The Agriculture, Manufacture, Trade, Market
Accessibility and the movement of the professionals are the areas
where a consensus has yet to be developed among the member countries
prior to implement the World Trade Organization (WTO) regime with
effect from January 1, 2005.
Currently, the subsidy on agriculture products by
the developed countries is the burning issue for the ministerial
council of the WTO regime, as some 90 countries have put strong
resistance in the recently concluded Cancun conference on the un-even
playing field between the developed and the under-developed nations
especially in agriculture sector.
Although the agriculture sector plays a key role in
strengthening the economy, yet it is the manufacturing sector which
strictly speaking draws a line between the developing and the
developed world. The developed world has an edge over the developing
nations because they have allowed massive subsidy to farming sector
besides having a strong industrial base, which provides sustainable
growth to the developed economies as compared to the developing
As far as Pakistan's economy was concerned,
primarily it's a combination of agriculture, manufacture and trade
activities. Despite having a strong agriculture base, we have not yet
fully utilized the available resources through proper management of
land due to excessive politicization of the agriculture sector.
On the manufacturing side, the country has
considerably developed areas like textile, sugar, cement, fertilizer
and leather and leather products of which only textile and leather
products have the export potentials. On the service sector, Pakistan
has comparatively a small urban base which is capable to produce
professionals in very little numbers hence this area deserves efforts
for human resource development at a much larger scale to make any
impact under WTO regime.
There is a genuine concern among the developing
nations that as a result of globalization of the trade it will become
more difficult for them to develop their own industrial or
manufacturing sector in the post-WTO scenario. The manufacturing
sector of the developing countries would not be able to combat the
onslaught of the cheaper products produced by the developed countries
hence the smaller economies may divert their interest from industry to
However, people of different shade of opinion think
in diversified manners. One of the senior businessmen while commenting
on the ensuing WTO regime, suggested that instead of setting up of new
export processing zones in Pakistan, the economic managers should
think in term of setting up free trade zone. He substantiates his
suggestion with the argument that the coming situation does not suit
to the processing of raw material into finished products. It is wise
to allow development of free trade zone instead of groping for
developing the industrial projects or processing zones.
The opinion leaders in Pakistan while justifying
the resistance put by the developing countries have said that actually
we cannot treat the agriculture sector of the developed and the
developing countries at par. The privileges got by the developed
countries in terms of market accessibility and technological
advancement impairs the efforts of the farming sector in the
developing countries. Hence the farming sector of the developing
countries justifiably deserves certain subsidies to survive in the
face of trade onslaught by the developed countries after December
Another genuine concern of the manufacture sector
is the increasing non-tariff barriers being created by the developed
countries against the exportable items from the developing countries.
The business community time and again invites attention of the
government for initiating one window operation to deal with the issue
of social compliance under the WTO regime on labor, environment and
Any delay on this issue could hamper the exports of
various industrial sectors, which could easily touch $15 billion mark
within next couple of years. At present, industrial units are
confronted with double compliance, one from the government agencies
and the other from foreign buyers, who do not certify a factory unless
it meets their standards for quality, environmental and social
standards. Any lag in compliance in the required standard deprives
them of the export orders.
The setback at Cancun by developed countries'
resistance to agricultural subsidies, did not allow a level playing
field to the farmers in Pakistan and other developing countries.
In order to resolve the issue, the WTO was however
working closely with the IMF and the World Bank on a proposal to set
up a fund so that adjustment process was facilitated for the benefit
of the agriculture in the affected countries.
The leaders of the business community in Pakistan
have their own reservations and concerns regarding possible impact of
the WTO on the national economy. They feel that the economy of
Pakistan was facing problems by observance of WTO rules since 1995,
leading to stagnation of country's economy. Under IMF and World Bank
conditions, Pakistan had to raise higher revenue, which consequently
created a situation where poverty level was on the rapid increase in
The actual problem at the Cancun started soon after
the release of a WTO draft trade text, which called for an end to
export subsidies on farm products of special interest to developing
countries and their gradual elimination on other farm goods.
Justifying the draft, the WTO says it aims at bridging gaps in
positions that have held up progress towards new multilateral trade
Large-scale exporters of the 17-strong Cairns
Group, led by Australia, and a newly-formed group, of 21 developing
countries, whose key figures include Brazil, India and China, have
been pressing for the complete elimination of export subsidies.
The proposed draft calls on members to commit to
"eliminate export subsidies for products of particular interest
to developing countries" stating that a list of these products
will be established.
