Unfriendly attitude of WTO

An informative ad in the print media (21st July 2004) put in by the EPB states that Pakistan has now been able to increase its exports to the world's most sophisticated markets ranging from 11.64% (Belgium) to 35.61% (Italy). Afghanistan has shown an increase of 78.67% now, after the lowest ever exports a year earlier on account of large-scale hostilities there.
With the above prelude, a brief description of the WTO's unfriendly gesture towards developing countries, including Pakistan may be pretty appropriate, and are given below:
The World Trade Organization (WTO) was formed on the first of January 1995, after prolonged discussions and negotiations with various World States under the auspices of GATT (General Agreement on Trade Tariffs). The objective was to decrease the tariff and non-tariff constraints with a view to making global trade as free as possible.
When the international trade began to be free to an extent, the Third World countries demanded a relaxation in the textile and agriculture export regimes. In reply, the developed countries succeeded in getting the developing countries' reasonable demand turned down on the plea that it was out of the WTO's jurisdiction under interminable paper rights and investments. Yet the developed countries only cannot be held responsible for this as developing countries themselves could not represent their case forcefully. The developing countries remained unsuccessful in securing any notable share in the global trade and production in 1995 when 40 percent share of this trade remained in the hands of developed countries.
The developing countries might have endeavoured to make the agriculture and textile industry free so that their exports could be increased. But the reason why this effort could not be fruitful needs to be investigated when all the countries joining the GATT did so with their own free will and consent.
On making an in-depth review of the matter it is revealed that to save their economy from the doldrums the developed countries themselves made textile and agriculture free from quotas and tariffs. But again, when the situation improved, the developing countries had to be confronted with high tariff rates constraints.
Now to make the situation better is both difficult and time-consuming. However, in 1994, two ways were adopted to make agriculture free under the GATT. Firstly, access to market and secondly to decabase countries' assistance, particularly export subsidy under the agreement on agriculture (AOR).
MARKET ACCESS: To achieve this objective, first of all tariff controls were made chargeful tariffs which are termed as "tariffication" and which is one of WTO's significant principles. The developed countries imposed still higher rates in place of quotas, which on the complaint of the developing countries were reduced. Even then the final tariff was pretty high as it was imposed outside the line of the quota, thus the developed countries' imports remained immune sufficiently. Besides this, the developed countries' quota holders got the permission to reduce it by only 36 percent despite enjoying the benefit of higher tariff. And for the developing countries, the risk limit was fixed at 24% less for 2004. Resultantly, developed countries effective reduction remained less on account of the high limit, despite a redemption of 36 percent. Thus the agricultural world continued to get the desired safeguard. It is, therefore, necessary to find out how much is the rate of safeguards compared with the developing countries. After assessing this, the developing countries should make headway in this regard. Some negotiations are under progress. Its benefit should be obtained by the developing countries endeavouring to get them, so that the action may be accelerated when the developed countries have already pocketed most of the safeguards. That is, they can use this security to safeguard steps in case the value of their imports increases to an extent that the cost of import rises endlessly. In this regard the upper limit has also been fixed which is called restrictions on tariff meant for developed countries. Indebted to the real tariffs of that time, this facility was granted to developing countries. Besides the tariff bondage was much more than the prescribed rates. At fifty percent less from 150% to 100%, but Pakistan had already brought down the rate of import duty after reducing it in 1995, under the IMF's reform programme upto 25% in 2002-03 and which is also applicable to agricultural quotas.
In the circumstances, it was so easy at present to reach the developing countries markets but Pakistan having reduced the import duty hastily has made its agricultural market easily accessible. But for doing so, we ourselves are responsible. But even then some circles shall say that Pakistan has reduced the duty under external pressure and for this they hold all the external agencies equally responsible when factually this pressure was exerted from the IMF and not from the WTO's side. This pressure is so great that the facility given in the shape of restrictions is not used or could not be used by the US.
As far as the question of developed countries is concerned their passive decision-making is much more shocking. Unless the developing countries adopt a combined approach Pakistan should not take active part in making a positive decision.
EXPORT SUBSIDIES: In the case of allowing these subsidies, the condition is that the same developed countries should reduce them by 36% uptil 2001 and developing countries should reduce them by 33-34 % till 2005 but countries like Pakistan who bid not to use this subsidy, did not make any commitment to lessen it.
