September 1, 2003	Monday	Rajab 3, 1424

The progressive liberalization of the world trade has created opportunities for Pakistan to become integrated into the global trading system and to exploit its national and regional comparative advantages.

Evidence suggests that Pakistan has a potential comparative advantage over developed countries in the production of many agricultural products, such as cotton, rice, fruits, flowers etc.

However, the ability of the country to maintain or expand its world market share depends on its ability to meet the demands of the world trading system, not only in terms of competitive prices but also quality of exportable products and their safety standards. Technical measures such as food quality and Sanitary and Phytosanitary (SPS) requirements under the WTO may likely impede future trade of agricultural products from Pakistan.

It is argued that Pakistan lacks the needed resources to participate effectively in the institution of WTO, and thus may be unable to fully exploit the opportunities provided by the Agreement on Agriculture (AoA) in general and the SPS agreement in particular.

The SPS measures seeks to protect consumers by providing basic rules for food safety and animal and plant health thus ensuring that consumers are supplied food which is safe by the standards that each country considers appropriate provided these standards are based on scientific evidence, international standards, guidelines and recommendations. It is reported that majority of import detentions and rejections of food imports in the US of products originating from developing countries are not related to highly sophisticated or technical requirements laid under SPS agreement.

Given that Pakistan typically implements qualitatively or quantitatively lower SPS standards than developed countries, in principle the SPS should help to facilitate trade from Pakistan to developed countries by improving transparency, promoting harmonization and preventing the implementation of SPS measures that cannot be justified scientifically. Much of this is dependent, however, on the ability of Pakistan to participate effectively in the Agreement. The Agreement itself tries to facilitate this by acknowledging the special problems that Pakistan along with other developing countries can face in complying with the SPS measures and allowing for special and differential treatment.

The SPS measures are claimed to be an impediment to exports of, for example: fish, livestock products and horticultural products from Pakistan. More theoretical work has demonstrated that Pakistan finds it difficult to trade with developed countries due to differences in quality equipments, which in turn reflect prevailing consumer demand or the nature of government regulation.

It is reported that exports of agricultural and food products from Pakistan are rejected due to microbiological/spoilage or contamination. Although public authorities inspect food products prior to export, most consider that financial constraints limit the effectiveness of these procedures and that, in particular, testing and inspection facilities in the country are inadequate.

One study of the World Bank examined the costs of SPS-related projects as an indicator of the resources required for the development of the SPS controls, both domestically and related to trade, in developing countries. For example, the cost of achieving disease- and pest-free status to enable Pakistan to export meat, fruits and vegetables was reported to be enormous.

As such, there is strong need for application of Sanitary and Phytosanitary measures that include enforcement of laws which protect human, animal or plant life and health based on scientific evidence, environmental considerations and use of child labour in the production process for enhancing export of agricultural products from Pakistan. In this regard, more emphasis needs to be laid on curtailing illicit trade practices and ensuring quality of exports in terms of purity of the product, environmental considerations and labour standards in order to comply with emerging requirements of the WTO.

A broader indication of the impact of the SPS requirements on exports of agricultural and food products from Pakistan and other developing countries is provided by data on rejections following border inspection in developed countries. At the current time, these data are only systematically collected and publicly available for the United States.

It is reported that significant rejections of imports from Africa, Asia and Latin America and the Caribbean are due to microbiological contamination, filth and decomposition. The cost of rejection at the border are also considerable, including loss of product value, transport and other export costs, and product re-export or destruction. This indicates considerable problems that Pakistan and many other developing countries have in meeting basic food hygiene requirements.

The importing countries judge the merit and integrity of exporting countries by the consistency of acceptable product quality and the authenticity of certifications in line of their compliance with the mandatory import quality requirements. Food control agencies of food importing countries maintain risk lists of exporting countries depending upon their reputation and compliance with the mandatory import requirements and certification credibility.

Products from listed countries are sometimes automatically detained or strictly scrutinized with accompanying costs. The major defects causing detention and rejection of food consignment mainly comprise filth contamination, microbiological contamination and incorrect food labelling in international trade. According to the US FDA the Asian food consignments were detained because of violation on filth contamination (35.2%), followed by microbiological contamination (15.5 per cent), low acid canned foods (14.3%) and decomposition (11.5 per cent).

The difficulties in exporting under increasingly strict SPS measures will thus be manifold and particularly acute for Pakistan. Food safety measures are not well structured to cope with growing demand of sophistication in managing risks of food. Pure Food Ordinance (1960) and Pure Food Rules (1965) form the legislative framework of food safety in Pakistan. The rules give authority to provincial governments to appoint public analysts for the investigation of quality and safety of food. As such, there is no federal structure of food safety programme in Pakistan.

