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GOVERNMENT OF SINDH
PLANNING & DEVELOPMENT DEPARTMENT
(WTO CELL)

IMPLICATIONS OF W.T.O ON AGRICULTURE SECTOR

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WORLD TRADE ORGANIZATION (WTO)

1. INTRODUCTION:-
World Trade Organization (WTO) is a successor / replacement of GATT (General
Agreement on Tariffs and Trade) which was established in 1994. Pakistan has been a W.T.O

member since January, 1995. Pakistan is one of the founder members of both the GATT
and the WTO. At present the WTO has nearly 150 members of world trade, ( representing over
95% of world trade), of which there are 100 developing countries including Pakistan. The WTO
headquarter is based in Geneva, Switzerland and is headed by a Director General. The WTO's top-
level decision-making body is the Ministerial Conference, which meets at least once every two
years and appoints the Director General WTO. More over, there is a General Council which is the
body that overseas the day-to-day operation of the WTO. It also reviews national trade policies
and overseas the dispute settlement process. The basic theme of WTO is to promote free trade
and it is based upon the principle of comparative advantages i.e to utilize the available
global resources in the best possible manner.

2. OBJECTIVES:-

1. The WTO's overriding objective is to help trade flow smoothly, freely, fairly and
predictably.
ll. It deals with the rules of trade between nations at a global level.
lli. It's an organization for liberalizing trade.
IV. It's a forum for governments to negotiate trade agreements and down trade
related disputes between nations.

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/ v. The WTO is a place where member governments try to sort out the trade
problems they face with each other.
.~
VI. The.WTO's rules - the agreements - are the result of negotiations between the
members.
vii. It is an international body that promotes and enforces the provisions of the Trade
Laws and Regulations.
viii. It is aimed to enhance the overall welfare both consumers and producers in the
global market.
IX. The WTO is also formally structured organization whose rules have legal
binding on its member states.
X. The organization provides framework for international trade laws.
Xl. Member countries can refer trade disputes to WTO.

3. GENERAL IMPRESSION ON WTO

In Pakistan, almost every second businessman appears to be suffering from an
unknown fear of the WorId Trade Organization. The smaller the trader, the greater the fear. Only the
richer section of the community harbors much less. One reason is obvious: lack of knowledge and
awareness among the middle class traders about the WTO, its functioning, its rules and its key
objectives.
2. Pakistan has of late realized the necessity of imparting some basic information
to the trading and manufacturing community. The fears, about the WTO among the Pakistani
business community stem from lack of awareness.

3. Another misunderstanding, about WTO, is that it dictates to governments on

issues such as food safety, and human health and safety. Some of the agreements, do deal
with product standards, and with health and safety for food products made from animals and
plants.

4. The WTO is essentially designed to protect the vital interests of the core
capitalist states, such as the US, Britain and Japan. It will definitely accommodate the
developing capitalist states.

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5. The World Trade Organization (WTO) negotiations are dominated by rich

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countries and their corporate lobbying groups thus the process of negotiations is not producing any
fruitful results for developing countries.

6. All the key decisions are being taken in small group meetings influenced by rich
countries like USA and European Union.

7. Considers WTO as an unbalanced agreement as it favors rich countries and trans-

national corporations. This institution has been created to protect the expanded interests of global
capitalism rather than poor people.

8. Looking into the history of WTO negotiations, trade barriers remained intact,
agriculture subsidies have been increased and protected, and rich countries have progressively
pursued rules on investment, services and intellectual property that threaten to reinforce global
inequalities.

9. All the agreements which countries have to abide during the Uruguay round of
negotiations were unbalanced and tilted toward rich countries. Thus it is evident that all those were
made by the rich countries to penetrate in the markets of development countries and exploit their
resources.

