WTO: QUOTAS & SUBSIDIES TO GO
The agreement has been n negotiated in a way that our farmers would remain protected
By AMANULLAH BASHAR
Aug 09 - 15, 2004
The elimination of subsidies on the exports of agriculture products, agreed by the rich nations is certainly a major breakthrough achieved in the recent WTO conference held in Geneva recently.
It is really a great success in the sense that it will be providing a level playing field both to the rich and the poor nations of the world to compete in the world market. This can be described as an unusual achievement provided the framework signed in the conference was implemented in letter and spirit. It is also unusual because generally speaking the rich seldom care for the poor as the saying goes "the pleasures of the rich are bought with the tears of the poor".
In the face of huge export subsidies given by the rich nations to their agriculture sector, the developing countries like Pakistan were unable to export various agriculture products like sugar, rice, milk or cotton despite having a strong agriculture base in the country.
Consequently, the sugar industry in Pakistan in the absence of any subsidy given by the government was unable to export the surplus because of the price difference.
The framework agreed in the Geneva Conference may help making things bright for the developing countries with the implementation of the WTO rules from January 2005.
According to Humayon Akhtar, Federal Minister for Commerce, the removal of subsidies by the developed economies, Pakistan may gain substantially by the price difference in the post WTO regime. Pakistan has a plenty of milk, it may add substantial amount of $2-3 billion to our exports. Similarly, rice may earn an additional $200, sugar $100 and so on by other non-traditional agriculture items.
Actually, the WTO members who met in Geneva recently, have approved the historic framework agreement for the Doha Round of negotiations. The Doha Round was launched in November 2001 and was to be completed by December 2004. However, negotiations were not making any real progress which had also created an impression that the implementation of WTO rules may stuck up for want to a consensus among the member countries over a number of issues. In this connection a ministerial conference was held in October 2003 in Cancun to take stock of the situation and to move the process forward, but it failed to make much progress. It was feared that if there is no progress up to the end of July 2004, talks might not make any progress over the next few years because of the forthcoming US elections and other international developments in the pipeline. However, the Geneva conference has kindled the hopes about the future of WTO.
In the framework agreement, rich countries agreed to eliminate export subsidies on farm products by a date certain to be negotiated later on. The European Union has, however, assured to announce a date for elimination of subsidies in near future.
Since Pakistan does not give any export subsidy nor we can afford to, it makes very difficult for Pakistan farmers to compete against subsidized agriculture products. It has also been decided that other trade distorting subsides such as domestic support that are lavishly offered by the developed countries to their farmers, will be substantially cut and a down payment of 20 percent would be made when the agreement is implemented. For cotton, there would be comparatively fast track approach.
The agreement has been negotiated in a way that our farmers would remain protected for the following reasons:
—Any tariff cuts will apply from the bound rates. Since our bound rates are 100 percent to 150 percent, any reduction from those rates would mean that our applied rates as at present would remain unaffected. In fact, if need arises, Pakistan can enhance them as well will continue to have enough cushion between our applied rates and WTO bound rates.
—Special and Differential Treatment has been agreed for developing countries. Under the provisions of this clause, developing countries can keep a certain number of Special Products. Such products can remain protected from any substantial cuts.
—It has also been agreed that in case developing countries ever need to protect their farmers against any dumped farm produce, they can apply special Safeguard Measures to restrict such imports.
It has also been agreed in the framework agreement that non-agricultural market access or industrial goods will also be extended to the developing nations including Pakistan. The principles agreed so far are use of a formula approach for cutting tariffs. There are provisions for special and differential treatment so that developing countries can protect their sensitive industries against any drastic cuts. Another agreement reached in the framework is that of the four Singapore issues, negotiations for an agreement may only commence on trade facilitation. Pakistan and many other developing countries were insisting on dropping other issues for the time being as we could not cope with so many new rules. This viewpoint has now been accepted and it has been agreed that there would be negotiations on trade facilitation only. All said and done, January 1, 2005 will bring a quota free regime which matters especially for our textile exports. Fortunately, our textile sector is well equipped to meet the challenges; the industry has invested over $3 billion in Expansion, Balancing, Modernization, and Replacement. However, there are certain issues related to environment and quality standards, which are yet to be addressed by Pakistan textiles, leather and other export segments.