WTO and the challenges facing agriculture

Irfan Shahzad

It was fair on Federal Commerce Minister Abdul Razzaq Dawood's part to accept the government failure on different accounts, and specifically on the Pakistani efforts to prepare for the post-WTO scenario.

Dawood has spent most of his three- year tenure as the federal commerce minister in trying to boost the country's exports, minimize the dependence on imports and to tell the Pakistani business community about the challenges they face under the World Trade Organization (WTO) regime. Being a businessman, he has been conscious that in the newly emerging scenario of the WTO, our economy would face increased competitiveness.

The WTO, its possible impact on the Pakistan's economy, and the steps to safeguard our interests are basic questions in need of immediate attention. Being a founder member of the WTO, in operation since January 1, 1995, we had 10 years to streamline our domestic economy in accordance with the rules and principles of various agreements, the organization consists of. Did we move in the right direction at the desired pace? The answer is a big 'no'.

While all sectors of the economy come under the WTO, the most relevant is its impact on the Pakistan's agriculture and those directly or indirectly involved in it. Agriculture, being the backbone of our economy, and a sector facing the heat of the WTO must come before all other sectors for the stakeholders.

In a recent national workshop on the WTO, organized by the Institute of Policy Studies, an Islamabad-based think-tank, Akhter Mehmood, a former federal secretary and an expert on the subject, made an interesting, yet a realistic statement. He said that the WTO was not a set of perfect agreements, the most unfortunate being the 'Agreement on Agriculture'.

He also listed the agreement on the 'Trade Related Aspects of Intellectual Property Rights (Trips) in the same category. Both these agreements are directly relevant to the agriculture, a sector almost half of our population, more so in the case of rural areas.

The WTO regime on agriculture comprises the Agreement on Agriculture (AoA), the Sanitary and Phyto-Sanitary (SPS) Measures, the Technical Barriers to Trade (TBT) and Trips, which are all inter-linked to each other.

Preparedness apart, there is hardly any awareness on the issue. Dr Wajid Pirzada, a senior scientist in the Pakistan Agriculture Research Council (Parc) and an expert on the WTO, lamented that the first seminar on the AoA was held in Pakistan in 1999 - four years after joining the organization. This shows the lack of awareness and interest in this regard.

The WTO cell of the ministry of commerce now has a working group on agriculture, along with five other working groups on different agreements on the WTO. It is a laudable step. But we need to do much more. Creating awareness is the foremost requirement. There is an urgent need for reaching out to the masses, the real stakeholders who are going to face realities at the grassroots level. While larger sectors like textile and others have already started to modernize themselves for the years to come, educating the farmer community is the need of the hour.

Then there are certain government policies that need attention. The ever-rising prices of inputs and utilities have highly increased the cost of production for the farming community. Besides, the corporate agricultural farming has been allowed, in haste according to a number of concerned experts. As the borders will be open for foreign agricultural products, when the AoA is implemented just after two years, it will be difficult for our farmers to survive, what to say of competition, and Pakistan may emerge as an ultimate looser. The agreement is binding by January 2005 and we have commitments in three areas, the market access, the domestic support and the export subsidies.

In the Doha Declaration adopted by 142 countries on November 15, 2001 the provision under Article 20 A has been recognized. Though it was agreed to phase out the subsidies being given by the developed countries, there was no commitment of any steep cut in these subsidies. The new round of negotiations has started after the Doha Ministerial Meeting.

It is yet another issue in need of thorough debate that why should we abolish the domestic support for our agriculture when the developed countries like the US, the EU and Japan are not compromising on it. The US in fact has increased its agricultural subsidies recently. On the other hand we have promised the Asian Development Bank to abolish the subsidies for a loan of mere $350 million. But more important is the question that what should we do to prepare the domestic agriculture industry to enhance its competitiveness.

We are already on the loosing end in the global agri trade. Our exports of agriculture products, food items in particular, have not been up to the mark. Global trade in agriculture grew by 51 per cent in the period 1986-98, but Pakistan's exports increased by only 1 per cent. We have a meagre 0.38 to 0.6 per cent share in the global agri-trade. Exports of India and Sri Lanka have increased by 167 per cent and 68 per cent, respectively in the same period.

The foremost issue is the problem of efficiency. We are lagging around 30-100 per cent behind, in this regard. The infrastructure and the human resource development situations are poor and creating hurdles in the way to get ready for competition. We must use 10 per cent of the agricultural income, that comes to about 2.5 per cent of the GDP (agriculture contributes 24 per cent in the GDP) to get rid of these problems.

On its part, the government of Pakistan should be focussing on building the infrastructure, the human resource development, quality enhancement and the research. We should avail the 10 per cent facility as provided under the WTO regime. Our focus should be to invest in the infrastructure building, the disease control, the HRD, and the research to help our farmers in the WTO Regime. Then we can get our most important sector, the agriculture, better prepared with an enhanced competitiveness to meet the challenges arising out of the WTO scenario.