4. AGREEMENTS ON AGRICULTURE (AoA}

The WTO agreements are a complex set of International Legal Instruments inter
facing international economies that include inter alia a host of rules related to international trade in
Agriculture and food sector. National understanding of these Agreements and rules is a pre-
requisite for both informed policy at National and International level and changed management at
domestic front under WTO Regime. The WTO motive is to liberalize trade and gradual reduction
of tariffs and elimination of subsidies in the Agriculture Sector being given to the farmers by the
US, EU and developed countries.

2. The result of the AoA on rice and wheat were considered to have mixed effects on
Pakistan. The agreement to reduce subsidies on rice and cotton maintained by the US, the EU
Japan and Korea could result in increased market access for Pakistan's exports. However, Pakistan

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would have to switch production to rice varieties popular in Southeast Asia, as they are currently

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not produced in Pakistan.
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j. In case of Pakistan, while applied tariffs on most agricultural products have fallen
since the early 1990s these tariffs remain relatively high for commodities classified as 'essential'
such as edible oils and oil seed. High ceiling bindings for most products, under their Uruguay
Round commitments place India, Pakistan and Bangladesh with the highest bound rates among
WTO members. Although progress has been achieved on the export side by removing export
controls however restrictions still apply for commodities such as sugar in India and cotton in
Pakistan.

4. Imports and exports of Agriculture commodities have also been liberalized. Import
tariffs and export duties on these commodities have also been abolished and there are no
quantities restrictions in place. Productivity gains from removal of subsides, variety of seeds,
water conservations, etc will lower unit cost of production making agriculture exports from
Pakistan competitive in international markets. As agriculture subsides and support for production
in the developed countries are hopefully removed under the new Development round. Pakistan
should be able to capture a share of global commodities market particularly in the proximate
geographical Areas. The switch over to higher value added non-traditional products such as meet
and dairy, fruits and vegetables would become more feasible under a liberalized trading
environment.

5. While all sectors of the economy come under the WTO, the most significant impact
will be on Pakistan's Agriculture sector. Agriculture being the backbone of our economy and a
sector facing heat of the WTO must come before all other sectors for the stakeholders. Agriculture
sector being the important chain of country's economy continues to be the single largest sector and
a dominant driving force for growth and development of the national economy. It accounts 22%
of GDP and employees 4.8% of total work force. Agriculture contributes to growth as a supplier
of new material to industry as well as market for industrial products and also contributes
substantially to Pakistan exports earning.

6. The WTO regime on Agriculture comprises the "Agreement on Agriculture"

(AoA), the sanitary 0 and phyto -sanitary (SPS) Measures, Technical Barriers on Trade (TBT) and
TRIPS which are all inter-linked to each other. With the implementation of AoA in 2005, the

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borders will be open for foreign Agricultural products and it will be difficult for our farmers to

~ survive. According to Agreement, we will have to open the domestic market for foreign
Agriculture producers, to eliminate the domestic support on Agriculture products and to withdraw
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the export subsides.

7. Under AoA, tariff on Agriculture products should be the same in all member
countries. Tariff reduction can only benefit, if both the countries either exporting or importing are
providing the same amount of subsides. But if one country provides heavy subsidy and the other
country is not able to do so either due to financial constraint or under the conditionality of IFI,s
mutal reduction of tariff, it will only benefit the former in terms of enhanced exports. The result of
cut in tariff will jeopardize the very existence of rural population because of insurgence of cheep
imports and decreased export of Agriculture products, this devosting the very basis of domestic
industry. On the other hand, tariffs are also a source of revenue for the government, and reduction
in tariffs means fiscal deficits.

8. Interestingly, developed countries like the US, the EU and Japan are providing
""_domesticsupport to the-ir Agriculture sector while askin~ developing countries to eliminate the
subsides. The USA, in fact has recently increased its agriculture subsides. European countries, on
the other hand, give a subsidy of 2.5% day / cow as compared to per capita income of 75% .
According to estimates, the opportunity cost of one job in textile sector, in an industrialized
country, protected by tariff and quota barriers, is about 35 jobs in textiles in low income countries.
Moreover, subsidy on cotton provided to an American farmer decreases the world cotton price by
4.5%, in contrast to this, against the promise to uplift the agriculture subsides.

