WTO: Protect Liberally

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Pakistan should not liberalise agriculture till it develops to a level at which it can compete in the open market. A civil society perspective after the recently concluded Cairns Group meeting.

By Tahir Hasnain

Under pressures, Pakistan makes U-turns. Agriculture is backbone of the country where the lives, livelihoods and culture of around 70 percent population depends on agricultural activities. In the recent past, Pakistan position at the World Trade Organization (WTO) negotiations on agriculture was quite defensive. But right now, it has very offensive interests that ignore the ground realities. Pakistan’s recent U-turn in the agriculture negotiations can hit agriculture and especially the small farmers and peasants.

Agriculture is the central sector to economies of many poor member countries of the WTO and currently, these countries are resisting its further liberalization without getting tangible market access in developed countries. At the moment, challenge for poor countries in WTO negotiation on agriculture is to attain larger market access in rich countries and at the same time to protect their domestic agriculture from competition.

As of the Doha Ministerial Summit (named as Doha Development Round) during 2001, the agriculture appeared key to any progress in the ongoing stalled WTO negotiations. The framework on Agreement on Agriculture agreed during 2004 has several flaws related to its three pillars i.e. market access, domestic support and export subsidies. The framework does not seem friendly to the farmers in developing countries. It expands mechanism of massive subsidization that Northern countries give to its agriculture sector under the “Green Box” and the “Blue Box” and demands additional market access to Southern countries. The question of rich country agricultural support and its potential impacts on rural poverty in poor countries has been one of the major concerns throughout the Doha Round negotiations.

Between the Doha Ministerial and now, developed countries used a range of unfair tactics (mini-Ministerial meetings, bilateral pressures, bilateral incentives, formation of G5 and now G4) to divide poor member countries. This forced these countries to form different political groups within the WTO. G20 (contesting Northern agricultural subsidies and other protection measures), G33 (demanding provision of special products-SPs and special safeguard mechanism-SSM in agriculture) and G90 (who effectively opposed attempts by the US and EU to include Singapore issues -- investment, competition policy, transparency in government procurement and trade facilitation – during the Cancun negotiations in 2003) formed after the Doha Summit.

During June 2006, WTO Members met at the ministerial level in Geneva to try to reach an agreement. The negotiations however did not achieved a progress. The negotiations had reached an impasse on the issues of market access for agriculture and non-agricultural products and agricultural domestic support. On July 27th, 2006, Director General Pascal Lamy made a formal recommendation to the WTO General Council to suspend the WTO Doha Round until further notice. After the Davos meeting, the negotiation has recently re-launched as of January 2007.

About Cairns Group
 

The Cairns Group is an interest group of 19 agricultural exporting countries who aims to eliminate trade barriers in the agricultural sector. Cairns Groups members include Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Fiji, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, Philippines, South Africa, Thailand and Uruguay. While members of the Group focused on the expansion of agricultural trade, they also tackled the resumption of the stalled global trade talks.

The Cairns Group's objective is to bring about liberalization of global trade in agricultural produce. In particular, its members aim to abolish export subsidies and trade-distorting "amber box" (domestic support measures for agricultural products) and seek to improve market access for exported agricultural goods. The coalition attempts to present a common front in multilateral trade negotiations at the WTO, tabling joint proposals and occasionally working with like-minded groups such as the G20 group of developing nations.

In the ongoing Doha Round of trade negotiations, they are mainly opposed by WTO members seeking to uphold their high level of agricultural protection on grounds of public policy, such as the EU, Japan, Norway, South Korea, Switzerland and United States of America.

The Group Demands:

1.       Doha round should deliver significant benefit to their farmers

2.       Export Subsidies be phased out over 3 yrs for Developed Countries and 6 years for Developing Countries

3.       On Market Access, the group links tariffs cuts that deliver new trade opportunities for all agricultural products.

4.       The Group demands substantial cuts in current subsidies given by the Developed Countries.

Pakistan has recently joined the Cairns Group as of December 2005 to meet its offensive interests and fight for market access to export agricultural products.

