,
I think you missed within.
Article says as per the original Agreement on agriculture (AoA), the
developed and developing countries have to keep their Amber box subsidies
within De-minimus level i.e. 5% and 10% of their agriculture production in
1986-88 respectively.
5% and 10% are the limits within which subsidies are permitted.
Read it again for better understanding.
Thanks
1. Reply
Mallikarjuna
Thanks for ur reply. I understood the concept-it is within 5% & 10%,
but under the subheading Amber box: De Minimus limits of the
article it is given that De Minimus is the Minimal amounts of Amber
box subsides permitted by WTO, which implies 10% is min limit (but
actual is up to 10% or max 10%)
6. Reply
ABC
Hi .. pls explain the below question:
Q. Consider the following data table. Which statement best explains the climate
variation between these two cities?
LOCATION MAX TEMP(F) MIN TEMP(F) MEAN ANNUAL PRECIPITATION(in)
MEAN ANNUAL SNOWFALL(in)
CITY A 110 -36 23.8 31.9
CITY B 90 -19 38.2 92.9
a) City A and city B are located at the same longitude
b) City A is located at a high elevation,and city B is located at Sea level
c) City A is located far inland, city B is located near a large body of water
d) City A is located on the east coast, and city B is located on the west coast
1. Reply
Biswajit
Loking at the annual range of temp we can say the weather of A is of
continental type with low pecipitation. for B the annual range is less and
rainfall is high due to influnce of ocean or alrge water body .. So My answer
would be C
7. Reply
Ayan
Hehe Mrunal i must say that the pics of Gangajal are very pertinent in all the places u
have used themfunnyi especially liked the life expectancy one:D
8. Reply
abhineet
hi mrunal
please explain the blue box subsidy and De-minimus quota ill effects for india.i could
not understand both the concepts.
9. Reply
amit
Q: In a test, a student attempted only six questions and having got full marks for each
question, secured 40% marks in the test. how many questions did he not attempt?
3 , 6 , 9 , 12
how to solve this kind of qusn?
1. Reply
VINAY
@ AMIT
1. Reply
VINAY
for getting 40% u need 2 get 6 ques
for 100% =100*6/40=15
so total 15 q,u answered 6,remaining 9
1. Reply
Maharaj
@VINAY
just a query since ur here
is right to food a fundamental right or has it been converted to a
legal right after food security act
as SC takes right to food as incorporated in right to live
under article 21
1. B+ve
Right to food is out of many, one of the liberal
interpretation of Art. 21 by Supreme court after Maneka
case(1978), but using this interpretation, no one can
drag the govt. in court and that is why supreme court
order(only) to the govt release the food grain which is
rotting in go-down and govt places many reasons so
then how a govt would be punished? This matter also
falls welfare of people under Directive principle of state
Six bells commence tolling together and toll at intervals 2,4,6,8,10 and 12 seconds
respectively. In 30 minute?
Four bells begin to toll together and then each one at intervals of 6 s, 7 s, 8 s and 9 s
respectively?
13. Reply
abhilakshya
what is the difference between balance of trade and trade balance ncert class 12
microeconomics says trade balance is just difference between export and import of
goods.
1. Reply
vinay kumar
start with Current Account of BOP:
Current a/c Balance=Balance of trade in goods(BOTg)+Balance of trade in
services(BOTs)+ Payment Transfer
if it is not mention whether it is for goods or services then it is taken for goods
and it also called trade balance
means Balance of trade in goods=balance of trade=trade balace
14. Reply
B+ve
PLS publish the remaining article..
15. Reply
Joy
Can someone please provide a link for the list of endangered species in India as well
as IUCN red list
16. Reply
Nikhil
guys do go through these 100 mock questions on polity which were posted by Mrunal
last year, will help a lot in revision
http://mrunal.org/2013/05/polity-100-mock-mcq-questions-from-the-static-portionconstitution-of-india.html
Mrunal are you going to post similar mock this time too or too busy with eco survey?