9. As the agreement was to be implemented to bridge the gaps for various agriculture
products between developed and developing countries. But its true implementation is still to be
materialized.

10. Pakistan has already reduced tariff on imports of agricultural products from
m~ximum65 percent in 1995 to 25 percent in 2002-03. Secondly Pakistan had converted most of the
non-tariff measures into tariff before the submission of the schedule to the WTO in 1995. So, we
cannot avail the provision of Special Safeguard Measures (SSM).

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11. Since 1998, Pakistan has progressively and substantially reduced tariffs. This effort

~ culminated in June 2002 with the establishment of four maximum import tariff bands of 25
r" percent,20 percent, 10 percent and 5 percent respectively.

12. Generally, Pakistan's applied tariffs are below the WTO bound commitments and the
weighted average applied tariff is 16.7 percent, down from 56 percent in 1994.

13. W.T:O wanted to eliminate subsidies in the agriculture sector, which were given to
farmers. The W.T.O stressed elimination of subsidies where as the US and Europe are reluctant to
eliminate subsidies. and there are a cry by rural and peoples movement to seprate agriculture from
the W.T.O.The W.T.O motive was to liberalize trade and gradual reduction of tariffs so that
subsidies could be eliminated ultimately but there were countries protecting farmer's interests.

14. The W.T.O's basics needs to be under stood carefully because countries that signed
the W.T.O without studying it are facing its implications now. The W.T.O objectives called for
converting world into one economic unit where investors can invest their capital wherever they
like and manufacture products.

15. Apart from the Government to eliminate export subsidies in Agriculture

by 2013, nothing concrete was committed in the Hong Kong for developing countries.

16. The inputs for Agriculture Sector must not be taxed to provide a level playing field
to our farmers who have to compete with subsidiesed agriculture of global north..

17. The finalization of modalities for tariffs and subsidies on farm and industrial

sectors by rich countries would hurt the interest of poor c;ountries.

18. Creating a level playing filed for trade in agricultural would, therefore,
Increase global welfare. But developed countries had erected barriers to agricultural
imports and also had in place elaborate systems of subsidies for the small number of
people who chose to remain on the farms.

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19. The United States was unwilling or unable to show any flexibility on the

I issue of farm subsidies. The U.S. had not matched flexibility shown by W.T.O. nations
,.., on farm trade. Subsidies for agriculture have been a central obstacle in the five (5) years of
talks to agree to a so-called Doha Round of Tariff cut.

20. In the Doha Round talks developing countries have demanded deep cuts in
the billions of dollars that pays to US farmers.

21. The developing countries are demanding lower tariffs on their agricultural
exports to US and (European Markets) while industrialized nations seek greater access to
developing and emerging Countries for their industrial goods and services.

22. All major countries both developing and developed stands to gain from the
comprehensive, across the board bold reductions in tariffs, domestic subsidies, export
subsidies and the expansion of tariff rate quotas.

23 Farmers and governments of the developing economies are demanding that

the richer nations should remove all barriers to international agricultural trade_byallowing-
greater market to their products through substantial across the board reduction in tariffs, J

removal of domestic as well as export subsidies and expansion of tariff rate quotas. The
developed countries wanted to exploit the poor.

24. Japan, the US, and the EU-refused to cut heavy agriculture subsidies and
bring down tariffs as demanded by agricultural exporting nations, both the developed and
developing.

25. The W.T.O. had failed to deliver its promise of a fair trading system. The
EU, US and Japan must do much more to give effect to the far-reaching mandate for
agricultural reforms.

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26. Proliferation and increased stringency of technical regulations and food
, safety and agricUlturalhealth-siandards are major source of concern among the developing
."
countries.

27. Developing nations are pushing the United States and other wealthy nations
to significantly cut farm subsidies, while powered countries are pursuing to allow more
access to their markets.