Pakistan’s Position on Agriculture
 

Pakistan has both defensive as well as offensive interests in agriculture. Pakistan is member of G33 who demand provision of SPs and SSM in agriculture to protect agriculture; and the G20 for challenging Northern agricultural subsidies and other protection measures. To achieve its ambitious results, Pakistan joined the Cairns Group who strive for market access to export agricultural products.

On SPs, Pakistan does not want excessive application of SPs by other countries to keep export markets in the South open. Hence, Pakistan does not support the idea of G33’s stance that 20 percent of the agricultural tariff lines be exempted from sharp tariff reductions that are crucial from country’s food security, rural development and livelihood security point of view. Rather Pakistan would like to have very limited number of agricultural products designated as SPs.

On the issue of tariff reduction, Pakistan 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).

A Critique of Pakistan’s Position on Agriculture
 

At the Doha Ministerial Summit in 2001, Pakistan presented the idea of Development Box for seeking high protection for agriculture in developing countries to safe guard food security, livelihood and rural development concerns. Taking the same agenda forward, Pakistan became an active member in G33. However after Doha, pressure mounted on Pakistan both internally and externally. Asian Development Bank-Pakistan enhanced friendship with US that played a major role in Pakistan in changing its position on protection of agriculture.

Some of the communications and policies pursued by Pakistan after Doha, it is evident that Pakistan has changed its position to 180 degree, for instance, policy decision for corporate farming; Pakistan joining the Cairns Group; and its soft position on SPs/SSM. All this was done with the claim to end the stalemate in the Doha Round negotiations while ignoring the interest of the 91 percent of poor farming community at the national level.

Pakistan has recently submitted “Modalities for the Selection and Treatment of Special Products, April 2007” in the WTO. Many G33 members were surprised and disappointed both by the content and the procedure of Pakistan's proposal. On the procedure, the G33 members were not aware that Pakistan intended to make such a proposal and were not told in advance before Pakistan circulated it to the whole WTO membership. The position in the paper is in contradiction with much of the G33 position on SPs. This has sent a very confused message since Pakistan is a member of the G33 and signed on to the G33 Ministerial Communiqué and the Revised G33 SP Paper. On the content, Pakistan introduces new indicators that are not the same as the indicators agreed among the G33. Pakistan introduces a second set of indicators which in many ways nullifies the first set of indicators. The second set of indicators is designed to satisfy the position of some exporting agriculture countries. Similarly, the Pakistan paper introduces a linkage between SPs and sensitive products (the G33 prefers to delink SPs from sensitive products). The fact that Pakistan proposes that all SPs have to have tariff cuts is contrary to the G33 position which proposes at least 50% of tariff lines exempted from tariff cuts. The introduction of tariff capping and expansion of tariff rate quotas is also problematic in relation to the current G33 position. Pakistan also proposes to offer incentives to those developing countries who decide to limit the number of SPs.

It is thus widely argued that Pakistan has been serving the interests of vicious international lobbies and influential countries who would like to divide and cheat poor countries. It is proved by the fact that Pakistan’s recent Proposal on SPs was discussed among selected countries of the Cairn Group alone. Pakistan's statement in the recent G-33 meeting was taken as an effort to divide G33. Venezuela pointed out right away that in the future Pakistan must make sure that the proposal is not interpreted as a G33 proposal, especially because the coalition has a well-defined process of arriving at positions. Indonesia also stressed the importance of appearing united as a group and ensuring that all concerns are processed internally.

If we connect the entire scenario, we don't see a positive role by our government in protecting our agriculture and the farmers and peasants at large.

Pakistan and the Cairns Group: Concerns and Recommendations
 

The civil society (small farmers, peasants and civil society organizations) in Pakistan are surprised on Pakistan’s joining in the Cairns Group and its distancing policies from the G33. From the civil society perspective, Pakistan should protect its majority agricultural products as well as farming communities and should not liberalize agriculture till we develop ourselves to the level that can compete in the open market. Pakistan’s positions over-time in the WTO and the domestic agricultural policies clearly favor few landlord feudal farmers and other trade and commerce influential groups. The majority farmers however are small (including landless peasants) and they need protection so that they could intensify their role in maximizing (both quantitatively and qualitatively) agricultural production not only for their own better life but also to help country’s economy on sustainable basis.  

