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Pakistan likely to get WTO’s Council chair

January 06, 2013


ISLAMABAD: Pakistan is likely to get chair of the General Council the highest level decision making body of the Geneva-based World Trade Organisation for a period of one year, it is learnt.

As a result of this historical decision, Pakistan will replace Norway currently holding the chair of the General Council. The decision in this regard is expected to be announced in February.

An official in the commerce ministry told Dawn on Saturday that the current fiscal year will present considerable challenges to the WTO with the Doha Development Agenda at an impasse and renewed efforts for reviving of talks among leading global players.

The official said the WTO ministerial is expected to be held in the next few months. Pakistan’s commerce minister will chair the ministerial which will consider various important issues especially the agriculture sector.

What does Pakistan want from WTO to address its food security needs? It is in Islamabad’s favour that the system of minimising distortions from the agriculture sector is strengthened. Agriculture subsidies were not even touched in Pakistan’s bilateral free trade agreements with Malaysia, Indonesia, Sri Lanka and China because no FTA has ever addressed that.

“Ironically, the agriculture subsidies are not even discussed, while commerce ministry agreed to fulfil our commitment to completely liberalising its trading regime to India,” the official regretted.

The official said WTO was the only bulwark against distortions in the agriculture markets. Consequently, these issues can only be handled at multilateral level. Pakistan has an opportunity to flag the food security issue, and seek support from other developing countries as well during the proposed ministerial meeting, the official added.

Documents show Pakistan has already done agriculture liberalisation unilaterally as a result of structural reforms. Prices are no longer fixed by the government for rice, sugarcane, maize and cotton, which is a big departure from the government controlled agriculture policy of the 1970s and 1980s. As a result, the performance of the private sector has improved. Pakistan has emerged as the third largest exporter of rice in the world according to the recent WTO document.

Contrary to these crops, the story of wheat is slightly different; population of the country has increased from 130 million in 1998 to 197 million in 2011. Roti/bread being the staple food of the country has become very expensive because of high commodity prices.

In 2010-2011 there was a decrease of 2.5pc in the area under cultivation of wheat, but the production increased from 23 million ton to 25 million ton.

Farmers got the right prices for their crop and they invested in buying fertiliser and better seed. As government has no fiscal space to provide input subsidy to farmers in Pakistan, high prices are a legitimate incentive which the farmers must be allowed to respond.

Analysts said the policy makers have to be careful in passing on the market signal because we have to ensure that Pakistani wheat production remains competitive, the comparison of procurement price and CIF prices indicates that Pakistan has managed to take the benefit of high prices without losing its competitiveness.

Unfortunately, Pakistan got rid of keeping stock as part of unilateral reforms in agriculture sector. In the absence of wheat storage in the private sector, expert says government has no option but to purchase 20-30 per cent of the production to avoid post harvest losses. In fact, a greater collaboration and coordination with the private sector can also lead to much lower levels of government owned wheat stocks.

The monsoon season starts immediately after the harvest season and in the absence of storage infrastructure the likelihood of post harvest losses is huge which can further increase the level of food insecure population. There is a need to attract private sector investment in the storage infrastructure to ensure that government’s role is minimized and remains only for maintaining the buffer stock.

The operational stocks should be handed over to public private initiatives (PPI) in a phased manner. However, an efficient food stock system for a staple food is absolutely necessary for a country with huge population and prone to natural calamities.

Analysts said WTO needs to have rich debate on food security issues, food security is about keeping the markets open rather than resorting to protectionism. However, isolating one tool from rest of the policy debate will not lead us anywhere. Therefore, it’s time that WTO members start analyzing the agriculture trade policies rather than just looking at the notifications where developed countries have the expertise to play with the numbers and hide their subsidies.