5. AGRICULTURE SECTOR
Agriculture
Agriculture is the mainstay of Pakistan's economy. Nearly 22% of total output
(GDP) and 44.8% of total employment is being generated in agriculture. It also contributes
substantially to Pakistan's exports. Agriculture also contributes to growth as a supplier of raw
materials to industry as well as market for industrial products. Not only that 44.8%of country's
work force is employed in agriculture but 65.9% of country's population living in rural areas is
directly or indirectly linked with agriculture for their livelihood. Whatever happens of agriculture
is bound to affect not only the country's growth performance but to a large segment of the
country's population as well. Pakistan's agriculture has been suffering, off and on, from severe
shortage of irrigation water in recent years.

PRODUCTION OF IMPORTANT CROPS

Fiscal Year 000 Tones
! 000 Bales
wheat Rice Bajra Jowar Maize Gram Sugar- Cotton
cane
2004-05 21,612 5,025 193 186 2,797 868 47,244 14,265

2005-06 21,700 5,547 221 153 3,560 527 44,312 12,417

a) MAJOR CROPS:
i) Cotton:
Cotton is not only an export- earning crop but also provides raw material to the
local Textile Industries. It accounts for 8.6% of the value added in agriculture and about 1.9% to

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GDP. The area and production target for cotton crop during the year 2005-06 were 3247 thousand

"I
hectares and 15.0 million bales respectively. The crop was, however, sown on the area of 3096

r'" thousand hectares.

ii) Rice:

Rice is an important food cash crop. It is also one of the main export items of the
country. It accounts for 6.1 % of the total value added in agriculture and 1.3% to GDP. Area and
production target of rice for the year 2005-06 were set at 2533 thousand hectares and 5000
thousand tons respectively.

iii) SU2;arcane:

Sugarcane crop serves as a major raw material for production of white sugar and
gur. Their share in value added of agriculture and GDP are 3.4% and 0.7% respectively. For 2005-
06, the area under sugarcane crop was targeted at 955 thousand hectares as against 966 thousand
of last year.

iv) Wheat:
Wheat is the main staple diet of the people of Pakistan. It contributes 13.7 percent
to the value added in agriculture and 3.0% to GDP. Area and production target of wheat for the
year 2005-06 were set at 8415 thousand hectares and 22.0 million tons, respectively. Wheat was
cultivated on an area of 8303 thousand hectares, showing a 0.7% decrease over last year and 1.3%
lower than target. The size of the wheat crop is provisionally estimated at 21.7 millions.

v) Other Maior Crops:

Except maize, tobacco and bajra all other major crops have decreased as compared
to the last year's production. The production of gram, jawar, rapeseed & mustered and barley is
provisionally estimated to have declined by 39.3%, 17.%, 7.4% and 5.4%, respectively. The main
reason for decline in production as compared to last year has been the shortfall of respective area
of these crops. The production of gram is 39.3 percent lower than last year mainly because of the
less rains during crop growth period and at crop development stage.
b) MINOR CROPS:

i) Oilseeds

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The major oilseed crops include cottonseed rapeseed / mustard, sunflower and

I canola etc. The total availability of edible oils in 2004-05 was 2.764 million tons. Local
production stood at 0.857 million tons which accounts for 31%of total availability while the
remaining 69% was made available through imports. During 2005-06 (July to March) local
production of edible oil is provisionally estimated at 0.809 million tons. During the same period
1.269 million tons of edible oil was imported and 0.216 million tons edible oil was recovered from
imported oilseeds. The total availability of edible oil from all sources amounted to 2.294 million
tons during (July to March) 2005-06 (Provision estimates).