For other agricultural products, members shall
commit to reduce, with a view to phasing out, budgetary and quantity
allowances for export subsidies. On another divisive issue, the draft
proposes the launch of negotiations to draw up new global rules on
government procurement and trade facilitation, which basically means
easing customs procedures. But on two other more controversial matters
— regulations on cross border investment and competition — the
text merely calls for further consideration.
Developing countries had particularly objected to
expanding the WTO mandate to include investment rules, fearing they
would in the end benefit Western capitalists at the expense of their
In an instant reaction over the WTO draft regarding
withdrawal of farm subsidies, 90 countries from Africa, Asian and
other poor nations formed a block to demand wide concessions on farm
reforms, adding pressure on rich nations at global trade talks.
The alliance came after a more powerful group of 21
developing nations, including India and Brazil, went on the offensive
against the European Union and the US at World Trade Organization
Pakistan has, however, assured implementation of
World Trade Organization (WTO) rules in letter and spirit, said
Supachal Panitchpakdi, the Director General of WTO, after a detailed
meeting with leaders at top level during recent visit to Pakistan.
Though Pakistan has expressed its disappointment
over what is being called failure of the Cancun conference to reach an
agreement on the agricultural policy, yet hopes are alive that WTO
would be able to be on the track soon. The issue of agriculture policy
would soon be taken up for a review as soon as the currently on-going
election process in different countries completes in due course of
time. It may be mentioned that currently hot election campaigns are
under way in the United States, France and India which are signatory
to the WTO regime. Agriculture policy would again be reviewed to reach
at a certain agreement prior to the inauguration of the global trade
Besides, holding details meetings with President
Pervez Musharraf and his team members, WTO Chief also had discussion
on pros and cons of the WTO program with different opinion leaders
within the government and outside the government including Sartaj Aziz,
former minister for finance and foreign affairs.
Pakistan, however, pins great hopes that the spirit
of give and take would prevail at future negotiations on the
outstanding issues and it would be possible to implement the program
according to the schedule i.e. 1st January 2005.
The failure of the Cancun conference to reach at a
consensus regarding agriculture policy may hit the time schedule for
implementation of WTO program. The Council of ministers of the WTO,
however, has given no indication regarding any change in the schedule
for implementation. The council seems firm on the given timeframe for
implementation of the program.
The WTO Chief has however vowed to salvage the
global trade talks despite setback at Cancun.
In his first post-Cancun pronouncements on the
issue in Pakistan, WTO leader Dr. Supachal has said though he was
disappointed with the Cancun discussions, he would move forward with
the cooperation of all the member countries to salvage WTO. He was of
the view that WTO has not failed. The Cancun conference was not the
end of a round. In the past, WTO had seen many worse crises.
Before the year ends, meetings with the senior
officials of the member countries would be called to discuss how to go
ahead with the WTO's goals. In this respect an action plan is also
under consideration on how to move forward.
In cooperation with the IMF and the World Bank,
they propose to set up a fund to assist countries in making
WTO officials feel that member countries would have
to adopt a positive approach in a spirit of give and take to achieve
success. WTO Chief chose Pakistan for his first public pronouncements
because Pakistan had adopted a very positive approach during the
Cancun parleys and had also announced its solidarity with the WTO.
The officials of the member countries have to work
on how to put the negotiations on track by consulting their capitals.
It is a challenging task but not daunting. In fact, the members need
Doba development package to succeed and it is of no use talking away.
The senior officials would contact their capitals on further to
resolve the issues. They would work out a plan to move forward.
The WTO Chief has said that next year trade issues
will be taken up with the member countries. He, however, expressed the
hope that the countries would show flexibility in their approach. The
countries, which, have acquired newly gained role at the Cancun talks
must not forget that they have obligations too. They have to be
reasonable and forward looking.
It is not the setback alone at the Cancun instead
several gains have also been achieved by the WTO during the parleys. A
major gain has been in the field of health allowing manufacture of
cheap medicines by developing countries. This would benefit not only
the producers, but also people of other developing countries. At the
Cancun entry into the WTO by Nepal and Cambodia was another landmark.
Besides other achievements some 700 projects of trade concessions have
also been approved.
Choudhry Amir Hussain, Speaker of the National
Assembly while speaking on the subject at a business conference said
that Pakistan attaches great importance to the multilateral trading
system to supplements its export-led strategy on the road to
sustainable and equitable development and economic growth. The
multilateral trading system offers all the nations the best
opportunity to run world trade in a just and rules based system. The
rules are there but we need to negotiate on making them more just and
There was no doubt that the WTO system was for
freer trade and discouraged protectionist measures by the governments.