17. Reply
Optimus
I think it would be advisable for bloggers to comment/upload their
queries/doubts/confusions as per the subject matter. If its related to CSAT 2, post it
under the relevant topics under the CSAT article which Mrunal has listed. If it is
Polity, post it under the relevant polity articles and so on. And with this WTO topic,
let comments be related to WTO and related matters, that way discussions can be held
if required and it would be more organised. Anyhow, its just a suggestion since i find
it distracting to see unrelated comments when i scroll down to see if there has been
any supplementary information added by bloggers.
Big thanks again to Mr. Mrunal.
18. Reply
Gayathri
Hello sir,
Ive a question here. When the present De-minimus quota for developing nations is
already 10%, why should we fight for the limits agreed under AoA?
so, is it like, India wants to provide subsidy beyond 10% quota with a revised base
year or the WTO wants us to cut down subsidy level to less than 10 % with existing
base year?
Thanks
1. Reply
Ritu
Hi Gayathri,
I can explain what I understood.
Actually 10% limit is based on 1986-88 but inflation rate increased manifold
since then in India. As India may exceed this limit under NFSA therefore,
India wants WTO to raise the % limit with same base year.
Hope this will help.
Thanks
2. Reply
Nikhil
let MSP which india give for wheat = $10 per tonne
let Fixed external reference price (world market price)(1986-88 levels) = $1
per tonne
let Domestic production of wheat = 100 tonnes
are asking about perenniality of Kavery than obviously they are asking
it because it has something which is an exception otherwise every one
know that peninsular rivers are not perennial in general. and about
the fight between states .even india bangladesh and india pakistan
are also fighting and that too over perennial rivers , !!!
1. Reply
Tinkusrinivas
Cool dude..obviously its a debatable topicand thats the
reason i mentioned strickly speakingdont go by majid
hussain or saddam hussain in such depth it might be more
harmful than beneficialif upsc asks about perenniality of
kaveri doesnt mean it is perennialur logic is more dangerous
than mine.;)
Official link..for ur info
http://india-wris.nrsc.gov.in/wrpinfo/index.php?title=Cauvery
3. Reply
Nikhil
Kaveri is a rain fed parennial river because its drainaige recieve water from
rainfall both in summer and winter monsoon, refer Majid Hussain Geography
of India
1. Reply
Hriti
read Indian geography ncert its mentioned that its perennial..
1. Reply
Nikhil
@hriti I am also saying that its parennial and was not able to
find anything about perenniality of Kaveri in tinkusrinivas link
instead it says that the tributaries of kaveri hemavathi and
kabini are perennial rivers .and @tinkusrinivas its good that
you rely more on authentic govt sources but plz dont mock a
respected teacher I have read geography from his book only
and respect him a lot newys peace
1. TS
Nikhil
See buddy i have not come across any where about
perenniality of kaveri explicitlyif u have any
authentic ( govt source ) please do tell me.in that link
also they have not mentioned it explicitlyso just
chilln sorry if i hurt ur feelings..
21. Reply
Ahmad Nafees
Please update about India-Israel foreign policy.
22. Reply
arun
thanks rahul
23. Reply
keshav
sir mujhe ye samajh nhi aya ki 10% of production ar subsidy me kya relation hai?and
how is it related to msp?
plz help..
1. Reply
keshav
one more thing.. why the year is 1986-88? why ot some other year?is there ant
reason for it?
24. Reply
biswajit
which one is not liquid financial asset ?
time deposit
demand deposit
currency in circulation
foreign aid
a or d ?
1. Reply
Hriti
Time deposit are basically fixed deposit, and can not be withdrawn anyday
hence less liquid. So its d.
1. Reply
Nikhil
your explanation is correct but the answer will be a read his question
1. Reply
chaitanya
Time deposit, DD, CU are parts of aggregate money supply and
hence are liquid assets. So option D is the most likely answer.