Other Minor Cro~

Finant'ial Vear I
( 000 tons) I

Masoor Mung Mash Potato Onion Chillies

2004-05 25.9 130.0 18.3 2024.9 1764.8 90.4
2005-06 22.4 113.6 16.5 1662.7 2275.9 121.9

ii) Other Minor Crops:

The production of all the pulses namely masoor, mung and mash are down by-
13.5%, 12.6% and 9.8% respectively during 2005-06. The main reason for decline in production of
all these pulses as compared to last year has been the short fall of respective area of these crops,
which declined by 17.8%, 15.2%and 23.7% respectively. The production of potato was also lower
than last year on account of frost which affected the potato crop during the month of January, 2006.
However, the production of onion and chillies increased by 29% and 34.8%, respectively over the
last year.

c) LIVESTOCK AND POULTRY

a) Livestock
Livestock sector contributes almost 50 percent to the value addition in the agriculture
sector, and almost 11% to Pakistan's GDP, which is higher than the contribution made by the crop
sector (47.4% in agriculture and 10.3% in GDP). The role of livestock sector in the rural economy
of Pakistan is very critical as 30-35 million rural population of the country are engaged for their
livelihood. Within the livestock sector, milk is the largest and the single most important commodity.
Despite decades of neglect, Pakistan is the fifth largest milk producer in the world. The total value
of milk produced is higher than the value of two major crops, that is, wheat and cotton.

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b) Poultrv
The Poultry has emerged as a good substitute of beef and mutton. Its importance can
~ be judged from the fact that almost every family in Urban IRural area are deriving 30 to 40% of
their income from it.

d) FISHERIES

Fishery as a sub-sector of agriculture plays a significant role in the national

economy and towards the food security of the country, as it reduces the pressure on demand for
mutton, beef and poultry. It is also considered to be the principal source of livelihood for the
communities inhabitating at the long coast of Sindh and Balochistan as well as along the major
rivers, lakes and dams. It contributes, on an average, about 0.3% to the total GDP and 1.3% to
agricultural. It has been estimated that about 400 thousand fishermen and their families are
dependent upon the fisheries for their livelihood.

MAJOR EXPORTS BY COMMIDITY

(Mill' R )
,
ITEMS 2003-04 2004-05
I I

1. Fish and preparation 8805.6 8259.1

2. Rice 36534.7 55392.3
3. Cotton yarn 64851.0 62749.4
4. Cotton cloth 98542.2 110578.7
5. Vegetables & Fruits 7391.2 6653.6

2. The overall exports posted an increase of $ 1890.28 million in the first nine months
of the fiscal year 2005-06 over the same period of last year ie 1994-05. It is encouraging to note
that exports 2005-06 have been largely quantity driven and with firming up of the price of
exportable, Pakistan's export may rise substantially in the medium terms. Pakistan's exports are
highly concentrated in few items including Cotton and Rice. These two categories of exports
accounts for 65.3% of the total exports during the nine months of 2005-06 with Cotton
manufacturing alone contributing 58.4% followed by rice 6.9%.

Exports

Cotton and rice are the two major traditional exports of Pakistan. Pakistan has two
export corporations, one for rice and the other for cotton. Over time, private sector has been
involved in export of rice and cotton. The country has been designated as net exporter of these
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commodities by the WTO Committee on agriculture. In world production Pakistan claims a share

I of 9 percent for cotton and I percent for rice. Total exports of primary agricultural commodities
markedly fluctuated from year to year. Pakistani cotton enjoyed perfect market conditions for its
export outlets. No trade barrier affected it. Pakistan produces two types of rice varieties, which are
also exported. A special variety known as Basmati rice has its traditional markets where it faces
some competition with Indian rice. The export of other variety of rice faces competition from
other countries and this is exported to Asian and African countries. Even two rice producing
countries of Sri Lanka and Indonesia also import it. The special variety is exported to high-income
Middle East countries and U.K. During the post UR period no market diversification has been
noticed. Pakistani rice could not get adequate market access to the developed countries.
Notwithstanding that the rice export has substantially increased over this period mainly due to
increasing trends in exportable surplus in line with domestic production.

The export of fruits has shown notable improvement. Except some limited
exports of fruits to very few countries like the U.K. market access in developed countries
has not been allowed to it. The SPS standards were the main impediments against
Pakistani exports of fruits to these countries. Pakistan has not formally invoked the dispute
settlement provisions of WTO in the case of commodities covered under the AoA. Four
major items of raw cotton, cotton waste, rice and fruits roughly account for about 94
percent of total agricultural exports excluding fish.