However, this was lopsided at the moment because it was ostensibly
designed to benefit developed countries since items such as
agriculture products, textiles, etc, face not only non-tariff barriers
but also high tariffs.
Unfortunately, the Cancun conference has been
termed as the failure, and this result was not favorable for the
progress in the WTO system, in general and development concerns in
trade issues in particular.
However, this should not dishearten us as the
previous negotiating rounds and specifically the last one, i.e. the
Uruguay round, which ended in the birth of the WTO, was beset with
numerous delays as well. Therefore, the Cancun setback perhaps would
be temporary phase in the history of the WTO. Pakistan was an agrarian
economy and the WTO regime by allowing agricultural subsidies to the
developed countries rendered the playing field uneven. This handicaps
the farmers who find it hard to compete with the foreign products in
the domestic market what to speak about the international arena.
The concept of free trade in agriculture products
does not really exist. A farmer from Mexico was quoted saying that one
can buy corn imported from the United States three times cheaper than
the corn crown in Mexico because of subsidies to American farmers.
With this background, the WTO has to ensure more
trade friendliness for developing countries so it was not seen as
benefiting some countries at the cost of others. It is generally said
that the originally, the program for globalization of trade under WTO
regime was authored by the developed nations. Obviously, the program
must have been designed in a way that the maximum benefit of the
program goes to the developed world as compared to the poor or
However, the council of the ministers of the WTO
regime claims that the program is aimed at bridging the yawning gap
between the rich and the poor states and breaking down barriers to
global trade. Contrary to these claims, the reality of the
international trading system today does not match the rhetoric.
Instead of open market, there are too many barriers that stunt, stifle
and starve; UN Secretary General Kofi Annan in his written statement
read at the opening of the Cancun conference made these remarks.
Prior to the establishment of the WTO in January
1995, the General Agreement on Tariffs and Trade (GATT) was the main
operational treaty amongst the world nations dealing with trade rules
and their implementation. Pakistan was one of the original 23
countries, who had signed GATT.
Special and Differential Treatment for Developing
Countries is the concept of the exports of developing countries should
be given preferential access to markets of developed countries and
that developing countries and less developed countries need not
reciprocate fully the concessions they receive. Less developed
countries and developed nations also get longer time frames for
phasing in new rules and lower levels of obligations. Such provisions
are intended to assist at developing countries in capturing a greatest
portion of the gains from trade.
Under GATT agreement, WTO members engaged in market
access negotiations and consequently made commitments to eliminate
reduce tariff rates and non-tariff measures applicable to trade in
goods. These commitments have been recorded in the national schedules
of tariff concessions that formed an integral part of the Package of
Uruguay Round Agreement.
Pakistan pledged to bind about 38 percent of its
tariff lines and equal installments over a 10 year period (1995-2005),
virtually all agricultural tariffs have been bound and mostly at 100
per cent. Tariffs on tea, certain types of wheat, maize, cane and beet
sugar and their products are bound at even higher rates i.e. 150
percent while the betel nuts are subject to binding of 200 percent.
Pakistan has been the victim of anti-dumping
actions number of times since the implementation of WTO agreement.
Pakistan has enacted its own legislation on anti-dumping; recently
Pakistan imposed anti-dumping duty (27-33 percent) on imports of tin
plate from South Africa. Recently NTC also applied provisional
anti-dumping duty (96-50 percent) on imports from France and
Indonesia. Pakistan has been enacted its countervailing and safeguards
legislation to provide protection to domestic industry.
Trade Related Aspects of Intellectual Property
Rights (TRIPS) agreement provided a transitional period of five years
for developing countries, which has already expired on December 1999.
Pakistan has accordingly upgraded its legislation in different areas
of IPRs, in conformity with the provisions of the TRIPS agreement
through Patents Ordinance 2000, Registered Designs of Integrated
Circuits 2000, Copyright Ordinance 2000 and Trademarks Ordinance 2001.
Out of 12 sectors as classified by WTO, Pakistan
has made very limited commitments in six sectors namely business
services, communications, construction, financial services, health and
In the area of market access, Pakistan is fairly
comfortable in this negotiation, because our tariffs are relatively
low, Pakistan hardly giving any subsidy, reliance on customs revenue
has reduced drastically and constitutes only 15 percent of our total
revenue. In order to get greater market access, Pakistan would like to
see tariff reduction by other developing countries, reduction or
elimination of peak tariffs of developed countries in products of
export interest, most of the tariffs are otherwise very low and
reduction of non-tariff barriers in all countries.
Pakistan is however supportive of the objectives of
negotiations on improvement and clarification of WTO rules whereas
some developed countries are reluctant to make concession in this