November 10, 2003	Monday	Ramazan 14, 1424

The slogan of ‘globalization’ was meant to enhance the overall welfare— both of consumers and producers— in the global market. The World Trade Organization (WTO) was supposed to be an authentic tool for the purpose.

Its basic theme is to promote free trade and it is based upon the principle of comparative advantage i.e. to utilize the available global resources in the best possible manner.

The performance of any campaign can be judged by comparing its achievements against the set objectives. So far performance of the WTO portray a gloomy picture. In order to bridge the gap between the North and the South, the existing complex approach should be modified through meaningful adjustments.

The WTO principles not only bear implications on the production pattern of farm products but also for the distribution mechanism of these commodities. Particularly, the developing countries need to be more careful in their approach, if they intend to pursue a reasonable market share in the global scenario.

In the agriculture sector, marketing plays dual role, i.e. it not only provides materials and services to the consumers in the factor market but also serves the product market. Provision of quality inputs with disposal of farm products at the right time is considered to be the supreme task of agricultural marketing. Marketing performs the function of exchange which is meant for the transfer of entitlement rights.

In the global scenario, under the WTO regime, eligibility criteria for selling the products is the ownership of the product, which comes under the scope of the TRIPS (Trade Related Intellectual Property Rights). Only the producers of registered varieties, breeds and products will be able to grow and export those commodities. So the producer of farm products need to get their breeds or varieties registered with WIPO. The procedure and mechanism has already been clarified in this regard. The need of the time, particularly in developing countries, is to undertake a well documented comprehensive campaign and efforts to safeguard their interests.

By now we all are very clear about the recipe for the WTO regime, i.e. to produce high quality products at the lowest possible cost. Here quality of products is a matter which needs to be understood in a more comprehensive way. Based upon the principle of food safety, quality is concerned with hygienic production, careful handling, effective transportation, storage, processing, and packaging and is also sensitive to the toxic residual effects of pesticides and medicines. So an approach based on infrastructural support including maintenance of chemical labs, orientation and training of staff, effective integrated pest management, check on the quality of input materials etc. is the available option to combat the existing situation.

The developed countries are using these quality standards as a hidden tool to restrict exports from the developing countries. Belgian and Dutch food safety authorities had taken green Indian seedless grapes off supermarket shelves over fears of high chemical residue levels leading to stomach cramps in children. Similarly, China banned its cattle imports and bovine products from Canada to avoid spread of mad cow disease. So it becomes the responsibility of Pakistan’s commercial counsellors to produce the details of scientific tests introduced by developed countries, so that our exporters can meet the global standards of food safety.

In the coming days of trade liberalization, marketing of agricultural products will become a more sensitive issue. Developing countries like Pakistan, the existing infrastructure of which is not conducive for the efficient marketing, need to concentrate more on the provision of requisite marketing facilities on priority basis. The developing countries are little unfortunate in the sense that they have to observe two-way obligations i.e. WTO and other IFI’s, which are contradictory.

The WTO is supposed to take the world towards free trade environment in which countries with comparative advantage in the production of agricultural commodities should gain. This is possible for developing countries if they support their agriculture sector, which is contradictory with the working of the IMF and the World Bank. Supporting agriculture is not prohibited under the WTO and developing countries can manage the green box provisions and deminmis payments for supporting their agriculture.

The green box measures are non-actionable i.e. are permitted. These measures are considered to have no or minimal trade distorting or production related effects. Such payments are, therefore, exempted from domestic support reduction commitments. According to provisions under green box measures we can support marketing and promotion services including marketing information, advice and promotion relating to particular products but excluding expenditure for unspecified purposes that could be used by sellers to reduce their selling price or confer a direct economic benefit to purchasers. Inspection services, including general inspection services and the inspection of particular products of health, safety, grading and standardization purposes and other infrastructural support can be sought under these provisions.

Deminimis payments are the domestic support payments representing only a small percentage of transfer to producers. This is 5 per cent for developed and 10 per cent of production value for developing countries. These payments are allowed to be paid in addition to the green, amber and blue boxes. These payments are exempted from reduction commitments even if the effects of such support are potentially production or trade distorting.

Pakistan’s Gross Domestic Product (GDP) is Rs4018.1 billion. The share of agriculture sector in total GDP is 24 per cent (Rs964.34 billion); ten per cent of it, i.e. about Rs96.43 billion, is allowed to be given as domestic support to the agriculture sector. So we are allowed to give a reasonable amount for supporting agriculture, of which we can allocate resources towards market improvements.

Increased trade liberalization means more market access, which will be achieved by reducing tariff for developed, and developing countries by 36 and 24 per cent respectively. The hypothesis behind this thinking is that lesser trade restrictions will ensure free trade with increased trade opportunities for developing countries. The results so far are not encouraging because developed countries have started using disguised trade barriers against developing countries and the hallmark of increased market access is leading towards a total collapse.

A recent study by the Food and Agricultural Organization of the United Nations (FAO), however, concludes that there have been hardly any changes in the volume of exports. Tariff peaks or in other words high import duties in the developed world continue to block exports from the developing countries. Another UNCTAD/WTO joint study on the post-Uruguay Round tariff environment for developing countries exports showed that tariffs on products of interest to developing countries remained high. In the EU, in the agriculture and fishery product group of the 2,726 tariff line items, 1,273 have tariff peaks whereas in the USA, of the 1,779 agricultural and fishery products, 334 or 36.6 per cent face tariff peaks.

In the domestic market set-up, there are certain issues, which need to be addressed. After producing the agricultural commodities on scientific basis, we need to assemble and handle those in a more careful manner. Suitable transportation facilities, which will ensure less physical hazards, should be provided to increase the marketed surplus.

Appropriate wholesale market set-up with proper provisions for storing commodities, especially for perishables, is necessary for enhancing consumer welfare through the provision of quality products.

Standardization and grading are important marketing issues the importance of which cannot be overlooked in modern marketing. A more scientific and disciplined approach, which will cover the grading in more details, is the need of the time because existing grading system covers only few dimensions.

Packaging is another important aspect which not only protects the product but also makes it attractive and easy to handle. In the existing scenario of marketing the consumers in the international markets have become more conscious about the materials used for this purpose. The USA has taken the action against Chinese exporters in the same context by making it compulsory to treat wooden packaging material for Asian Horned Beetle.

Effective marketing mechanism is meant for the availability of products throughout the year and this has been made possible through processing and storage. Although value addition is considered to be a useful tool to enhance the earning for any country yet major proportion of our production system remains aloof from processing activities. A combination of public and private investment in this regard can be sought to establish storage and processing chain on scientific basis.

Now this is the time where we need to evaluate and interpret the possible implications of the WTO on the economy of Pakistan so that we can take suitable preventive measures to safeguard our interests.

In order to promote the Pakistani products in the international market, we will have to undertake the diversification of agriculture products with the identification of new markets. In addition to these we need to comply with the international standards to put Pakistani products in the rank of highest repute.