Imports

Despite being an agricultural country, Pakistan has to import every year a

huge amount of food-stuff. On the import side, Trading Corporation of Pakistan is
involved in imports of agriculture commodities. Pakistan has been notified by the WTO as
a net food importing developing country. The largest items of import are wheat and edible
oil. Wheat is mainly imported from North America. The other important items of import
are sugar and pulses which are essentially to meet deficit in local production and their
value has been varying over the years depending on the local deficits. Milk and milk
products are the next important item of import which is also meant to meet the local deficit
but it is small proportion of the total national requirement. The six import items of wheat,
edible oil, tea, sugar, pulses and milk constitute about 90 percent of total agricultural
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imports. Most of the agricultural imports are of essential nature. The imports of

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- agricultural commodities have been getting differential treatment under its tariff policy.
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I,
I. FARM INPUTS ISSUES

i) Fertilizer:-
Fertilizer is one of the basic input of agriculture and timely availability is very cruel for
agricultural production.

ii) Improved Seeds:-

Certified seed plays a pivotal role in boosting agricultural production both in market oriented and
subsistence farming.

iii) Mechanization :-
Intensive use of agriculture machinery needs to be popularized among farmers with a view to
improving the average yield. It is well known fact that effective use of agricultural machinery not
only speeds up cultivation process but also accelerate harvesting and threshing operations.

iv) Plant protection:-

Plant protection measures help in increasing per hectare yield by protecting crops from damages
because without effective protection against the attack of pests and diseases the beneficial
outcome of other inputs may not be realized either.

II. MARKETING ISSUES

i) The WTO principles not only bear implications on the production pattern of farm
products but also for the distribution mechanism of these commodities.

ii) In the agriculture sector marketing plays a dual role i.e It not only provides
materials and services to the consumers in the farm market but also serves the
products market.

iii) In the global scenario, under the WTO regime, eligibility criteria for setting the
products are the ownership of the product, which comes under the scope of TRIPS

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(Trade Related Intellectual Ownership). Only the producers registered varieties

c breeds and products will be able to grow and export those commodities.

iv) Under WTO regime we are required to produce high quality products at the lowest
possible cost. Based upon the principle of food safety and quality is concerned with
hygienic production, careful handling, effective transportation, storage, processing
and packaging and also sensitive to the toxic residual effects of pesticides and
medicines.

v) Standardization and grading are important marketing issues, the importance of

which can not be over looked in modern marketing. A more scientific and
disciplined approach, which will cover the grading in more details, is the need of
the time because existing grading system covers only few dimensions.

vi) Packaging is another important aspect which not only protects the product but also
makes it attractive and easy to handle. In the existing scenario of marketing the
consumers in the international markets have become more conscious almost the
materials used for this purpose.

vii) Effective marketing mechanism is meant for the availability of products throughout
the year and this has to be made possible through processing and storage. A
combination of public and private investment in this regard can be sought to
establish storage and processing chain on a scientific basis.

viii) In order to promote the Pakistani products in the international market, we will have
to undertake the diversification of agriculture products with the identification of
new market. In addition to these we need to comply with the international standards
to put Pakistan products in the rank of highest repute.

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SU22est~Dn:-
We should maintain the standard of grading and packaging, which are
effective marketing mechanism so as to promote the Pakistani products in the international
market.

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ANNEXURE
COMMENTS OF
STACKHOLDERS AND DEPARTMENTS

1. KARACHI CHAMBER OF COMMERCE &

INDUSTRIES

1. It is expected that under WTO agreement, market forces would result in

domestic prices rising along with rise in world prices, which would stimulate
domestic production. Reduction in tariffs and elimination of subsidies would
provide Pakistan improved export opportunities. The position suits us because
our tariffs are generally lower and are not granting subsidies. In fact, despite
the fact that Pakistan's Bound Rate of Duty on agricultural products was 100-
150% the current rate of duties ranges between 5 to 25%.

