Agriculture plays an important role in Pakistan’s economy, accounting for over 26 percent of GDP and almost half of the country’s labour force. The Agriculture growth rate has been at an average of 3.5 percent per annum since 1991-92 with wild fluctuations –rising by 11.7% percent and falling by 5.3 percent. The downward fluctuation in agricultural growth leads to uncertainty in terms of production and adds to the ever-increasing food import bill.

According to FAO projections, food demand in Pakistan would rise substantially by the year 2010, as the share of imports in domestic consumption is likely to go up further. Total cropped area in Pakistan (total area cultivated plus area sown more than once) declined slightly over last decade, whereas cultivable waste land was increased in that period. These trends indicate an increased investment in sustainable agricultural research and development, without which our food imports cannot go down. To do the needful, we need to adapt pro-poor as well as pro-farmer agricultural policies. It is to be taken care of that the trade liberalization regime is largely affecting national policies and the policymaking process due to the increased influence of multilateral and international regimes and processes such as WTO, IMF, World Bank and OECD negotiating mechanisms in the name of trade liberlisation. Pakistan, being a developing country enjoys certain flexibilities and concessions for implementing WTO agreements including the Agreement on Agriculture (AoA). Although, it is widely reported that these concessions and flexibilities are inadequate and insufficient, yet we are not able to avail whatever is offered to us due to our commitments with IFIs such as ADB, and IMF.

The AoA is of particular importance to Pakistan in terms of economic and food security. In theory, the AoA speaks of increasing trade in agricultural products through progressive liberalisation. The agreement stipulates that members must undertake specific binding and reduction commitments in the areas of:
· Market access (increased market access through the reduction of the import duties or tariffs);
· Domestic support (reduced domestic support through reduction in trade distorting production subsidies);
· Export subsidies.

In the area of market access, Pakistan offered “ceiling bindings” on agricultural imports during Uruguay Round (UR). Hence Islamabad was not required to reduce the tariffs during the UR implementation period (till 2005). However, the structure of border protection has undergone significant change over time towards greater liberalisation, involving both the dismantling of various non-tariff barriers (NTBs) and the reduction of ordinary tariffs. The NTBs included outright import bans, special dispensation and licensing, quotas, negative lists and certain monopolies. Import surcharges were removed in 1992-93. Licensing fees and the Iqra surcharge were abolished during 1994-95. Import quotas have been progressively eliminated since 1987. A number of items on the negative and restrictive list have also been fallen considerably. A reduction in the maximum applied rate of ordinary tariffs followed these measures. The import regime seems to be fairly liberal in recent years with applied tariffs mostly much below the WTO-bound rates. This has led to an influx of subsidized imported foodstuff in Pakistan.

As for as the domestic support is concerned, Pakistan had “market price support programs” for 11 crops during 1986-88 (Base Period for AoA). The base period aggregate measurement of support (AMS) was zero from the AoA viewpoint for these 11 crops bar sugarcane, which itself was within the permissible level (de minimis level). Similarly the non-product specific AMS in the form of fertilizer subsidy, electrical subsidy, and credit subsidy were also within the de minimis level. Being a developing country, Pakistan was allowed to give special and differential treatment (SDT) subsidies that amounted to Rs. 2085 million in 1986-88 on fertilizer, credit and tubewell electricity. These subsidies were for the farmers with landholding of less than five hectares. However, Pakistan stopped availing the benefit of SDT provisions and eliminated these subsidies in 1997-98. Pakistan still can utilize domestic support provision under AoA.

Prior to the establishment of WTO, Pakistan occasionally provided direct export subsidies. Exports of rice and cotton were subsidized when the export trade was a monopoly of the public sector, but the subsidy was abolished when the private sector was permitted to trade in these products. Thus there was no export subsidy on agricultural products in the base period for AoA and accordingly Pakistan cannot resort to them in future. However, it is entitled to provide subsidies to reduce the costs of marketing exports and internal transport as well as freight charges on exports shipment.

Apparently, it seems that AoA is not affecting the agricultural sector in Pakistan. However, one needs to analyse this situation in broader multilateral trading system, where the players and economies are highly unequal. While we are unable to give domestic support or subsidies to our farmers either due to the lack of resources or under the bindings of various loans that we are getting from various international financial institutes for “structural adjustment” and/or “structural reforms” programs, a number of developed countries have devised a “legal” way out to soften their reduction commitments under AoA. Many studies reveal that level of protectionism in agricultural trade has gone higher in the developed world despite the fact that their reduction commitments are (apparently) high.

According to the OECD, developed countries spent US $ 360 billion on agriculture in 1999 (about seven times more than what they had given to the poor countries in international development assistance). Likewise, U.S. subsidies to cotton growers totaled $3.9 billion in 2002, three times the U.S. foreign aid to Africa. This depressed world cotton prices, cut the income of the poor farmers in West Africa, Central and South Asia, and the poor countries around the world. Removal of U.S. subsidies on this one crop alone could increase revenues from cotton by about $250 million in West and Central Africa. Thus the Agreement on Agriculture is creating inequalities between countries that could give substantial support and protection to their agricultural sector (the developed countries) -and those, which could not provide such protection to their agriculture sector (under developed). This is a vicious circle where developed countries are protecting their farms with huge subsidies and grants and later on the produce is dumped in the developing countries. When it comes to import from developing world, the developed countries have hundred and one excuses such as sanitary and phyto-sanitary measures and environmental standards.

International Monetary Fund (IMF), the World Bank, and Asian Development Bank (ADB) by influencing the policy-making processes in the developing countries are widening these inequalities. Over decades, the IMF/World Bank loan conditions have forced developing countries to lower their trade barriers, cut subsidies for their domestic food producers, and eliminate government programs aimed to enhance rural agriculture. It was the loan conditionality of the ADB’s Agricultural Structural Reform Loan that forced Pakistan to take “U” turn from its “Development Box” stance it took at the WTO Ministerial Conference at Doha just two months after the Conference. So far, the deeds of International Financial Institutions (IFIs) were considered independent from those of the WTO. However, on 13th May WTO Director General Supachai Panitchpakdi, IMF Managing Director Horst Köhler and World Bank President James Wolfensohn met during the WTO General Council meeting on coherence. The theme of the meeting was to bring coherence in the plans and strategies of world economic agencies. In other words what Bretton Woods institutes were doing from back channels would be openly done now in the name of coherence.

Pakistan in this situation needs to remain over cautious. So far our negotiators in WTO Geneva have done a wonderful job. However, at home front there is a room for further improvement. The civil servants are being sent abroad (mostly Switzerland and the United Statees) for WTO training courses. However, most of them are posted in other departments when they start to know about their subject. Why not to form a WTO cadre in our civil service structure so that the civil servants may concentrate on WTO issues with full concentration. There is also a sheer need to involve academia and private sector (including various chambers of commerce) in WTO capacity building efforts. Moreover, arranging seminars and workshops in five star hotels is not the only way of building capacity. Various developing agencies and various ministries should also sponsor empirical research on the challenges and opportunities that WTO presents. This is the time to act and not resort to rhetoric.