In the backdrop of this, farmers and the CSOs reject Pakistan’s membership with the Cairns group. They believe that by doing so, Pakistan is representing certain minority interest groups by ignoring majority peasants and small farmers. Pakistan needs mostly the defensive stance in agriculture negotiations but since peasants and small farmers in the country are marginalized and unorganized (having no political or any other influence), Pakistan does not have the priority in defending agriculture. On the other hand, Pakistan is moving more towards offensive stance because of influence of few landlord feudal farmers and other trade and commerce influential groups who has grave interest in exporting agricultural products no matter if the local consumers suffer food insecurity. There are number of arguments that further strengthen this believe. Some of them are listed as under:

·   Country’s agriculture (including area, yield, quality, diversity, research & development, investment, post harvest losses, prices, etc.) is already deteriorating and needs protection.

·   Country’s exports markets are shrinking due to high cost of agricultural production, low yields, inadequate storage facilities, poor trade facilitation, exploitative and faulty agricultural domestic policies, lack of quality standards, lack of Market related R & D, lack of grading packaging and treatment service, inconsistent production trends, lack of supportive policies and infrastructure, shortage of water, etc.

·   Shrinking export markets and massive imports have presently resulted into a trade deficit of 12.5 billion US dollars that also includes the invisible balance.

·   Food import is already on increase, many farmers are leaving their innate profession and hence, there are fewer chances that Pakistan will start growing huge surpluses in near future. For instance, we are now importing pulses and in the last budget government has announced a subsidy on imports of pulses. Farmers shifted their focus due to lack of policy support and low prices. Instead of giving import subsidy, if these farmers were provided with little support (subsidy), the situation would have been vice versa.

·   Because of irrational exports to China this year, citrus prices were very high in Pakistan and citrus was short in the national market. Due to lack of coherent policies and proper checks/balances in the country, few benefit and many others suffer.

·   We lack transparency in policy making, more especially in agriculture. Majority farmers are not consulted in policy decisions despite the fact that fall out of that policies is more direct and sever on vulnerable farming and rural communities.

·   During recent Cairns Group meeting, farmer leaders from member countries of the Cairn Group are meeting on 16^th April, 2007. From Pakistan only few influential farmers will participate. When CSOs requested the Government to include one or two small farmer leaders for this meeting, the request was turned down.

·   Similarly, civil society representatives are not being given the chance to speak and share their concerns during the Cairns Group meeting in Lahore.
 

It is therefore recommended that:
 

·   As a priority, we look into policy gaps in the country and must first put our home in order. The country policies in principle should benefit the majority population and not few ones who are already rich and influential. Small farmers and peasants must be properly involved in all agriculture related policy decisions.

·   Addressing the ground realities, Pakistan should defend its agriculture and should play a leading role in G33 and G20 rather than the Cairns Group and should avoid keeping pseudo ambitions for market excess merely in the interest of few influential farmers and traders.

·   In fact our farmers are not well adapted to new technologies and production structures and therefore, they should not be subjected to compete freely in the open markets at this stage.

·   In view of growing trade deficit and alarming imports, Pakistan should turn its focus to competing in the domestic market. Ongoing export oriented agricultural policies are non-realistic, already proved harmful and will pose more threats if enforced further. Taking example of the citrus export this year, exports without proper policy and checks/balances could pose food security risk through shortage of agricultural products in the local market.

·   Poverty reduction is now widely accepted as a primary objective of the international agenda and the Millennium Development Goals defined by the United Nations in the Millennium Declaration (UN, 2000) committing to halve poverty by 2015 can only be achieved through fair trade practices.
 

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Ref Link: http://jang.com.pk/thenews/apr2007-weekly/nos-22-04-2007/pol1.htm#7

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