June 2, 2003	Monday	Rabi-us-Sani 1, 1424

Apart from the self-congratulating bureaucrats and ministers, nobody amongst the intellegensia or the economic experts would be prepared to give credit to the government for the ‘financial improvement’.

Over $10 billion reserves, reduction in the foreign debt from $38 billion to $36billion, reduction in the interest rates, are the gifts of 9\11 and not prizes which have been won as a result of sustained hard work and astute planning. The improvement in the figures is due to the concessions given directly by the US or at its behest by the world bodies.

The rot in every segment of the economy and society is so rampant that, even for a well-meaning ruler, it is difficult to decide where to start and where to stop. The cleansing of the Augean stables is indeed a Herculean task.

It is indeed most unfortunate that the military government, which did not have burdens of political rivalry failed—— and failed miserably— to grasp the significance of the WTO sponsored environment, and let the opportunity pass by. A clear-cut policy of promoting export-oriented growth, with textile sector very much in the lead, should have been evolved. All its powers, specially in the budget, should have been used to make it successful.

Textile sector should have been made into a power house to face the challenges after 1.1.2005. It is even more to blame because it failed to bring into focus the impact of WTO. All through its tenure, it virtually ignored the existence of the WTO. If a parallel is to be drawn it could be said that what 9/11 was for the rich West, the WTO is for the poor countries. Truly, the world will never be the same after 9/11, as we are witnessing. Truly, the world will never be the same after 1.1.2005, when the WTO will fully come into force.

The WTO has virtually introduced a new species of international law whose socio-political as well as economic tentacles and ramifications are not yet clear to the poor countries. It requires a drastic and fundamental change in the local laws which will increasingly abridge the sovereignty and freedom of the poor nations. And if the poor nations have to file cases in the WTO, they should know the exorbitant fees they will be required to pay. The law firms demand fees ranging from $220 to $600 per hour. Even for a relatively small case, a law firm quoted a figure of $200,000.

The WTO forcibly lays down—of course not in so many words but by necessary implication—that the weak companies of the poor countries are the equals of the giant-sized strong and vigorous MNCs.The contest being equal, the poor countries must open their markets to the MNCs without any obstructions and hindrances.No subsidies must be given to their companies which may allow them to sell their products at competitive prices in the rich countries.

The custom duties must be lowered to levels of 5 to 6 per cent, which will ensure that the products of MNCs are cheap enough to capture the local markets. This will weed out local companies. To have a taste of things to come one has only to watch the names of sponsors of big budget TV programmes. Already the market is in their hands. About 20 MNCs remitted $400 million profits for the three quarters of 2003 to their shareholders abroad. There can be no curbs, of-course, under the WTO on taking away the profits in foreign exchange.

Cars are assembled in Pakistan by Japanese MNCs. The import cost of chassis and engine of a 1600cc car is Rs95,432. Remaining cost is about Rs300,000. The total cost is about Rs400,000. But the MNCs are charging about Rs900,000 to Rs1,000,000. The concerned minister is afraid to ask for a reduction in the price. According to Mr. Liaqat Jatoi,Minister for Industries and Production, “if the government pressurises the MNCs it could become an international issue which may hamper future investment in Pakistan”. He has also expressed the view that Pakistan gets assistance and financial help from Japan and it was difficult for him to annoy Japanese investors on the issue of car prices.

Such helplessness will snowball after 1.1.2005. The WTO agreement was signed in December ‘94 and starting from 1.1.95 a period of 10 years was given to poor countries to make adjustments to the provisions of the new system.

China took about 7/8 years to negotiate the terms of its joining the WTO and that too with special provisions to protect its industries. Russia and Saudi Arabia are still not members. Joining WTO is not a kid’s play. It is a very serious matter. Not so, it seems, for Pakistan. The economic managers are blissfully innocent of the urgency to prepare for 1.1.2005.

This writer attended many meetings of the Lahore Chamber of Commerce and Industry where functionaries of all shades come. Mr. Khalid Javed Ch., the ex-President, Mr. Yawar Irfan the current President, as well as industrialists and other participants have been crying hoarse, that the government should give all types of concessions to trade and industry to make it strong to face the coming challenges.

But it is most unfortunate that the big-wigs were in no mood to accommodate and they were particularly and almost aggressively against subsidies. Pakistan seems to have almost missed the bus. Its economy, its industries are terribly weak.

The military government has wasted most valuable time of its tenure and done virtually nothing in its budgets to give much-needed help and strength to the industries to face the rigours of the WTO. It is hoped that in the dying days of the 10-year period the economic managers will, willy-nilly, wake up and provide the necessary succour to our trade and industry in the coming budget.