ISLAMABAD, July 23: Pakistan is likely to accept cuts in its tariff by maximum 36 per cent on agriculture products under the current round of Doha Development Agenda (DDA), says a Pakistani trade diplomat.
This is seemed an immediate reaction of Pakistan Mission to WTO, based in Geneva, negotiating the country’s position on various areas of the DDA. The chair on committee on agriculture has recently issued draft modalities text on agriculture in response to reaction on the draft papers on agriculture.
“In any case our bound tariffs are around 100 per cent on average thus leaving a lot of water between final bound and applied rates at present,” according to Pakistani Mission official reaction on the draft modalities text.
Besides tariffs, Pakistan would also have recourse to additional flexibilities like Special Products (SPs) and SSM etc., which, in case of any future surge in imports, would provide Islamabad a fair chance to check any potential negative effects on domestic agricultural sector.
“On the whole the text is much more positive for developing countries and well defined in terms of issues and number ranges,”, said Pakistan Commercial Secretary to WTO Ahmad Mukhtar.
Pakistan has been playing a vital role and putting a lot of importance to modalities in Agriculture since this is the area which will have major impact on the living standards of our farmers. Reforms in this area would help Pakistan to materialise its huge potential through getting fair market access and removal of distortions in the international trade for agricultural products.
The modalities text has given a range of $13 to $16.4 billion for Overall Trade Distorting Domestic Support (OTDS) to the US — which is the leading source of distortion in international market. This range, though tight, would still leave some policy space for US to manoeuvre.
However through various disciplines especially the products specific allocation of support and base periods etc, such maneuverability is likely to be capped in particular those crops, which suffer the maximum distortion such as cotton and rice which are leading agricultural products of Pakistan.
Dairy sector both in EU and US has already started receiving a persistent decline of support thus slowly shifting the comparative advantage towards other potential dairy producers including Pakistan.
With this capping in domestic support and elimination of export subsidies by the year 2013, farmers growing rice, cotton, horticulture, wheat, etc., are likely to be major beneficiaries through higher prices and more market access opportunities, Mr Mukhtar said.
In the market access area, the developed countries would reduce their tariffs by 45-65 per cent on average thus providing enhanced market access on MFN basis where Pakistan could capitalise its potential.
Due to the expected treatment to various products (especially horticulture, rice, beef, dairy etc.,) under the tropical and alternative products and the tariff escalation, Pakistan would have an even better chance to get more market access for the value added products.
It is not yet clear, the commercial secretary said, but if rice is finally accepted as a tropical and alternative product which has to be given fullest liberalisation through tariff cuts of at least 70-80 per cent cut in developed countries markets, it would provide lot of additional market access for our rice exports.
According to a study by the Asian Development Bank, if the DDA mandate delivers fully on cotton both in domestic support and market access (which is quite likely based on the existing text) then around 2 million farmers in Pakistan would get out of poverty immediately due to cotton alone.