Agriculture continues to be the single largest sector, a dominant driving force for growth and the main source of livelihood for 66 percent of the country's population. It accounts for 20.9 percent of the GDP and employs 43.4 percent of the total work force. Agriculture is at the center of the national economic policies and has been designated by the government as the engine of national economic growth and poverty reduction.
It contributes to growth as a supplier of raw materials to industry as well as a market for industrial products and also contributes substantially to Pakistan's exports earnings. Thus any improvements in agriculture will not only help country's economic growth to rise at a faster rate but will also benefit a large segment of the country's population. This sector includes crops, livestock, forestry and fisheries.
Pakistan has diversified ecological and climatic zones and thus a wide variety of crops are grown in different regions of the country. The major crops, which include cotton, rice, wheat and sugarcane, account for about 32 percent of agricultural value added. However, minor crops, constituting 12.3 percent of national agricultural value added.
Keeping in view the importance of agriculture in the country, Govt. of Pakistan signed three agreements with WTO in 1994, related to food, agriculture and livestock commodities through the Ministry of Commerce. These agreements are Agreement on Agriculture, Agreement on Sanitary and Phytosanitary Measures, Agreement on Technical Barriers to Trade and Agreement on Trade Related Aspects of Intellectual Property Rights.
Trade potential in Pakistan is severely limited by low level of production capacity. That is, even when all trade barriers are addressed and markets made available, several factors will continue to limit international trade, particularly trade in agriculture and food products. First, there is the issue of poor quality of products caused by low level of technology and lack of quality control.
Clearly, the problem of quality of agricultural products begins at the farm level, where much intervention is required ranging from selection of seed variety to farming methods/management. Furthermore, traders are not used to trading on standards as most of them sell their products in the domestic market. Second, production capacity is restricted by high production costs.
These include high energy cost, poor (especially rural) infrastructure leading to high transportation and transaction (ie port, storage and marketing) costs and inefficient bureaucracy (eg delays in obtaining licenses and utilities), and high cost of borrowings. Third, low level of marketability of agro-products arise from lack of advanced preservation and storage equipment's/technology, low level of processing and packaging skills.
Finally, farmers are not fully aware of the advancements taking place in the world. They are illiterate. They don't have knowledge about the rules and regulations of WTO. Keeping in view the lack of advanced technology, lack of infrastructure, and non-availability of pre-requisites, the world scenario has created a competitive and compelling environment for Pakistan's agriculture sector, which has to be dealt with utmost urgency.
It is difficult to make a precise estimate of the impact the trade liberalisation achieved in WTO has had on international trade. It is evident, however, that the lowering of tariff and non-tariff barriers, not only in developed but also in developing and transition countries, has had, and continues to have, an important effect on access to international markets.
NEGATIVE IMPACTS: An instrument being used by the developed countries, which is causing hindrance in exports by Pakistan, is the application of sanitary and phytosanitary (SPS) measures.
Another important agreement within the WTO set-up is Trade Related Intellectual Property Rights (TRIPS). As Pakistan is short of necessary expertise, it is facing an uphill task of framing the requisite legislation to bring its national laws in conformity with the WTO.
The exports of the fishery sector are being restricted on the pretext of health and hygiene. Raw cotton, one of the main exports of Pakistan, is being claimed of excessive use of pesticide. Furthermore the pesticide application on exportable fruits and vegetables is a serious concern and is threatening to upset the whole export circuits of citrus, mangoes, dates, banana and potato in Pakistan.
The top most layer creating the greatest hurdle in Pakistan's agro-trade is the emergence of genetic modification and hormone treatment of agricultural products. The genetically manipulated (GM) products are creating problems in our agricultural sector. It is impossible for Pakistan's poor and small farmers, who solely depend on indigenous seeds to compete with genetically developed seeds over which the multinationals have acquired complete control.
POSITIVE IMPACTS: Pakistan's agricultural exports have a very narrow base, mostly comprising of rice, cotton and fruits. Raw cotton is mainly directed to South East Asia whereas rice and fruits are mainly exported to the Middle East. There is a potential of rice exports in Korea, Japan and Indonesia. If Pakistan grabs this market it would greatly enhance its rice exports. Furthermore, this area promises a huge potential market of fruits and vegetables for Pakistan.
Pakistan has comparative advantage in many primary commodities and there are some upward trends in exports of primary commodities. But in order to fully utilise our comparative advantage, we need to focus on and solve the problems in supply side (domestic requirements). It is imperative for reaping the probable fruits from the WTO regime.
It is not in the interest of developed countries not to fully allow developing countries to benefit from their comparative advantage. That's why the implementation of AoA has not been fully done. And that's why Cancun conference has failed. Full implementation and improved and stricter rules on agriculture are beneficial to us.
Pertaining to TRIPs, different varieties of plants and animal species and traditional pharmaceutical and herbal knowledge need to be registered to take full advantage of them. All valuable export brands like Basmati rice, varieties of mangoes, oranges, etc need to be protected under different provisions of TRIPs agreement.
Furthermore we need to exploit our comparative advantage in the production of meat, dairy products, fruits, vegetables, etc. As far as demand side is concerned much more is needed to be done in order to secure cuts in the tariffs of developed countries in order to capture the tariff peaks and escalations for increased market access.
Subsidies given by the developed countries need to be drastically reduced which they have been insisting vehemently so far. Even the green box subsidies of developed countries are distorting world trade in agriculture by increasing production and hence depressing world prices are given by the developed countries which is great disadvantage for countries like us. Besides export subsides given by them also need elimination. Misuse of SPS and TBT measures need to be checked.
It is very clear from the above discussion that AoA has promoted an industrial model of agriculture, which is responsible for increasing food security in developing countries. In accordance with AoA, no domestic support in buying farmer's harvest can be provided by the government. The trade liberalisation thus will have a disastrous effect on small farmers, who need support both in price and purchase of their produce.
They neither have the financial capacity nor government support to use new technology in cultivation. Whereas the developed countries with their advanced methods of cultivation and crop yield can almost totally capture crop export.
Foreign products and producers will get a greater market share, and the government will be unauthorised to act as a second buyer for our poor farmers.
Agricultural community will have no space to survive, as the indigenous farmers will not be able to compete with the multinational corporations (MNCs). Trade liberalisation will thus open the gateway for food insecurity, poverty and deprivation.
HOW TO GO ABOUT SURVIVING IN WTO REGIME: Support of agriculture sector through use of permissible subsidies, improve farm to market roads, ensure adequate water supply, educate farmers on output enhance techniques, move from subsistence to commercial farming.
Encourage agriculture research to improve seed quality, patent product. Restructure agriculture to demand responsive high value agriculture while keeping in view food security, equity and justice in distribution of the benefits.
IMPROVE INPUTS: provide better seeds, fertilisers, machinery, desalination plants, tube wells. Diversify out put to various crops so that economy is not subjected to fluctuations in prices of new crops like cotton and wheat.
Improve standards to avoid action under SPS, TBT etc by improving and upgrading quality of products. Upgrade systems for storage, packing grading, procurement and delivery system technologies so as to comply with international standards.
Ensure awareness of WTO policy and implications, especially in rural areas through intensive awareness schemes using radio and television as well as direct outreach programmes.
Last but not the least, we will have to change our basic economic philosophy of revenue based economic strategy to survive in the WTO regime. We need to move on to the universally accepted long-term stable policy based on productivity enhancement strategy. The availability of raw materials should be ensured at zero rates to promote industrial activity in the country. Also we need to effectively take care of ever increasing utility charges and surcharges, which are obviously pushing our cost of production at higher side and thus making our national products uncompetitive in the international markets.