A strong presentation was made on the challenges confronting Pakistan's commercial and industrial sectors following the WTO regime coming into force in 2005 and their solutions by the Federation of Pakistan Chambers of Commerce and industry (FPCCI) in Islamabad, before the special committee, constituted by the Senate to suggest ways and means of facing these challenges.
The members of the committee comprised 17 senators and minister for commerce as ex-officio member. The Chairman of the committee was senator Dr Abdul Hafeez Sheikh, Minister of Privatisation.
Consensus on the WTO becomes the law of the land. Therefore legislators and Senators must link with the WTO mission in Geneva for consultation to reply in the affirmative or negative as it would affect the Trade and Industry of the country.
Pakistan has done very little in the area of Regional Trade Agreements while there is a proliferation of RTAs.
Since the multilateral agreements mandated by the Doha Development Agenda are progressing at a slow pace, it gives Pakistan time to accelerate signing regional trade agreements and to activate regional co-operation agreements.
Pakistan must chase the ECO, Saarc, and FTA as well as promote bilateral trade between Bangladsh, Sri Lanka, India and China.
Multilateral agreements have been slowed down probably because the EU is not still comfortable with the present system of WTO in which each member has an equal say, irrespective of its level of economic strength.
Pascal Lammy, the Trade Commissioner of the EU had called the WTO, 'medieval' and lacking in rules for conducting business, which he said resulted in the failure of consensus in Cancun for the Doha Development Agenda.
The Ministry of Commerce must research how to shift exports to other destinations by following the example of the changing position of the EU. The EU, incidentally, would follow a different line, with Pakistan and other developing countries, when it takes into its fold less prosperous countries, expanding to 25 units.
30% of Pakistani's exports are directed to the EU and 25% to the USA, again with swinging duties.
However, this market access is not ensured as the EU and the USA change their level of preferences when they feel necessary, together with Anti Dumping measures.
The situation requires in-depth study to avoid surprises at 11th hour decisions by the major trade partners.
The recent preferential treatment by the EU for Pakistan, as a country combating drugs, could not be long term or sustainable. For India proved a case of discrimination against it, with the EU favouring Pakistan.
Foreign missions must be activated to anticipate Antidumping measures on the import of Pakistani goods so that the time-gap before the imposition of AntiDumping duties could be utilised to seek deferment.
To avert the intended antidumping duties, which render our goods non-competitive for importers in EU and USA, a case would also be made out.
Capacity building programmes related to the WTO, uptil now, focused only on the public sector.
It was through grants and assistance, including foreign trainings abroad, sponsored by agencies like DIPID, UNIDO, Colombo Plan, APO through the Ministry of Production and Industry and Economic Affairs Division.
The government of Pakistan had been focusing on inward investment flows while there are chances for the export of services.
Services make up 50% of Pakistan's GDP, with a similar or near share in the global trading system.
Trade related intellectual property rights are important in their implementation in developed countries.
However, in Pakistan, the TRIPs laws are split amongst different ministries like the MOC, MOI, Medu and Ministry of Science and Technology.
In 2000, a single umbrella for handling TRIPs was announced in the trade policy. It was known as the Pakistan, intellectual property rights organisation. It was again announced in the trade policy 2003-2004.
The private sector still has not seen the draft of the PIPRO. It is time that one umbrella be created from officers from all the ministries, with academia, researchers and businessmen, who, together, can promote trade and business interests, while protecting consumers.
The Trade Related Investment Measures affect the automobile industry, already protected by tariffs and non tariff barriers by the restriction on the import of second hand automobiles.
It is time to liberalise the import of raw materials at the lowest rate of duty, against higher slabs for import of finished goods.
Steel, plastic, paper and chemicals are raw materials which need to be imported at the minimum possible tariff.
The liberalisation will result in the survival of sectors which can grow and will restrict the growth of sectors which may not be sustainable in the globalise economy.
WTO is now a sister concern of the IMF and the World Bank, who promise capacity building for developing countries following the rules of International Law.
The senators were asked to influence government policy so that commitments made by Pakistan in the WTO be predominant and that the conditionalities of the IMF and World Bank against its loans should not lead to departure from the commitments to the WTO.
The government should invest in industrial areas for improving the environment. The senators were also informed of a programme proposed by the Asian Development Bank that offered a 1.40 million US dollars package for improving environmental conditions by the construction of a combined effluent. treatment plant in its main industrial areas.
The 2003-2004 Trade Policy has some good points but its spending nature and offers are bureaucratic and will generate questions in future as to its productive utilisation more funds may be spent on non development projects, likely to be of individual advantage rather than of general advantage.
Senators should report on the money spent on programmes related to WTO issues.
The country has internal weaknesses such as the high cost of doing business, the lack of an infrastructure, high energy charges, inadequacy of water supply for industrial areas and multiple laws for the same purpose such as the labour levy related laws, which add to the cost of doing business, adversely affecting competitiveness.
