Impact of WTO’s agreement on Pakistan’s

trade
Pakistan is a mixed economy consisting of a public sector domination
of major sectors of the economy, which is changing very quickly under
the freer market agenda of WTO making the role of government to
minimum level under the globalization policies guided by World Bank
and IMF. Although with the growing awareness among the intelligentsia
of the country about the core issues of development not being address
appropriately yet we have seen the growth role of institutions of
globalization mentoring the economic direction of the country. In the
preview of economic sanctions imposed on Pakistan in 1998, political
instability, state-of-war with India, and most importantly the 11th
September Crisis has not been able to hamper the country which these
events has the potential. The social indicators — literacy, mortality,
fertility, and poverty — remain poor, even for a country with Pakistan's
per capita income, and the squeeze on the budgets of the provincial
governments suggests that this is unlikely to improve much in the
short run. The country clearly faces a difficult challenge in reviving its
economy and in achieving a level of social standards in which it can
begin to take pride.

On the brighter side, government has undertook a series of initiatives

to revive the economy such as tax reforms, trade and tariff reform,
deregulation and privatization, financial sector reform, fiscal
transparency measures, poverty alleviation program. If one observes
that the genuine focus has been more and more on export led
economic growth and for that matter the government has chalked out
an intensive program to increase the capacity of key economic sectors
specially Agriculture and Textiles. Information technology has become
the most important sector as the modes of modern business become
more and more sophisticated providing greater access and farther
outreach to local exporters of foreign markets.

At first we must understand what the major objective of WTO is and

that is to raise the standards of living. May be the motive is simple but
in application we have seen that how WTO can become from a
wonderful trade organization to a wrong trade organization. The basic
fact of the matter is that with the given economic conditions and
limitations Pakistan like any developing country rely on foreign aid on
one end, and the whatever is earned through exports in terms of
foreign exchange, the major chunk is paid back to the international
lenders leaving little room and money for the drastic economic growth
cycle to be ignited. In addition, with the appreciation of dollar, or
devaluation of local currency the standard of living of an American may
increase as the Pakistani goods become cheaper from him or her, but
for Pakistan this devaluation hits directly the purchasing power of a
common man burring into the vicious cycle of poverty. Therefore, the
process of globalization and the projectors of globalization, the Bretton
Wood Institution have created a global economic anomaly for the
developing countries like Pakistan. Whatever is earned through trade is
paid in terms of foreign exchange and profits is paid back in interest
and loan reimbursements, where trade is supported by WTO and debt
payback by the Bretton Institutions created a free movement of capital
flows and investments to serve only the few with a very selected group
of nations get elevated in their living standards and the rest remain
either same or downgraded even further.

Pakistan has accented to GATT by default as an English colony in 1947

and accented to WTO in 1995 as the organization came into being. As
a developing country Pakistan has enjoyed the extra time given for
preparations of readiness to abide by the Agreements of WTO.

In simple, WTO negates anything which blocks the way of free

movement of goods and services from one market to another on a
basic assumption of improving the human lifestyle. WTO demands
open market access for foreign goods and services in the local market
without any discrimination by creation of tariff or non-tariff barriers.
Pakistan is also required to provide a Most Favored Nation (MFN) status
to all trading partners which means non-discriminatory treatment
among the members implying on any imports or exports origination
from respective countries. If Pakistan provides an MFN status to India
for example, then Pakistan has to provide an equitable treatment to all
imports originating from India which will restrict Pakistan to impose
any kind of qualitative or quantities restriction on Indian products. Now
this implies to the question why like India Pakistan is not reciprocating
to given the same MFN status. The major reason is that the total GDP
of Pakistan is $ 60 billion (year 2002) and if India can subsidize all its
imports of an equal amount this will create havoc for the local
Pakistani industry. In case of GATT, it requires all countries to reduce
there respect rates to a given limit, and here WTO provides special
preferential treatment to the developing and least developed countries
by giving them more time and more flexibility to adjust to the global
trade liberalization system.