1. Maharaj
@Chaitanya
Regarding Foreign aid
It comes in form of Internationally recognized
currencies ( such as dollars or euros or yen)
it is the most liquid asset in a country after a countrys
domestic currency.
its swapping mechanism with banks are most easiest of
processes.
So its a highly liquid asset with government to deal
internationally and domestically also
25. Reply
mnu!!
can any one tell simplest way to solve the x vs y questions.
a linear graph is gvn we hav to match the relation with the graph and findout the crrct
option gving said relation.
1. Reply
Nikhil
a linear graph will always be of a linear equation that is y=mx +c just learn the
shape of logarithmic ,exponential,cubic (y = x^3) and square polynomial (x =
y^2) and you will be able to answer the question
1. Reply
mnu!!
thnx bro googled it and learned the equation,thnx a lot.
26. Reply
Hriti
hey does anyone has instructions page which we need to carry with hall ticket?
Plz share..
1. Reply
Nikhil
http://upsconline.nic.in/eadmitcard/instructions.php
1. Reply
Mama
Do we have to carry it to the exam hall? Nothing is mentioned on
admit card as such. While downloading admit card, we were just asked
to download the instructions (no mention of CARRYING it).
1. Reply
Nikhil
no need to carry it
1. Gayathri
Guess we need to carry it
IT IS MANDATORY FOR THE CANDIDATE TO
TAKE PRINT OUT OF IMPORTANT
INSTRUCTIONS TO THE CANDIDATE BEFORE
DOWNLOADING THE E-ADMIT CARD AND
BRING THE SAME ALONG WITH THIS eADMITCARD TO BE PERMITTED TO ENTER THE
EXAMINATION HALL
@ Hriti thanks, I wouldve missed it
2. Tinkusrinivas
Yes it is mandatoryif its not mandatory also i will
take atleast i can use as a rough paper;)
3. NIk
its mandatory, need to carry
4. Nikhil
@gayathri @hriti thanks for pointing that out, would
have missed it and sry for above comment
2. Reply
Hriti
Thanks Nikhil.
i dont think we have time to discuss over it. Just take the print and
take..no penalty in doing that..
2. Reply
neeraz
no need to carry it.
27. Reply
prakash kumar
Those who are appearing for prelims CSE 2014 on 24th aug 2014 ..Important
instructions has been uploaded on UPSC website http://www.upsc.gov.in/
http://www.upsc.gov.in/exams/misc/2014/CSP_2014/Press_note_Eng_CSP_2014_21
Aug.pdf
Regarding English passage questions not to be attempted ..whose english translation
is not given ..
28. Reply
Arpit Gupta
Sir,
very informative articles posted by you but if the posted articles are pre-set for
printing on A4 size sheet or if it can be available for download in pdf file format set
on A-4 size sheet then it will be great. I tried all possible combination of A4-Legal
size/margin width/page layout to get print out but at some point or other the text was
half printable on any given page.please sir, do look into it as after a particular time
your eyes get strained by working on computer.A hard copy is the best way to be
accessible to the topic at any time.
29. Reply
lockthat1
in the sub heading why india is opposed- Input costs have skyrocketed in these
decades. But, De-minimus doesnt consider inflation factor.
But in the calculation of AMS inflation is considered.. please correct me if i am
wrong
30. Reply
sourabh pandey
What kind of action can WTO takes if India denies to sign on TFA ,or what India will
suffer by WTO now when India already raise voice to change of base year and for
minimal subsidies.
31. Reply
Abhijit Roy
Are 3 months enough for Mains preparation if i have not prepared anything before
prelims? Please guide Mrunal Sir
1. Reply
shilpa
Yes very much. Just give ur 100%.
32. Reply
ABHISHEK
can any one help me out for statement assumption implication type question being
asked in po exam or please send me a pdf link regarding this or tell about boot thats
must be refferd,please help me out i am in need of this topic
33. Reply
Pavithra Maduram
Hi ! What are the intangible cultural assets in India (notified by UNESCO) ?
