The World Trade Organization came into being in 1995.
It is the successor to the General Agreement on Tariffs and Trade (GATT)
established in the wake of the Second World War. After the Dec 2004,
Pakistani Economy would be exposed to new challenges related to
international trade. The WTO's implications would be started and the
whole macro-economic and financial scenario would take a new shape. WTO
is a big challenge facing the governments, traders, entrepreneurs,
manufacturers, agriculturalist, businessmen, educationists, and business
executives. It calls for tariffs reduction in International Trade and
calls for free trade. Which is considered a threat for developing
countries but no doubt it also has certain opportunities, which have to
be identified. There are many apprehensions of local businessmen
regarding the pre and post 2005 era when WTO rules will be implemented
in all 146 signatory countries including Pakistan. And a greater
percentage of our business people are ignorant of this fact. There are
perplexed as to what will happen to their business and industry.
Financial indicators in recent past and before that indicate that the
multilateral trading system works and thus it makes room for every WTO
member to be a winner. This can be said keeping in view the trade theory
and the experience of more than 130 GATT/WTO members for over 50 years.
The opportunities, rights, and benefits that Pakistan
will gain from WTO membership are apparent even before conducting and
concluding accession negotiations. In order for Pakistan to reap the
aforementioned advantages of WTO and benefit from market access
liberalization implemented by WTO members during and after the Uruguay
Round, Pakistan needs to —
I. Reform its
policy, legal, regulatory, and institutional framework, and
Provide market access on goods and services to other WTO members.
Access to the Pakistani market is subject to lengthy
and complicated negotiations between Pakistan and interested trading
partners who are members of the WTO. The outcome of such negotiations is
difficult to predict at this stage. Based on the experience of other
countries, one may however draw the following observations at this point
with regard to the potential outcome of negotiations.
Pakistan does not have to eliminate all customs
duties; rather, Pakistan will have to bind its customs duties at levels
negotiated with its trading partners. The level of binding of certain
goods may be above currently applied rates. Pakistan may have to lower
certain import duties from the current level if the binding level is
below the current rates. Given that Pakistan's market is saturated with
imports, that too from China which produces goods at a very lower price,
and also some smuggled goods, any reductions in import duties are not
likely to lead to any significant increase in the volume of imports and
cause any adverse effect on domestic producers.
The service sector is relatively open. Especially the
telecommunication sector, after the deregulation. That is already open
to for foreign companies so compliance with WTO restrictions won't be
having any impact on telecom sector, which in Pakistan is growing at a
proceeding rate. Banking sector is already open and there are many
foreign players in this field in Pakistan. Certain areas such as
transport, audio-visuals, courier services, and financial services,
Pakistan is not likely to be requested to make significant commitments
connected with other services.
Any market access commitments for both goods and
services that Pakistan may be requested to make are likely to be in line
with those made by other WTO countries; bringing, therefore, Pakistan's
foreign trade regime to a level playing field with other countries.
The GoP, by dedicating its brightest resources and
working together as partner with the private sector, various Chambers of
Commerce and trade unions, will be able, as many other countries have
done, to negotiate market access on goods and services that are
favorable and are in the best interests of Pakistani producers and
The misperception that WTO membership will harm
Pakistan's domestic industry is invalid. Under WTO rules, Pakistan will
continue to have the right to take necessary measures to safeguard its
industry in case of threat of material or serious injury caused by
foreign products and apply, in addition to customs duties and where
appropriate, safeguard measures, anti-dumping duties, and countervailing
Even after acceding to the WTO, Pakistan retains the
right to renegotiate aspects connected with market access with regard to
goods and services. The WTO decision-making process is generally by
consensus. This is even more democratic than majority vote, given that
all countries present in a meeting have to agree. Pakistan, as a Member
of the WTO will be able to participate in multilateral negotiations
round and have an impact on shaping future trade rules in such a way to
safeguard its interests.
Last, WTO membership will not lead to decrease in
fiscal revenue. On the contrary, increase in fiscal revenue is the
Based on the above and provided that the Government
of Pakistan will dedicate its best and brightest human resources and
work as a partner with the private sector, there are no foreseen
significant disadvantages resulting from Pakistan's membership in the
The cost of WTO membership
for Pakistan is primarily the cost of —
Implementing policy, legal, regulatory, and institutional reform to
conform to the WTO agreements which will lead to the establishment of a
transparent and cost-efficient business environment; and
Upgrading the civil service and building institutional capacities to be
more responsive to private sector needs and to operate under the new
rules. Conducting such reform should not be viewed negatively. Pakistan
will be simply bringing its regime in line with rules that are currently
applied in at least 140 countries. Pakistan should "speak the same
trade and investment language" as the majority of the world.
Conformity of Pakistan with the WTO agreements is essential if Pakistan
is to develop its economy. Pakistan will not be able to compete for any
investment with its archaic laws. The need for modernization of the
policy, legal, and institutional base, the elimination of non-tariff
barriers (which are very harmful to domestic producers and consumers),
and ensuring transparency in service-related laws are crucial for the
survival of the economy of Pakistan and should not be perceived as a
concession on the part of Pakistan. A policy, legal, regulatory, and
institutional regime in conformity with the WTO will reduce the cost of
doing business in Pakistan, attract investment, ensure transparency and
consistency in the application of laws, significantly curtail
bureaucratic wrangling, and free up government and private resources to
focus on more important issues for developing the economy of Pakistan.
The likely losers from policy, legal, regulatory, and
institutional reform are mainly those persons who, currently are —
advantage of, and profiting from the lack of adequate rule of law (e.g.
wide discretionary authority, lack of accountability, lack of prompt
arbitral and judicial appeals),
engaging in illicit activities (e.g. intellectual property piracy/
engaging in unfair activities (e.g. monopolistic-collusion) harmful to
consumers (including the general public, government, tourists, and
Pakistani producers as a consumer).
Last but not least, Pakistani producers and service
suppliers are facing major challenges today. This is regardless of WTO
membership. The Pakistani industry needs to improve its competitiveness
and deliver world-class quality products and services at a comparatively
lesser. The Pakistani industry is already exposed to global competition.
WTO membership will not further increase such exposure. On the contrary,
WTO membership will provide advantages to Pakistani producers in
international markets and greatly improve the prospects of improving the
industry's competitiveness and quality of products and services by:
investment that will bring required capital, know-how and technology,
and expand and strengthen distribution channels.
Facilitating the adoption and application of internationally-accepted
standards and safety requirements.
Establishing a conducive environment (rule of law, streamlined
procedures, transparency, predictability, stability) for the development
of competitive manufacturing and service sector, and
Opening markets for both goods and services.