In the case of a dispute the case is to be presented to the Dispute

Settlement Body of WTO. This requires preparation of the case in
context with the legalities of WTO rules. A developing country like
Pakistan which does not have ample resources or know how about the
subject of WTO rules and references usually are trapped to pay hefty
foreign exchange to international lawyers which are almost
unaffordable. An ideal example is of Basmati Rice, which was initially
patented by a U.S. firm has been challenged by India, where Dispute
Settlement Body favored India. Now, India having the sole patents
refrains all Pakistani rice exports to be referred as "Basmati" until the
patents rights are paid for.

Take any industry or sector of economy i.e., textile, fertilizer,

pharmaceutical, oil & gas, ship building, sugar, banks, insurance,
leasing, and agriculture — WTO directly effects the local industry both
at the import and export ends from the beginning to end focusing more
on quality standards, hygienic conditions, and the very existence of a
product or service through intellectual property clauses.

The negotiation ground of WTO, between government to government;

we must be ready and fully prepared with complete set of briefings on
impacts of WTO Agreements and its agenda on all sectors of Pakistani
economy and industry. And there should be broad future vision that
identifies the tactical gains Pakistan would like to achieve from other
nations before reciprocating market access to respective countries.
Like all other relations, trade relations are friend and foe oriented and
are glued with the broader national goals of the country. Trade
relations have become so influential that have become either source of
normalization of other diplomatic relationships, or creating more
belligerent associations with other countries. If Pakistan has to choose
between the options international trade relationship can work wonders
for Pakistan, making it possible for Pakistan to normalizing
relationships with countries where the advantage is.

In additions, as it has been emphasized from the beginning that

exports are function of domestic production strength. Pakistan should
also develop an indigenous model of economic development based on
local stakeholders rather than following blindly the policies and
guidelines of WTO, WB and IMF. Bangladesh is a key example in this
respect which has achieved formidable success in developing socio-
economic strategies focusing the Small and Medium Enterprises (SMEs)
of the country. Gramine Bank and Gramine Telecom of Dr. Younas are
an epic story of mobilizing the poorest fraction of the country
especially women by providing credit loans to them to invest in local
self-employment and business opportunities, and accessing market
information using communication facilities.

The greatest disadvantage today Pakistan faces is the state of

illiteracy. No matter how industrious are the people of Pakistan
producing top class goods and services that can rule the international
market, the basic flaw with the businessmen and farmers of Pakistan is
the state of unawareness due to lack of formal education. The burnt of
which Pakistan faces today is lack of information and awareness, as
there are not formal studies and statistics available which can measure
the intensity of injury caused by the coming WTO regime.

WTO is a legal personality, a system of negotiated rules among nations

which become binding once agreed. Nations which have effectively
utilized the forces of globalization and trade liberalization are those
which has developed first of all local resource centers and local study
centers to develop a systematic study on every product line, on every
tariff line and then have studied the impact in detail. International
trade in the function of domestic production capacity and ability to
face international competition on one end and knowing how to take
advantages of the legal framework if an injury is inflected on the local
produces. Merely adopting information technology will not help
Pakistan until the application of Information Communication
Technology (ICT) is linked with research and analysis, fact finding and
promotion of formal education on one end is required. On the other, at
the higher level appropriate cooperation between government and
private sector is required in building expert capacity not only at the
enterprise level but stretching it to the university level. The
globalization issue was not taken seriously by the labor movement in
the initial period; they have to pay the price.

How Pakistan interacts with WTO to defend its rights while gaining
maximum benefit for the economy using the art of economic
diplomacy — either a wonderful or a wrong trade organization, all
depends on one's ability and understanding of WTO.

To what extend the tariff should be bound, to what extend the

subsidies to be provided, to what extend Pakistan can win preferential
treatment, win anti-dumping and safeguard cases, secure intellectual
property rights, to choose to give MFN status, to apply national
treatment to foreign products, to acclaim developing country
provisions, to ensure a level playing field for domestic industry — is not
an easy task for Pakistani Mission to Geneva in WTO at least for now!