| WTO, Pakistan and the Cairns Group | |
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By Tahir
Hasnain Paper prepared for “Peasant’s Resistance
Convention” A CSOs Parallel Event to Cairns Group Ministerial
Meeting at Lahore from 16-18 April, 2007 World Trade Organization (WTO), an institution comprising 150 member governments, was established with objectives to regularize international trade to help increase employment, reduce poverty and enhance living standards.
The
culmination of the past fifty years of trade liberalization has seen the
formation of an international regulatory system more powerful than any
other. The WTO is charged with administering the World Trade Agreement
(WTA) including adjudicating over trade disputes. Although the WTO has
many developing country members and a consensus-based decision-making
process yet it is widely argued to be undemocratic, nontransparent and
serving the interests of its richer members. And despite references to
sustainable development in the preamble of the WTO, it has failed to take
into account economic as well as socio-cultural needs of its poor
members. Rich countries
are not ready to offer a level playing field thus not fair to free trade.
They wish to have no tariff barrier in other countries so that they can
trade efficiently but at the same time they protect their industry and
agriculture through giving huge subsidies and putting numerous tariff and
non-tariff barriers to block other country products. In rich countries,
the corporate sector guides their positions in the WTO who want developing
countries just a consumer market. The poor member countries has experienced so far that WTO limits role of the public sector to take necessary measures to protect people and ensure better services. Agriculture is the central sector to economies of many poor member countries. Therefore, in the on going Doha Round negotiations, these countries are resisting further liberalization without getting tangible market access in developed countries.
Contents
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.
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.
The current scenario is that:
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| About Cairns Group |
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The Cairns Group is an interest group of 19 agricultural exporting countries who aims to eliminate trade barriers in the agricultural sector. While members of the Group focused on the expansion of agricultural trade, they also tackled the resumption of the stalled global trade talks.
The Group takes its name from the Australian city of Cairns, where its inaugural meeting took place in 1986. The Australian Government led the formation of the group, though some of the South East Asian countries had been working together on agricultural trade through ASEAN. The move to form the group was largely a response to the spiraling trade subsidies of the European Union's Common Agricultural Policy and the USA's Export Enhancement Program. Particularly, the objection came to the double standards between the GATT forcing countries to liberalize their economies, whilst the USA granted a waiver for agricultural protection in the 1950's.
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. |
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| Pakistan’s Position on Agriculture |
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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 who challenge Northern agricultural subsidies and other protection measures. To achieve its ambitious results, Pakistan joined the Cairns Group who strives for market access to export agricultural products.
Pakistan’s
strategy in the three areas (pillars) of the agriculture negotiations is
as under - Export
Competition: complete
elimination of the export subsidies by the year 2013 & achieving
parallelism through elimination of programmes for export credit
guarantees, insurance programmes beyond 180 days, while ensuring front
loading of commitment by achieving 50 % elimination in the 1st
year of the implementation period. - Domestic
support: overall
substantial reduction of total AMS, permitted deminimus & blue box
payments; capping of product specific support; further reduction in
deminimus for developed countries; blue box criteria to be less trade
distorting; green box criteria to be reviewed and
clarified; - Market Access: substantial overall reduction in tariff; deeper cuts in higher tariffs; tariff escalation to be addressed; concept of SP and Special Safeguard Mechanism for developing countries; tariffs capping at 100% for the developed countries & 150% for the developing countries.
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. |
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| A Critique of Pakistan’s Position on Agriculture |
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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
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| Pakistan and the Cairns Group: Concerns and Recommendations |
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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 16th 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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| Acknowledgements |
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