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Promotes free trade among unequals

September 07, 2003

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KARACHI: Like people of all other developing countries, Pakistanis too consider the World Trade Organisation (WTO) a highly bureaucratic institution that impinges on their national sovereignty and is forcing globalization on them at the cost of local priorities and national aspirations.

The GATT (General Agreement on Trade and Tariff) remained a ‘rich men club’ since its inception in 1948 till is natural demise in 1995 when WTO was born. The WTO, according to Economists, represents the richest multinational corporations and most affluent individuals in the world. It represents those corporations that control four-fifth of the global industrial production. It seeks integration of the least developed economies with the most developed. It wants free and unhindered trade between unequals— very rich and most poor. The WTO has scant respect for the civil society, trade unions, pressure groups and non-governmental organizations. Most of the developing countries are represented in WTO by repressive monarchies, autocratic set-ups, quasi-democratic governments and military regimes who are easy to be coerced into any agreements by the rich and powerful countries.

But much before the advent of WTO, the successive governments in Pakistan, in last twenty years or so has started taking dictates from the International Monetary Fund, World Bank and other IFIs. No wonder, Pakistan’s Commerce Minister Humayun Akhtar has been claiming these days that there was no concern so far as the issue of bringing down import tariff is concerned. The maximum import tariff is now 25 per cent, down from 65 per cent in 1994. It has been done as a part of IMF’s package conditionalities. Pakistan’s industry has been exposed to goods from all countries far and near. Pakistan now presents a spectacle of a graveyard of dead, dying and sick industries. It was also a World Bank official of Pakistani origin, who a couple of years ago, had proposed phasing out of seven categories of industries in Pakistan. These were textiles, cement, steel, automobile, chemicals and a few others.

On the contrary the ILO and multilateral environmental agreements (MEA) are transparent and voluntary. They draw up their conventions in consultation and with the consent of their member countries. Besides the governments, they enter into dialogue with members of the civil society, trade unions, pressure groups and non-governmental organizations before drawing up their conventions. They seek ratification of their conventions from the national legislatures of the member countries. The WTO has no such respect for the civil society or legislatures of the member countries. Like IMF and World Bank it imposes its conditions on the member countries and demand a set of laws that dovetail its policies. It now wants to build up a free international trade regime on demolition of industrial structure of the developing countries.

“I want to see Pakistan a nation of traders,” declared Abdul Razak Dawood in December 2002. Razak was commerce and industries minister in General Pervez Musharraf’s government before the present Jamali coalition took over. Razak wanted all people of Pakistan to get rid of this obsession of “Made in Pakistan”. He made no qualms that Pakistan is now a dumping ground of goods from all countries. Razak Dawood represented the true spirit of WTO in Pakistan’s ruling classes. He has left many successors behind him.

Pakistan has taken up a series of legislation and will have to frame many more laws in coming days. Pakistan will have to set up institutions to put WTO agreements and contracts into operation. As things look, the legislation will be by way of ordinances. The graduate National Assembly and Senate will do everything but no legislation. So all the ordinances will remain tentative laws which would have to be extended on expiry. All these ordinances will be enforced without a debate and discussion by the elected representatives of the public.

Trade Related Aspects of Intellectual Property Rights (TRIPS) is considered to be one of the most important WTO agreements. It has far reaching implications on the economic growth, investment and trade flow of the developing countries. This agreement provided a five year transition period that expired in 1999. Without any debate and discussion Pakistan has upgraded legislation in different areas of the IPRs. These are Trade Mark Ordinance 2000, Patents Ordinance, Registered Designs Ordinance 2001, Layout Designs of Integrated Circuit 2000 and Copyright (Amendment) Ordinance 2000.

Legislation is one thing and developing capacity and infrastructure to enforce, monitor and administer law is another thing. Trade Mark law is being administered by Commerce Ministry, copy writing by education, patent, designs and integrated circuit by the industries and standardization by the science and technology ministry. It was only a day before the departure of Commerce minister and his delegation to Cancun meeting that a draft law on Pakistan Intellectual Property Rights Organisation (PIPRO) was sent for vetting to law ministry. Setting up of PIPRO was announced in 2001 Trade Policy. It could not be done then. Now when over half of the 2003 year has gone by, the government is vetting the draft of the law that will govern PIPRO.

Pakistan has remained a victim of anti-dumping actions by EU, Japan and many other countries on a number of occasions in the past. There was anti-dumping provision in the Article VI of GATT but WTO Agreement has much wider scope. Pakistan has enforced an ordinance on anti-dumping. The National Tariff Commission (NTC) has been given the task to administer this law. Only very recently the NTC imposed 27.33 per cent duty on import of tin plate from South Africa. Earlier, the Commission applied a provisional 96.50 cent anti-dumping duty on sorbitol import from France and Indonesia.

The WTO has also concluded agreement on subsidies and countervailing measures. This agreement intends to cope with subsidized exports so that domestic industry of importing country is not hurt.

“We want NTC to be headed by someone from the higher judiciary,” Engineer M.A. Jabbar, Vice President of the Federation of Pakistan Chambers of Commerce and Industry said. Jabbar heads the WTO cell in the FPCCI and is attending Cancum meeting in Mexico. He wants the government to engage professionals—chartered accountants, cost accountants, company lawyers and engineers.

“It took NTC two years to come out with anti dumping measures and countervailing duties on imports which hurt local industry,” he said while pointing out that it was pretty long period. Pakistani businessmen do not have capacity—financially and technically—to prepare a convincing anti-dumping case.

“It costs anywhere from Rs1.5 million a minimum to more than Rs3 million for preparing a convincing anti-dumping case for the NTC,” Jabbar said. It is not only lack of technical and financial capacity but political considerations also prevent from taking anti-dumping measures.

Businessmen in the FPCCI say that at least five applications have been moved with NTC against dumping of formaldehyde and other chemicals from China. But no action is being taken because of the “strategic relationship” between Pakistan and China. Pakistan markets are flooded with a variety of Chinese made goods. There are footwear, stationery items, garments, torches, shoe shine and what not. No case is being made because the local trade of many of these items is in informal sector and hence no accurate data and information is available.

The FPCCI wants the setting up of an Advisory Board of consultants and legal experts to help the small stakeholders. Jabbar said that the federal commerce minister is receptive to this proposal. Funds can be made available from the Export Development Fund.