34. Reply
praveen
Gajab sir ! Thank you
35. Reply
lockthat1
in the sub heading why india is opposed- Input costs have skyrocketed in these
decades. But, De-minimus doesnt consider inflation factor.
But in the calculation of AMS inflation is considered.. please correct me if i am
wrong
36. Reply
vinod
thanks a lot mrunal , the above information is very easy to to understand..
37. Reply
ANVIT Agarwal
@Mrunal -Really helpful article.
I would like to add few points.
1) In the peace clause agreement , it only covers agreement on agriculture so no one
can take India to Dispute Settlement mechanism, but India could be dragged to DSM
for violating Subsidies and countervailing mechanism (SCM)
2) Peace Clause was provided in 1994-95 when WTO was established , at that time
US and EU get 10 yr period relaxation, Why India and other emerging economies got
only 4 years?
3)Under Green Box, USA gives $120 billion out of $130 billion of its food security
programmes which is not correct ,also USA provide Incorrect data for its trade
distorting subsidies to WTO.
4) As mentioned in the articles, US major subsidies are export subsidies i.e for cotton,
soyabean, meat etc while India procures food for its poor.
P.S : please refer http://triplecrisis.com/?p=8920 THE HYPOCRISY CLAUSE.
38. Reply
srinu
thanks sir for given detailed information on this topic
39. Reply
Sourabh pandey
Mrunal Sir nobody has given me the answer which I had asked two months back ,now
again I m putting those question. Qus1. What will happen if India wont be ready to
sign after the given ultimatum by WTO after 2017. Secondary why WTO members
are not ready to change the base year 1986-87 production even they might aware that
there is lot of changes happened in economy since 1986-87.
1. Reply
Chirkut
First Thing first
1. WTO is an organisation which works by consensus(which largely explains
its inability to realize its vision-to make world trade barrier free)
you need to realize that it is not only India .In fact Indonesia
(Soybean),Thailand(Rice) ,China(Cotton) etc has similar problems.So they
formed a league(recall G-33)
Coming to your problem specifically nothing new as it seems is going to
happen in future.There are chances that deadlock will continue or in the
meantime solutions through mutual concessions have to be worked out.As said
WTO is a consensus organisation so everyone has to agree for new deal but
yes bilateral rifts seems more imminent in near future
2. Second question can be answered by common mathematical sense.I mean
what actually is subsidy it is just difference in the current price minus base
price which subsequently multiplied by amt produced in current year
Now according to developed world there is not much overall change in base
price as inflation in developed world is too low,but going by Indias stand the
price have undergone dramatic change so on average there is case for early
revision.But we are at the same place by going whole circle-Yes,WTO is a
consensus organisation
Now the question is why Developed countries not want revision to happen?
Think over it !!!!!!
40. Reply
amit
thanks a lot
41. Reply
pawan
So what is the solution? I think WTO should revise the agreement which would be
something like:
For any member country x, the cap should be specifically calculated using its
average inflation rate, with the base year same as before..
So, suppose the inflation factor in US is say,3.. Then the cap would be 3*some
constant. Inf factor in India is say,15.. Then the cap would be 15*the constant
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ravi { congrats sir please guide some books } [Toppers Interview] Vinay Tiwari
(AIR-193/CSE-2014) Civil Engineering Optional, IIT-BHU,...
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[APFC-2015] Cab Pooling, Room Sharing, Exam Centre Location Doubts...
neeraj { Hi pawan..the orange book is a must read and forms the base for sociology
optional..some topics in paper 1 should be read from the blue... } [Download] UPSC
Mains-2015: Sociology Optional Subject Question Paper-1 &...
Vaibhav { I have tried to include major tips in this detailed post bhai ...I hope you find
it useful... } [CAPF 2013] Vaibhav Prajapati Rank 211: B.Tech Electronics, Nirma...
Pawan { Hi Abhinav Thanks for your detailed guidance, but there is one doubt: many
veterans say go for Blue Harlambos. So is there major difference between... }
[Download] UPSC Mains-2015: Sociology Optional Subject Question Paper-1 &...
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