WTO and Agriculture Sector of Pakistan

World Trade Organisation stands for freer trade among countries. It aims to shed away trade distorting practices between countries, e.g., quotas and subsidies in a phased manner, but does not however, aim at zero tariffs. Pakistan has been the founding member of GATT (General Agreement on Tariffs and Trade 1948) as well as WTO. Aim of this article is to analyse the impact of WTO on the most important sector of Pakistan’s economy, i.e. agriculture.

Despite being an agrarian economy, Pakistan still imports various food items. Pakistan has comparative advantage in many essential commodities but in order to fully utilise this, we are to focus on and settle the issues in supply side, i.e. domestic requirements. Pertaining to TRIPS (Trade Related Aspects of Intellectual Property Rights) agreements, 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.

Brief Review of Agriculture Sector of Pakistan

The agriculture sector is an essential component of Pakistan’s economy. It currently contributes 21 per cent to GDP. Agriculture generates productive employment opportunities for 45 per cent of the country’s labour force and 60 per cent of the rural population depends upon this sector for its livelihood. It has a vital role in ensuring food security, generating overall economic growth, reducing poverty and the transforming towards industrialisation.

In Pakistan, crop production is well diversified, with more than half of the area devoted to cereals, one-fifth to cash crops, and the rest to vegetables and fruits.

The Agreement

In 1995, all agricultural and dairy products were brought under multilateral trade rules by the WTO’s Agreement on Agriculture. It comprised three ‘pillars’, i.e. market access, export competition and domestic support. All WTO members, except LDCs (least developed countries), were required to make commitments in all these areas in order to liberalise agricultural trade.

Pakistan’s current performance and future requirements for the major export crops/products

Cotton

Cotton is the major export of Pakistan whose production has been fluctuating markedly for the last two decades. This decline is due to domestic reasons such as pest attack. Indeed, abundant land availability, favourable climate and low labour costs enable Pakistan to be the third lowest cost producer of cotton. Accordingly, the prospect for growth in this is promising. However, we need to increase productivity, more than 20 million bales annually. However, quite encouragingly, the cotton production has increased to 13,595 thousand bales in 2011-12 from 11,460 thousand bales in 2010-11 showing an increase of 18.6 per cent. It is also important that the cotton quality is improved in order to be able to compete in the international market where the standards are going to be most crucial.

Rice

Rice is one of the most important crops around the world. It is a staple food and ranks second among the world as well as in Pakistan. In Pakistan, rice is a major source of export earnings in recent years. Pakistan grows a high quality of rice to fulfil the domestic demand and also for exports. Rice accounts 4.9 per cent of the value added and 1 per cent of the GDP. Pakistan produces two types of rice varieties Basmati and coarse, both are exported and have its traditional market and faces some competition with Indian basmati rice. Rice production has increased to 6,160 thousand tons in 2011-12 from 4,823 thousand tons in 2010-11 showing an increase of 27.7 per cent. However, exports to industrialised countries have not increased owing to lack of improvement in market access. Efforts are required to meet the required standards. Recently, it has been reported that EU will allow Pakistani Basmati Super variety to be imported on certain conditions of testing.

Fruits and Vegetables

Fruit and vegetables’ export have shown an increase of 70 per cent in the last two decades from 39 to 100 million dollars. However, many of developed countries have quality standards that Pakistani products, unfortunately, do not meet. These quality standards and TBT (Technical Barriers to Trade) measures threaten future ability to continue the increase in our exports. It is quite encouraging that the Economic Survey 2011-12 tells that fruits exports witnessed a major increase during 2011-12; in absolute terms fruit exports increased by $70.5 million during July-April 2011-12 over the same period last year. However, it is imperative that we take measures to meet these standards at the earliest in order to get the maximum trade benefit.

Other agriculture items on which we can focus for exports are leather, meat, dairy products. We can also export wheat provided our agriculture sector is made able to increase its production.

Recommendations

Support agriculture sector through use of permissible subsidies, improve farm to market transport infrastructure, ensure availability of water supply, educate farmers on modern techniques and move from subsistence to commercial farming.

Encourage research-related activities to improve seed quality, patent product and make use of TRIMs (Trade-related Investment Measures).

Restructure this sector as demand-responsive while keeping in view food security, equity and justice in distribution of the benefits.

Ensure provision of better seeds, fertilizers, machinery, desalination plants, and tube-wells along with uninterrupted water supply throughout the year.

Improve standards to avoid action under some WTO agreements like 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 policies and implications, especially in rural areas through intensive awareness schemes using radio and television as well as other techniques.

Conclusion

Pakistan has comparative advantage in many primary commodities and there are some upward trends in exports of primary commodities also. 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 competitive advantage. That’s why the implementation of AoA (Agreement on Agriculture) has not been fully done.  Full implementation and improved and stricter rules on agriculture are beneficial to us.