Deficits of knowledge
Pakistan's response to the WTO has been a schizophrenic blend of servile compliance, antagonistic rhetoric and general confusion. Proponents and opponents know not what they talk about.
Emma Duncan's book Breaking the Curfew portrays Pakistan as a nation that has ideas without any ideology, and ideologies without any idea. Pakistan's haphazard response to the challenges of the World Trade Organisation (WTO) only corroborates this assessment. The WTO has been described as a bicycle which collapses if it does not move forward. In Pakistan's case the bicycle is continuously moving in a circle with little sign of any forward movement. There is a lack of clear-cut vision on the WTO and most protagonists in the country are unclear about their positions on trade policy. Consequently, attitudes toward the WTO in different quarters are motivated almost entirely by ideological considerations, leading to a near-universal failure in understanding what the organisation really means and what its real and potential implications are.
There are two broad schools of thought in Pakistan about the impact of different WTO agreements on the country. One group uncritically propagates these agreements as the panacea for every ill that plagues the country. The argument here is that free trade will have a strong positive effect in creating the conditions for reducing poverty through enhanced direct and indirect employment opportunities, social welfare services and infrastructure, which can potentially benefit the poor. This is a restatement of the "trickle down" hypothesis of one strand of development economics, formulated decades ago, enjoying revived respectability in recent years. The most notable proponents of this view are government officials and representatives of the international lending agencies. The position within the government is not the result of any well-considered debate however. It is a position of convenience, since government departments find this approach the easiest way to obtain grants from international donors, who as a rule like to hear pro-WTO platitudes.
The opposing view sees the WTO as a curse and attributes every malady of the developing world to WTO agreements. The WTO is seen as a rich man's club, designed to exploit the developing world in the interests of the developed world. Most civil society organisations and anti-globalisation activists are partisans of this view. And since America is perceived to be a symbol and driving force of globalisation, the WTO also attracts criticisms from the strong anti-American lobby in Pakistan.
Neither of the two broad positions on the WTO is based on any substantial or systematic empirical study. They are simply assumptions paraded around as conclusive arguments. No one in this debate appears to understand that the WTO is a member- and rule-based organisation that in itself it is neither good, nor bad. It is an organisation in which those who can manoeuvre the rules benefit from it — and rich nations, by virtue of their better bargaining positions, are able to do so. Developing countries are far behind in this process, not only because they do not have the required capacity and understanding but also because they lack the political and administrative will to change the status quo.
The development box
The lack of clarity in Pakistan about the WTO manifests itself in strange and sometimes comical ways. Because there is no single official policy vis-à-vis the trade organisation and the agreements that it stands for, two important ministers of the present government have taken entirely contradictory positions on the WTO. The commerce minister, Abdul Razak Dawood, took a radical position in November 2001 at the WTO ministerial conference in Doha, where Pakistan assumed the mantle of "Champion of the Development Box". Under the WTO's Agreement on Agriculture, member states are committed to liberalise their trade in agriculture, including reductions in their tariff and subsidy levels. Developed nations are required to achieve this objective by the end of 2002, while the deadline for developing nations is the end of 2005. Exemption from these commitments is permissible only under certain exceptional circumstances, which are defined by what, in WTO parlance, are called the "Green Box" and "Amber Box" measures.
Backed by various other developing countries such as Uganda, Kenya, Nigeria and Malaysia, Pakistan demanded the introduction of "Development Box" measures. Under this rubric national food security crops would be exempt from the import tariff reduction commitments of the Agreement on Agriculture. Likewise the "Development Box" measures which Pakistan advocated would also enable developing countries to provide domestic support to food security, crops. Moreover, Pakistan demanded appropriate flexibility for developing countries to be able to promote exports.
However, when the finance minister, Shaukat Aziz, signed an Agricultural Structural Reforms loan agreement with the Asian Development Bank (ADB) just a month after the Doha meeting, Pakistan retreated from everything that Dawood had demanded under the Development Box. Pakistan committed itself to abolishing the support price mechanism for various crops (including wheat and sugarcane), shutting down food departments, downsizing agricultural research institutes and opening up the grain storage sector to private investors. All of these reforms are to take place over the next five years.
The effects of this loan agreement have already begun to show, as the case of wheat procurement amply illustrates. Every year the government announces a support price for wheat prior to the wheat-harvesting season. The purpose of this support price is to ensure that farmers get a return on their produce that covers the cost of inputs. Government agencies used to set up procurement stations, called flag centres, even in remote villages so that the farmer, irrespective of the size of his holdings or yield, could dispose of his grain at an assured price practically at his doorstep. This procedure had the advantage of reducing disposal costs and circumventing middlemen, who apart from hoarding and black marketing, tend also to depress the market price of grain during the harvest season. This procurement system appears to have come a cropper.
In visible compliance with the terms of the ADB agreement, most of the flag centres established by the Punjab Food Department in the past were closed down this year, leaving helpless farmers at the mercy of either middlemen or food department officials, whose vast discretionary powers in the matter of procurement can be expected to be used for patronage or rent-seeking rather than for the financial relief of the primary producers. The curtailment of the support price mechanism has happened despite President General Pervez Musharraf's pre-referendum assurance that every grain of wheat would be purchased by the government at the prescribed support price. Wheat growers who feel they have been abandoned by the government are now raising a hue and cry about it.
