GIVEN the highly contentious and complex nature of agricultural trade between India and Pakistan, both countries need to negotiate a separate agreement on the farm trade.
Now arises the basic question over the raison d’être of having a separate agreement on agricultural trade when these two countries are signatories to the existing South Asian free trade agreement, Safta.
The foremost reason is that agriculture is a sensitive issue globally, and relates to the rural economy of every farming nation. Agriculture also impacts the critical and sensitive issue of food security and production.
In the World Trade Organisation (WTO) framework, the legal discipline applied to trade in agricultural and non-agricultural goods is distinctive. And the legal obligations regarding agricultural trade are enshrined in a separate agreement on agriculture.
A recent study by the Lahore University of Management Sciences (Lums) revealed that during the GATT period (1947-94), several rounds of multilateral trade negotiations were held between the contracting parties, but they could not agree on a substantial reduction in protection for farm goods.
Moreover, the ban on quantitative restrictions or quotas in Article XI of the GATT had an exception for quotas for agricultural products. Nonetheless Article XVI.3 of GATT discouraged export subsidies for agricultural products so that a subsidising country might not end up having a more-than-equitable share of the world market for the subsidised good. But powerful nations like the US and Japan succeeded in getting waivers and circumventing this non-stringent provision altogether.
However, it was formally acknowledged that this agreement was merely a beginning of the liberalisation process for agricultural trade.
The Lums study further informed that the most practical reason for having a separate agricultural agreement between India and Pakistan is that it is already in place between the US, Canada and Mexico in the form of the North American Free Trade Agreement (Nafta). Whereas all ofthe agreement was negotiated trilaterally, agriculture was negotiated bilaterally between the three Nafta countries, and three separate agreements were signed between each pair of parties.
The study also focuses on Safta and how it deals with the agricultural issue between member countries. Agriculture is a critical issue for both Pakistan and India.
More recently, in the Bali package announced in December 2013, India’s proposal for provisionally excluding challenges to public stockholding programmes — which purchase crops for food security purposes — was accepted. This gave more unrestricted space to India to pursue trade-distorting subsidies that might have adverse effects on neighbouring countries in general and on Pakistan in particular.
Moreover, there is no mention of agriculture or agricultural goods as a subject in the main Safta agreement negotiated between countries. This is surprising, given that the signatories are primarily dependent on farming. It appears that the negotiators were not contemplating trade in agricultural goods.
Pakistan and India can sign a separate agreement on agriculture following the Nafta model with a few variations to suit regional and country-specific needs, consistent with the ‘special arrangement’ language covering trade between India and Pakistan provided by the GATT.
The Safta agreement itself envisages additional measures in Article 3.2 (a), which states that “Safta will be governed by the provisions of this agreement and also by the rules, regulations, decisions, understandings and protocols to be agreed upon within its framework by the contracting states”.
In this way, Pakistan and India may resolve the issue of heavily subsidised Indian produce by negotiating more rationally. Tariffs can be used to do away with the non-tariff barriers that Pakistani exports face while entering the Indian market.
Finally, as India has already negotiated bilateral agreements with Bangladesh and Sri Lanka, there is no harm in considering the negotiation of a bilateral agreement on agricultural trade between Islamabad and New Delhi.
The writer is an official of the ministry of commerce firstname.lastname@example.org