Trade Ministers from 128 countries met in Singapore
in December 1997 for the inaugural meeting of the World Trade
Organization (WTO). Their aim to chart a course for trade into the 21st
century and to accelerate the creation of a global market free of trade
restrictions. It is a course that will affect all our lives, with
widespread effects on where and how the work of the future will be done.
Two schools of thought prevail in Pakistan about the
impacts of different WTO agreements on the country. One group feels that
these agreements are a panacea for every ill we are suffering from. They
believe that there is a strong positive effect of free trade on the
provision of enabling conditions for poverty reduction through enhanced
provision of direct and indirect employment opportunities, social
welfare services, and infrastructure that can potentially benefit the
poor. This is the view taken by the proponents of "trickle
down" hypothesis. The second group, on the other hand, declares
that WTO is a curse and everything going wrong in developing countries
is the result of the WTO agreements. They feel that WTO is rich man's
club, meant to exploit the interest of developing world.
The agreement vows that the opening of food markets
would be beneficial for the poor in Third World countries since it would
increase productivity. But it does not require extra intelligence to
foresee that the emerging scenario would be far from beneficial.
Firstly, agricultural subsidies in OECD countries, especially the US, EU,
Canada and, Japan have been estimated at $1 billion per day. In sharp
contrast, developing countries are being forced to end subsidies.
Secondly, it would be next to impossible for developing countries to
resist the onslaught of MNCs that have sophisticated and technical
superiority and huge funds at their disposal and to top it off are to
struggle to market their products in the South. The "market
access" promised by industrialized countries is nothing but a
"misleading notion." More so because most developing countries
export 10 percent of their agricultural produce while the remaining 90
percent is consumed in their domestic markets.
US trade policy risks isolating the Muslim states
that are on the front line in the war on terrorism. The falling
economics of many Muslims states have been repeatedly acknowledged by
the White House but detractors say the US has done little confronting
with the quandary. The dilemma has been rancorous with the trade
concessions to some of its closets allies in the war on terrorism.
Pakistan has hoped for about $1bn in additional sales of textiles and
clothing to the US to offset the costs of the war on terrorism, but —
under pressure from its own textile industry — the US granted just
$143m. Most of the causes are internal, a consequence of oil-dominated
economics, high barriers to trade and investment and political tensions
that dampen regional trade. Seven of the 10 largest Arab Leagues
Members, including Syria and Saudi Arabia, remain outside the World
Trade Organization, as does Iran.
US trade policies have worsened the Muslim World's
isolation. The five largest Muslim countries Bangladesh, Egypt,
Indonesia, Pakistan and Turkey — already face high barriers on exports
to the US. These countries sell mostly light manufactured goods like
clothing and fabric. The situation will deteriorate as the US negotiates
further trade deals offering tariff-free access to the US for Latin
America, Africa and Asia. At the same time, the removal of quotas on
textiles will help the largest producers, such as China and India.
Washington has presented few initiatives to contradict this trend; it is
said Morocco is the only Muslim country to be currently in line for a
free trade agreement with the US.
Pakistan and India have signed the WTO agreement but
have to give a most favored nation (MFN) status to each other. India has
already given Pakistan the (MFN) status but Pakistan is reluctant.
Technically this is the appropriate itinerary because the Indian
products are much cheaper furthermore they will flood our market if the
agreement is signed, predominantly devastating our local industry which
needs protection. The Indian products would shatter the Pakistani market
mechanism as their internal (cost of production) and external
infrastructure is superior to ours.
As for China, another intimidating competitor in
terms of world trade, Pakistan would be forced to deal with them for the
sake of political and on the level of defense grounds. China has warned
the US against imposing new restrictions on textile imports when the
present quotas end in 2005, stating such measures would undermine
Beijing's co-operation in the new round of global trade talks. American
Textile manufactures wants quotas reimposed under the special safeguard
provisions in China's WTO accession agreement, which allow for
restrictions if an importing country concludes shipments are causing
"market disruption". The provisions were concluded in the WTO
accession especially for the protection of the US textile and clothing
industry against a possible surge in Chinese exports. However China
feels strongly about textiles, one of its largest exports, and one which
offers it great potential to benefit from WTO membership.
Our products continue to countenance tariffs and
quotas and other protective measures. In the Western market, at the time
of the formation of the WTO we were assured of reciprocal benefits if we
approved to join the World Trade Organization. Pakistan has already
brought its tariffs to the level of zero on its products while the West
has comparative advantage in the field of computers and
telecommunication equipment however our textile products continue to
face discrimination and import barriers.
As far as our imports are concerned, there are two
sides to it, if we lower the tariffs our imports would increase, this
would pressurize our domestic industry. Only those sectors of the
industry will survive which have modernized their plant, equipment,
management, and labor and lowered their cost of production. These
sectors would add to the efficiency and compete in the sectors of
surgical, sports, and leather goods, textile manufacturing and primary
With water logging and salinity transforming fertile
land into wasteland amid persistent drought coupled with the attack of
WTO, the ability of the State to feed 140 million people appears to be
at great risk. All ready as many as 41.2 percent of Pakistan's
population is living below the poverty line. Not only the food security
of Pakistan and other developing countries is being jeopardized but
colossal multinational companies, whose immense power and capability to
takeover the principal fraction in trade would be prominent.
The European Union is by far the biggest user of
export subsides, the most trade-distorting form of subsidy, which
depresses world price and undercuts more efficient farmers in poor
countries. The commission has said it is ready to contemplate a
phasing-out of export subsides, it has made this conditional on other
countries scrapping their schemes for subsiding exports, which the EU
says includes US use of export credits and food aid. But deeper cuts are
needed in tariffs and trade-distorting domestic subsides that would
narrow and widen disparities between WTO-members. Other agricultural
exporting countries are also expressing disappointment.
Even where some lower income countries have increased
their share of world trade, they have not seen a corresponding rise in
income. Over two decades there has been a 'decoupling' of world trade
from 'growth' in the neo-colonial world. Following advice from the
international agencies of world capitalism they have, in most cases,
diversified out of raw materials into manufacturing. This however has
led to them being trapped in 'international production networks', which
means they merely assemble imported parts in low-skilled, labour
intensive industries, owned by multinational companies.
Those who can maneuver the rules get benefited from
it and rich nations, by virtue of their better bargaining position, are
able to do so. The developing countries are far behind in this process
not only due to the reason that they don't have the required capacity
and understanding but also due to the fact that they lack political and
administrative will due to pressure.