Therefore they were debarred from using it. This is entirely unlawful when the developed countries, despite the 36% reduction, continue to use it. To be fair, countries having lost their one thousand dollars per capita income should be permitted to give subsidy. As they do in respect of export of industrial goods. When their per capita is of one thousand dollar. There is no bar to applying the export subsidy. In the agricultural sector the application of export subsidy is allowed only on marketing and transportation costs.
As subsidies disturb the situation in respect of commerce, therefore the WTO emphasises the reduction of the import price as its target is fair trade, in the agricultural sector as well. Subsidies are divided in the trade boxes green, blue and amber. The subsidies falling in the amber box are totally disallowed, that is, emphasis is strictly laid on reducing then since they disturb the trade. Subsidies falling in the green box are allowed if they increase production provide assistance to farmers, provide help in the event of natural commodities manufacturing. But to increase price or production is not allowed. Subsidies falling in the blue box are only allowed for limiting the production. Those subsidies would in no way provide help to developing countries, to obtain food security but have become a great point of reaction. At this stage, a question is raised, what is the objective? Free trade of food self sufficiency.
As such two parts are seen for developing countries. As has been stated earlier, developing countries cannot reach the developed markets easily because not only are they closely guarded but the developed countries have also guarded this benefit of theirs by many objections pertaining to safeguarding steps. As regards the question of developing countries' markets, including that of Pakistan, they have provided access by reducing their import duty hastily. But it has not so far been achieved, nor seems to be so in the near future. This freedom for developing countries looked pretty expensive because of their own short comings and their short sightedness. They have seated themselves on the FMBR. Trade after a long leap but are unable to fix its direction. Thus their condition has become that of the weakest elements. The internal supporting subsidies are also somewhat in the same way. The developed countries were required to reduce it to the level of aggregate measurement of support (AMS) from 1986-88 to 2001 by 20% and the developing countries had to reduce by 131/2%, of 2005 but in real terms the volume of the developed countries was estimated at 62 billion dollars, which is enormous. The subsidies given by European Union, USA, KN, Japan are collectively 77% of the global subsidies, both after falling as well as prior to falling: the safeguard of these three giant powers comparatively remained the same as was before its falling.
The EU's subsidies share was 47%, USA's was 12% and Japan 18%, the developing countries have been forcefully called upon not to provide assistance to prices to increase production. They are only allowed to provide a subsidy for investment or a subsidy on inputs for farmer and differentiation of crops excluding those producing drugs.
Therefore the support of the developed countries is 360 billion dollars which is more than the basic level of 1986-88 Pakistan's AMS is negative ie 21st million dollars. Pakistan can increase its support upto that much quantity and after that the country's raw material production can carry out 2.5% of GDP but the green box support of Pakistan has also dwindled. In 1994-98 it was 681 million dollars which decreased further to 465 in 2001. On the contrary, the developed countries green box support from 41 billion dollars in 1986-87, increased to 54 billion dollars in 2002. The 85% share of the green box subsidy was contribute by the developed countries in 1995 which increased to 88 percent in 2002. This means that the developing countries green box subsidy have fallen by this production.
Therefore, the greatest hit at present is in the subsidies circle which the European Union is not prepared to decrease due to food self-sufficiently, on account of providing a safeguard to the village community and for the development of livestock which is demanded by the European buyer.
As the developing countries do not have the strength to compete in the free market nor due to the WTO's bidding can they travel towards self sufficiency. Therefore they presented a proposal by the name of the development box in 2000. This contained an increase in the food production, small farmer's security, access to external markets and a revision of food producing countries problems. The viewpoint of the developed countries was that, under the WTO, these two laws could not be formulated, access to free market and special concessions and security for the development of the developing countries' agriculture. But the reformation circle of the developed countries are in favour of the development box, so that developing countries with their less concessions may be able to compete in the free market.
It needs a like minded group which absented itself in 2000. Kenya and the Dominican Republic are also in the group. It is strange that on the one side, Pakistan presents the development box-like proposals for the WTO's consideration and on the other hand continues decreasing its import duty at the behest of the IMF and also increases the price of gas and fertilisers, whose increased prices may be borne by agriculture, alongwith the presentation to undertake corporation cultivation, which is in the interests of capitalists and big farmers.
First of all, Pakistan should decide the direction of its American policy. The WTO has decided that under the special discriminatory treatment it shall consider the proposals of 141 developing countries and enter into negotiation with them so that their problems may also be brought for negotiations, so that their self-sufficiency of food, development, particularly village development, may be possible. But it may only prove fruitful when the thinking of the developing countries itself is crystal clean and deep. Otherwise this opportunity may be lost.