WTO and ad hocism
At the World Food Summit-five years later (WFS-fyl) that was held in Rome early last month, the minister for food and agriculture, Khair Mohammad Junejo, was at his rhetorical best when he assured the international community that the Government of Pakistan is determined to ensure the food security and food sovereignty of its people. Back home just 10 days after WFS-fyl, the federal cabinet approved the Corporate Farming Bill, which allows multinational companies and private investors to buy government land for industrial agriculture. Interestingly, there is no ceiling on the extent of the land that can be purchased. The Constitution is being amended to bring about changes in the land reforms act (1977) to do away with the existing ceiling of 100 acres of land. A limiting clause that for 25 years protected gross inequalities in land holding patterns from being accentuated is being abrogated to accommodate the interests of multinational companies.
As a further incentive to them and other private investors, some basic categories of the economy are being redefined. Agriculture is going to be declared an industry, but one excused from existing labour laws. More incentives are expected to be on offer to promote investment in industrial agriculture. Enough homework was not done before the bill was approved and there is serious concern that its provisions will reverse all that was achieved under previous land reform exercises, thereby placing food security at grave risk. It is evident from all these instances that policymakers in Pakistan are not clear in their understanding of WTO agreements and the larger economic and social impact of trade liberalisation. The affairs of the state are being handled in an ad hoc manner.
The lack of clarity is not exclusive to the government. Most civil society organisations (which are more than just the sum of all NGOs in Pakistan) have not formulated a clear response to the WTO, but this not prevented them from taking very rigid positions on issues with which they are unfamiliar. Some issues on which this lack of familiarity most evident are the provisions relating to environmental standards and market access contained in WTO agreements. Some groups who blame the WTO for being unfriendly towards the poor are also demanding tougher environmental policies. Doubtless, environmental standards are important but these must be considered in context. Setting domestic standards that are economically counterproductive and in excess of what other countries set for themselves can create potential trade barriers for developing nations, to the huge detriment of the poor in these countries.
In a similar fashion, the proponents of subsistence farming and organic agriculture have been demanding greater market access. The anomaly of greater market access for subsistence farming seems to have escaped them, as has the very different scale, logic, purpose and productivity of organic agriculture as compared to regular commercial agriculture. The two are not comparable forms of agriculture. The problem of confused perspective is compounded when different organisations combine in partnership networks to adopt a collective position on the WTO. Multiple ill-formulated positions converge in collective resolutions and documents to amplify the confusion. Contradictory positions are an all too dismal reality of most civil society WTO networks.
To add to the confusion, the developed world is, through its international funding agencies, trying to build 'capacity' among the different lobbies and interest groups in Pakistan to promote a better understanding of trade issues. Most of these capacity-building efforts are limited to seminars and workshops organised with such funds. These initiatives are not entirely useless. But they are not adequate either, particularly if one keeps in mind the distinction between 'capacity building' and 'quality capacity building'. In most of the WTO capacity-building workshops, there are many so-called experts who insist on imposing their far from credible perspective on the participants, without any serious empirical validation of their assumptions. At such workshops it is customary to hear all manner of wild claims, such as that the WTO Agreement on Agriculture would lead to deterioration in the quality of food in Pakistan or, more extremely, that the WTO is a conglomeration of Zionist lobbies acting against Muslim countries. If this is the kind of argument made by the opponents of the WTO, proponents of the organisation, including the government, are not far behind in contriving their own version of the truth. It is routine for senior officials and ministers, who have to deal with the WTO in very responsible capacities, to claim that those opposing the WTO are traitors.
All this has placed the trading community of Pakistan in a dilemma, as it does not know where to turn to for informed advice or what to do in its absence. WTO agreements involve complex technical and legal issues and any country that recognises the reality of the globalised trade regime must have institutional mechanisms to advise the trade and business lobby on very basic issues, as well as to negotiate with the WTO on behalf of domestic economic actors. There are various aspects to WTO agreements such as "Sanitary and Phyto-Sanitary Measures" and "Agreement on Trade in Services" that cannot be easily fathomed by local traders and manufacturers producing for the world market who are suddenly faced with new competition from foreign products in a liberalised environment. Unfortunately even the basic research on WTO agreements is lacking in Pakistan.
The only possible solution to this current tangle is empirical research on the implications of different WTO agreements on various sectors of the Pakistani economy. In particular, research must be undertaken in the agricultural and industrial sectors so that representatives of these groups can participate in national debates and international meetings in a meaningful manner, and help shape Pakistan's position. At present, however, there is no coherent critique of the WTO within Pakistan, a fact that prevents both domestic activists and diplomat-negotiators from offering intelligent criticisms of the trade regime that can potentially lead to meaningful reforms and adjustments. Failing this, there seems no option but the rather ungainly one of having to perpetually blame other nations for domestic predicaments.