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WTO must not win at the cost of Pakistani Farmers |
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Pakistan’s recent agriculture proposal at the World Trade Organization (WTO) can hit agriculture and more especially the farmers. Pakistan has made her mind to relax its position on Special Products (SPs) in the future negotiations on Agreement on Agriculture (AoA) as compared to current position of the G33 that 20 per cent of the tariff lines be exempted from sharp tariff reductions that are crucial from country’s food security, rural development and livelihood security point of view. The paper is being presented and discussed at various forums informally and right now it is being discussed in the Cairns group (a group of exporters of agriculture products).
One of the key issues in negotiations at the WTO that kept talks recently suspended is the flexibilities in market access. Developing countries, led by the G33, have articulated their position on SPs and the Special Safeguard Mechanism (SSM). Recent developments show that US and EU are about to make a deal on agriculture. If this happens, pressure would be built around developing countries and more specifically on G33 to step back from its position (20 per cent tariff lines).
Pakistan believes that there is no solid proposal on SPs on table except the extreme positions of G33 (20 per cent tariff lines) and the United States (5 products) and Pakistan, being a G-33 member, genuinely feels that there should be some balancing proposal in order to have some progress on this issue. Pakistan also believes that as far as its defensive interests are concerned, since bound rates for agricultural products in Pakistan are rather high (average 101%), it is not likely that the applied rates in Pakistan would be touched after applying the current G-20 formula (maximum cut in tariff of 40 per cent). However, on the other hand, Pakistan do have offensive interests as in future it is expect to have surplus production in several agricultural products such as Milk and Horticultural products (citrus fruit, potato, tomato and onion etc) and Pakistan do not want that because of excessive application of SPs by other countries, Pakistan may face difficulty in finding export markets in the South.
The critics however believe that the paper on SPs by Pakistan is too far from the G33 (20% tariff lines) and actually supports US position of 5 products. Paper takes in the main indicators only and ignores sub-indicators as per the G33 proposal. Paper suggests that Special Products (SPs) be ranked according to a scoring system based on the data and percentage of any product under a specific indicator i.e. food security, rural development or livelihood security. Members may agree on a benchmark score; therefore all products scoring more than the benchmark would be eligible for designation as SPs.
Taking the case of Pakistan, the paper takes 15 agricultural products that are important considering food security, livelihoods and rural development. These crops are cotton, wheat, rice, potato, sugar, edible oil, tomato, onion, citrus fruit (kinoo), apple, tea, beef, mutton, poultry, and milk. The paper ignores other products of regional importance such as maize, gram, groundnut, chilli, banana, other vegetables, hides & skin, etc. Among the prioritized crops, the paper says that only rice has high regional importance from the food security perspective and rice, tomato, onion, citrus, apple and tea have high regional importance from the livelihoods perspective. As regards rural development, the paper categorizes 6 products (cotton, potato, tomato, citrus, apple, milk) as highly important because of their potential for value addition.
While grading products by the three indicators, the paper says that wheat and rice have maximum aggregate score (21) followed by the citrus (16), apple (15) edible oil (14), tomato (14), milk (14), cotton (13), sugar (13), onion (13), tea (12), potato (11), beef & mutton (9), and poultry (8).
Based on this criterion, it appears that Pakistan would only be able designate five crops (wheat, rice, citrus, apple and edible oils) as SPs. All other important crops with strong export potential might be excluded from the list of special products forever and would be subject to sharp tariff reduction. The critics also doubt that reductions would go beyond the current applied tariffs in Pakistan.
Seemingly Pakistan is attempting to bridge gap between the G-33 stance and that of the US, but the critics believe that the proposals are quite away from G33 as well as development needs of the poor countries. As mentioned earlier that expected US/EU deal is likely to put pressure on G33 for a compromise and G33 member countries need more unity at the moment to resist these pressures. Pakistan should rather show solidarity with G33 and tackle the pressures from US using the pressures of G33 and G20. Pakistan should be cautious, as any limiting criteria or exclusion of products as proposed by Thailand and Malaysia could dilute this privilege, while many countries may not be able to designate even a single product based on the criteria proposed by Pakistan.
Pakistan’s stance that the excessive application of SPs could hurt Pakistan in finding export markets also seems irrelevant as SPs are not forever and already we have only 11 export products at the moment of which more than 80% goes to developed country markets. We are rather loosing market in developing countries i.e. of mango and citrus because of high cost of production, inadequate storage facilities and faulty trade facilitations. Similarly the food import is already on increase, many farmers are leaving their innate profession and hence, there are less chances that Pakistan will start growing huge surpluses in near future. Pakistan’s foremost interests therefore must be defensive.
As compared to designating products on the basis of data, concessions on percentage basis is fine with all poor countries as most of these countries, including Pakistan, lack proper data. Concessions on percentage basis also gives us the option to assess the impact of trade flows and in cases where short-term import surges cause serious instability in prices, developing countries would have the flexibility to shift the lines categorized as SPs. The proposal of limiting SPs to a few lines was not in any way endorsed in Hong Kong; rather it was a percentage. Developing countries were granted the privilege of self-designating an appropriate percentage of agricultural products with flexibility to avoid strict reduction commitments based on the criteria of food security, livelihood security and rural development needs.
Before and during the Doha Ministerial Summit, Pakistan was champion of the Development Box and SPs and got support from majority developing countries. We know that something happened during the Doha meeting and Pakistan started stepping back from its proposals made for the Development Box. Pakistan though claim that it would be its third attempt to accelerate the Doha Round including its initiatives earlier for Trade Facilitation and NAMA but the other circles show concerns that Pakistan, in the meantime, has rather been weakening resistance movements of development countries in the WTO and as compared to developing countries, rich member countries are quite happy with Pakistan.
The concerned persons in the NGO sector in Pakistan are planning to convene a workshop in this regard to analyze the paper more technically. They do have plans to come up with an alternative paper as they feel it’s their duty to provide policy makers a people’s perspective alternative view point in order to save peoples’ rights in the ongoing hegemony of unfair economic interests of rich industrialized nations. ___________ *Tahir Hasnain is Director of an Islamabad based civil society initiative EJAD (Economic Justice and Development Organization). He could be reached at tahir@ejad.org.pk
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