India's average applied tariffs in agriculture<sup>are 26 percent while bound rates in the WTO</sup> are 94 percent, a wedge of 68 percentage<sup>points (Table 2). In about 83 percent of</sup> agricultural tariff lines, the wedge is over 50<sup>percent (Table 4). The major items such as</sup> rice (applied tariff of 0 percent), skimmed<sup>milk (0 percent), wheat (0 percent), pulses (0</sup> percent), sugar (25 percent), and edible oils<sup>(15 percent) are virtually fully integrated</sup> with world markets (except of course for the export<sup>QRs) even though the bound rate is</sup> extremely high."<sup>1</sup> On domestic support, total AMS tends to<sup>be negative, suggesting</sup> taxation rather than protection of agriculture.<sup>On export competition, Indian agricultural</sup> exporters do not receive any direct export<sup>subsidies. However, there is some support in</sup> the form of exemption of agricultural export<sup>profits from income tax and subsidies on</sup> freight and for certain floriculture and horticultural<sup>exports.</sup> At the same time, India has significant actual<sup>and potential agricultural exports in rice,</sup> sugar, dairy products, cotton, and processed<sup>foods, and in the long run even in cereals.</sup> These exporting possibilities will be more<sup>fully realized as the discrimination against</sup> agriculture is fully eliminated.

This combination of a relatively unprotected domestic<sup>regime and potential comparative</sup> advantage means that India has a real interest<sup>in seeking to eliminate protection in</sup> international agricultural markets. India's sugar and dairy exporters have already expressed a serious interest in reducing barriers to<sup>their exports. As in manufacturing,</sup> India also suffers from the preferences granted to<sup>competing suppliers in sectors such as</sup> sugar. It therefore has a real interest in reducing<sup>agricultural tariffs as well.</sup> And yet, India's position is defensive, continuing<sup>to focus on the freedom to protect to</sup> safeguard food security.<sup>12</sup> India should seriously<sup>consider aligning itself with the Cairns</sup> group of agricultural exporters consistent with an<sup>overall strategy of forming coalitions</sup> based on a liberalizing ideology. In this regard,<sup>many of the specific proposals in Gulati</sup> (1999), including elimination of export subsidies,<sup>elimination of tariff quotas, moving</sup> from aggregate AMS to product-specific AMS commitments,<sup>and disciplining blue box</sup> measures are worthy of consideration.

# _C. Intellectualproperty_<sup>_13_</sup>

The main issues in TRIPs are: using TRIPs as<sup>a device for ensuring partner country</sup> compliance; developing domestic policies and institutions<sup>to offset some of the more</sup> egregious impact of TRIPs1<sup>4</sup> and harness the benefits<sup>of IP protection in other areas; and</sup> developing mechanisms for national and international<sup>protection for IP produced in</sup> India.'

> " However, state trading enterprises continue to influence<sup>trade in agricultural products.</sup>

**12** As Gulati (1999) argues, food security concerns can be adequately<sup>addressed through policies other than</sup> domestic trade protection.

**3** This section draws heavily on Subramanian (1999).

**14** The Uruguay Round TRIPs agreement did impose<sup>costs on India, particularly in the pharmaceutical</sup> sector (see Subramanian (1995)), which are likely<sup>to be felt in the early part of the next century.</sup>

**15** There are a number of issues that have generated<sup>well-entrenched and occasionally extreme positions</sup> such as compulsory licensing for non-working, parallel<sup>imports, transfer of technology, and restrictive</sup>

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