The GOP must be influence to correct areas to increase the competitiveness of our products, at home against similar imports, while abroad against similar exports.
The local industry has long demanded that the import of machinery and capital goods be zero text at the time of import so that the cost of the project and servicing of the mark-ups are manageable, for better feasibility of the project, as a sustainable and profitable project. This issue needs to be addressed.
Textiles makeup 67% of the exports. Internal weaknesses as well as external reasons may affect this figure.
Increasing imposition of non tariff barriers and technical barriers to trade threaten them.
The latest addition to the cost of doing business is from the container security initiative measures taken by US policy, asking exporting countries to screen the containers and prove the goods bonafides as declared, with documented proofs within 24 hours of sending of the ship to the USA, direct or in transit.
The GOP must address the issue by increasing the facilities for container security initiatives, by collecting data of all the TBTs and NTBs to be applied on our goods so advance preparation is made to counter the challenges.
The national tariff commission requires complete restructuring so that it becomes capable of taking measures for the imposition of AntiDumping, countervailing duties, safeguards measures to protect the domestic industry.
Legal defence before a dispute settlement body is another area of concern. We have almost no professionals who can defend cases of antidumping for the country in a dispute settlement body.
The initial grant of US Dollars 100,000 from the EDF was transferred to avail the subsidise legal services.
It same must be investigated for its cost/benefit ratio. But we must also train our own professionals together with using the services to defend cases of antidumping duties.
Resources should be strengthened and the private sector must be made equally involved in the administration of the EDF and EMDE with an equal number of directors.
The increase in the number of directors from the private sector would ensure proper spending as the private sector would through its experience of trade with other countries provide proper guidance.
To meet the challenge of the WTO, an increase in the resource pool was emphasised upon. A considerable amount of money exists, held by the Ministry of Finance as non transferred portion of money, collected on account of the EDS for EDF funding. A possible solution to increase the funding base for combating the WTO challenge would be to ask the Ministry of Finance to transfer the funds so that they could be used for R and D as well as other issues.
To meet the challenges of WTO, as well as the ISO certification, subsidy and accreditation of local institutions with ISO, 17025 class certifications, the ministry of Science & Technology has initiated an industrial linkage programme for Rs 1.3 billion.
It must be periodically reviewed so that it could also be used for WTO, when challenged by non tariff barriers and tariff barriers to trade.
In order to face the challenges of TBTs and NTBs, the Government of Pakistan should secure information on the standards that are demanded by importing countries.
They should foresee or ensure knowledge of changing trends in TBTs.
The GOP, through the commercial section of diplomatic missions, should collect data about the trends in upgrading standards in those importing countries which we wish to export.
The GOP be urged to in amend policies for the manufacturing of engineering goods to offset the effects of a termination of the TRIMs grace period, by end 2093.
The deletion programmes or the use of local contents would as a result not be made as notified domestic policy.
SPS and TBT-related issues require co-ordination with importing countries on acceptance of our local test results.
The GOP should arrange visiting of officials of importing countries to assess and certify our capability and accredit our institutions.
One umbrella coverage for intellectual property rights issues must be managed by an examination of the history of the announcement of PIPRO in 2000, repeated in the trade policy of 2003-2004.
To balance the challenges one must make use of the opportunities and take advantage of the GATS in Telecommunication, financial sectors, and through the import and export of services as investment would help improve the economy.
The present focus on attracting an inflow of investment has to be diversified to include the export of services under the GATS.
This is being negotiated on the principle of request and offer. The solutions lies in striking agreements which offer opportunities for the export of local skill and knowledge in the service sectors.
The Ministry of Commerce must help, in multilateral agreements, in the implementation of those rules seeking concessions of grace period on the basis of the actual level of progress.
The rules must be based not on the claim of being a developing country when it is the least developed country in actual statistics of the economy.
Proper capitalisation of S and D treatment within WTO is necessary. It requires exposing the necessary modalities. Pakistan should take more interest with others who raise the same issue.
Negotiating committees in WTO require more skill. Closer assistance, though Regional Co-operations would help.
The GOP should undertake research into the impact of the WTO from the accession of China to the WTO, from the enlargement of the EU to 25, from bilateral agreements in which countries of our interest are getting involved.
A single body be formed for matters related to the WTO. The human capital for the economic pool be related to planning and development, from all the ministries concerned with academia, researchers, private sector, ministry of science and technology as major shareholders.
They should consider how to combat NTBs and TBTs. To co-ordinate and come out with suggestions.
A Foreign Trade Institute be formed as well as an Intellectual Property Rights institute and an Industrial Growth institute and other institutes in other relevant areas by the GOP.
These bodies be given statutory powers to force their recommendations on policy adjustments each time required.
India has already taken the initiative and a foreign trade institute provides policy suggestions.
The status of observers or active participants be given to the heads of such institutes in the ECC and ECNEC whom its decisions affect from the Trade and Industry of the country.
(The writer is Vice-President, FPCCI & incharge WTO Resource Centre.)
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