2. The agreement to reduce subsidies on rice and wheat maintained by developed

countries could result in increased market access. The reduction on subsidies

and resulting price increase would mean that total expenses of Pakistan for
wheat imports, in wheat deficit years, will rise.

3. In the case of rice, Pakistan is a net rice exporting country and is thus bound to
benefit from the liberalization of rice and agricultural products. As it is only
2.5% of global production of rice is internationally traded.

4. Both developed and developing countries use policy measures and export
subsidies are also widespread. Export subsidies on rice in EU have been
estimated at $ 322 per tone while under different support systems a farmer in
the US is earning $ 152 per tone of rice production. The tariff protection on
rice is also very high with global trade weighted average tariff estimated at
43%.
; - - -~,~

5. In mid 2006, India notified Super Basmati for exports, claiming sole rights for
our high demand variety. During 2005-06 our rice exports crossed $1 billion
mark. The Indian move has grave consequence for Pakistan as it can deprive it
from around $ 500 million worth of export market. Thus the case for
registration of Basmati needs to be developed urgently because it can create
problems for exporters as under WTO and EU rules every exportable
commodity has to be registered under the local law before taking it up with the
importing country.
6. We laud the initiative of PHDEB to promote horticulture with the objective of
making "Floriculture" exports as one of the sunshine sectors of Pakistan
through establishment of FCFF in each province to enable the farmers to grow
quality flowers on a large scale. We need open trade borders and closing down
of trade barriers by developed countries to achieve quantum jump in flower
exports.

7. Pakistan has great potential in livestock sector. Pakistan is the fifth largest
milk products. We may, however, take temporary 'safeguard measures'
against import of livestock products, allowed to developing countries if so
warranted.

8. In general, we believe that substantial reduction in tariffs and farm subsidies

would mean greater market access to Pakistani agricultural products. Pakistan
will be able to export the excess sugar, wheat, tobacco, fruits and vegetables
and dairy products. Pakistan's cotton would fetch better prices for our farmers.

9. Pakistan is not fully availing of investment subsidies generally available to

agriculture and other input subsidies admissible under AoA. Besides provision
on S&D treatment permit developing countries to use subsidies to reduce cost
of making exports of agricultural products including upgrading and other

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processing costs and the cost of internal and external transport and freight. But
GoP is not extending such subsidies to the warranted level on the pretext of
budgetary constrains.

10. It is ironic that while developed countries are slow in phasing out subsidies
under WTO regime, most of the reductions in farm subsidies in Pakistan so far
have been made under the commitments to IMF, ADB and other international
financial institutions.

11. Besides, Pakistan has to apply agreement on TBT and SPS to develop modern
food control and safety programmes and meet specific requirements on private
standards like GAP, HACCP etc. We should see the writings on the wall and
ensure that measures like suspension of import of fisheries from Pakistan by
ED for non-compliance should not recur.

12.We can avail of exceptions for "sensitive' agricultural products, safeguard

mechanism" as a measure of last resort.

13.The successful and prompt conclusion of agreement as agriculture within the

framework of now stalled Doha Round is expected to create level playing
field, which will be in the interest of Pakistan. Developing countries as a
group could generate $ 40 billion in agriculture exports if protection policies
are abandoned by developed nation.

2. LIVESTOKE AND FISHRIES DEPARTMENT

The agreement envisages restriction on direct support in favour of

domestic producers including Export subsides. The hides & skins and wool
and hair are the only items of Agriculture commodities related to this

3
"

department. Moreover, this department is of the view that the provisions are
acceptable in principle.

3. AGRICULTURE DEPARTMENT

The items enlisted in "Agreement on Agriculture" at page 18 (551) raw

cotton, relates to Agriculture Department and supported. The context of WTO
Agreements are mainly related to import and export subsides pertain to
Industries sector.