KARACHI, Nov 3: The State Bank of Pakistan has initiated a public debate on the implications of various agreements of World Trade Organization (WTO) and in the 2002-03 Annual Report, released here on Monday, it has offered a broad overview of the Agreement of Agriculture that significantly impact Pakistan’s economy.

The agreement prohibits export subsidies on agricultural products unless the subsidies are specified in a member’s list of commitments. Where these subsidies are listed, the agreement requires the WTO members to cut both the amount of money they spend on export subsidies and quantities of export that receive subsidies.

The developed countries agreed to cut the value of export subsidies by 36 per cent over the six years starting in 1995. These countries took averages for 1986-90 as the base level. Developed countries have also agreed to reduce the quantities of subsidised exports by 21 per cent over the six years. Developing countries agreed to cut down by 24 per cent of value of export subsidies and 14 per cent in quantities over 10 years. The least developed countries were not expected to make any cuts.

Incidentally, the SBP report refers to the recently unsuccessful conclusion of the WTO ministerial meeting held at Cancun which has now made it quite difficult to observe the already agreed upon timetable set to start with the new world trade by January 1, 2005.

This failure in negotiations, the SBP fears may jeopardize the efforts being undertaken to promote international trade. The SBP annual report gives briefly the 50 years backdrop developments that eventually led to formation of WTO in 1995 and gives a list of nomenclature of three main agreements and seven other agreements signed to support the main three agreements.

It points out that at the beginning of GATT regime, agriculture sector was given exemption from some of the core rules (such as quantitative import restrictions and export subsidies) because it was generally believed that agriculture provides food security, agriculture was on relative decline and interests of farmers had to be safeguarded to avoid distortions in domestic markets.

The reduction in agriculture subsidies and protection had already been taken up and agreed upon in the Uruguay Round 1986 to 1994.

The SBP intends to take up specific WTO related concerns with respect to Pakistan’s agricultural economy as well as expanding coverage to other segments in the successive reports.