The Pure Food Rules in Pakistan are enforced through health service delivery channels of the provincial governments. The District Health Officer and Deputy Health Officer function as food inspectors for sampling and inspection. On the other hand, the Municipality Corporation may also appoint food inspectors and sanitary inspectors for sampling purposes. Any other public servant can also be appointed as inspector and can execute the powers of food inspector. The existing food regulations and food safety procedures in Pakistan however, do not cope with the Sanitary and Phytosanitary requirements.

The Pakistan Standard Institute (PSI) with its food and agriculture division develops standards for foods and food products. The PSI standards are voluntary standards and these indirectly complement the implementation of Pure Food Ordinance, (PFO) which is mandatory regulatory framework for the entire country. Common food products like edible oils, biscuits, grapes, and bananas are enforced through Pure Food Ordinance (1960). Standards for other food product such as banaspati ghee, cotton seed oil, refined soybean oil, biscuits, margarine and cooking oils are also enforced through PFOes. The federal ministry of health monitors the quality on import and export of food products. The Agriculture Produce (Grading and Marking) Act 1973 is implemented by the Ministry of Agriculture. Some food products like marine products, oil cake, dry whole chilies, onions, potatoes, citrus fruits, mangoes and eggs are under mandatory certification scheme of national grade standard system. Despite such measures, a lot needs to be done at the governmental level to cope with the sanitary and phytosanitary challenges.

The conformity costs include the costs of certification and control. It may be argued that the costs of respecting SPS measures will be higher in Pakistan than in developed countries. Access to technical know-how is more restricted and the public sector that certifies and controls conformity is also underdeveloped. The establishment of international disciplines as to apply the SPS measures is therefore potentially very important for Pakistan.

In short, Pakistan is experiencing difficulties in meeting the SPS requirements of developed countries and concerns have been expressed about the way in which the SPS Agreement has been implemented to-date. What Pakistan needs to do is to harmonies the quality of its products to internationally accepted standards. Information dissemination to farmers on higher standards should be promoted, financial assistance extended and training imparted to them on methods of attaining these standards. There is dire need to arrange conferences, seminars and talks on electronic and print media to educate the scientists, policy makers, farmers and other stakeholders about various aspects of the WTO.

Pakistan has a very narrow base of agricultural exports, which are directed largely to South East Asia and the Middle East. Agricultural and food products, on an average, accounted for around 88% of total exports in 1990’s. Major agricultural products exported from Pakistan during 1990’s in order of their importance, comprised of cotton, textiles and products (60.3 percent), leather and made-ups (7.9 per cent), rice (5.7 per cent), sports goods (4.4 per cent) and others (16.5 per cent).

The opening of rice markets in Indonesia, Japan, and Korea may further create a major gain for Pakistan. Nevertheless, this region promises huge potential market of fruits and vegetables for Pakistan. Gaining market access in the developed countries is rather difficult because Pakistan must comply with high quality standards. As such, Pakistan has to do many things, particularly in the areas of quality, packaging and promotion for acquiring reasonable share of the markets in developed countries. Considerable expansion in agricultural output and trade may however be anticipated with full and uniform implementation of the WTO negotiations. An FAO study has shown empirically that Pakistan will benefit more than any other developing country under full reform conditions. The study estimated that the growth rate of wheat production will be five percentage points higher under the WTO scenario amidst above average annual increases of other crops. It was shown that this increase will be synonymous with yield increase without significant change in area harvested and attributable to favourable trends in wheat prices as a result of withdrawal of negative rates of protection to agriculture. Notwithstanding good prospects of export of wheat, many other agricultural products from Pakistan are however being restricted on the pretext of health and hygiene, due mainly to alleged excessive use of pesticides. As such, there is need to improve efficiency of input delivery system particularly at the grass root levels for getting higher production of various products. Black-marketing, under bagging and sale of substandard fertilizers, pesticides and seeds should be eradicated through appropriate measures.

Investment in agriculture has been declining for quite some years in the country. In the context of international trade, there is an added urgency to reverse this trend and increase investment in research, integrated market development, storage and warehousing facilities, means of communications for efficient and quicker transport and development of scientific systems of standard setting and grading. Further, up-to-date information on domestic and international prices and demand should be made available to farmers through the print and electronic media.

The author is Associate Professor at the University of Agriculture, Faisalabad, Pakistan. Email. drkmustafa@hotmail.com