Pakistan has reportedly opposed India-led countries' proposal to purchase crops from farmers which can massively hit Pakistani rice sector, well informed sources told Business Recorder. Commerce Minister, Engineer Khurram Dastgir Khan is leading Pakistani delegation at the 10th World Trade Organisation (WTO) that began on December 15 in Nairobi (Kenya).
"India-led countries are urging a permanent solution for public stockholding issue that will allow them to purchase crops from farmers and we fear that this would hurt Pakistan particularly our rice sector," sources quoted the Minister as stating. Pakistan, source said, has taken a firm stance that it will never accept any solution that is harmful to its farmers. The Commerce Minister held meetings with like-minded countries on this issue and in his speech will state that Pakistan's Basmati exports have dipped by half during the last five years.
The issue of market access for agricultural goods is an essential part of the DDA negotiations on agriculture. A substantial improvement in market access for all agricultural and food products are politically essential for the success of the agreement on agriculture. Improvement in market access is by and large the most important of the three pillars for Pakistan in negotiations. The fastest growing area in agriculture and food products is the trade occurring between developing countries. Since Pakistan has already made a considerable progress in unilaterally liberalising its agriculture trade, it is in its own interest to push for substantial tariff cuts by other developing countries. These benefits will come at virtually no cost to Pakistan. Thus Pakistan is expected to propose limited special and differential treatment for developing countries, especially for the high income developing countries.
Under the existing agreement on agriculture, Pakistan can introduce virtually any amount of green box programs, such as research and development, marketing assistance, domestic food aid, infrastructure and input subsidies. In addition, Pakistan can introduce new amber box programs, as long as they do not exceed the 10% de minimus level. In order to gain policy space, Pakistan can push for large reductions in domestic support in developed countries; Pakistan would need this political cover to defend the tariff cuts that it may be forced to accept. The cuts in domestic support in the EU & US may provide benefits to Pakistani exports, the sources added.
Commenting on export subsidies, the source said Pakistan expects that an outcome on export competition in Nairobi should constitute a very significant and meaningful outcome. Apparently, benefits to Pakistan for their elimination may, in fact, be negative because of NFIDC status, however, Pakistan is now self sufficient in staple food supplies, rather "we face issues of competitiveness of agriculture commodities due to price depressions," sources added.
The Special Safeguard Mechanism (SSM) allows developing countries to raise tariffs temporarily to deal with import surges and price falls. The SSMs are invoked to protect the poor and vulnerable farmers with smaller triggers and bigger tariff increases. Pakistan has no offensive interests in SSM, as this can be used against its exports by developing countries; therefore, Pakistan will not push it too much. Politically, China and Turkey are pushing for SSM so Pakistan will not come to the forefront to oppose this decision.
Bangladesh, on behalf of the Least Developed Countries (LDC) Group, presented a draft submission that outlines the group's priorities in negotiations with fellow WTO members ahead of the organisation's 10th ministerial conference. Four elements of interest to LDCs - namely, duty-free quota-free (DFQF) market access, more favourable rules of origin, the operationalisation of the services waiver, and cotton - led to the adoption of decisions during the WTO's last ministerial conference in Bali, Indonesia two years ago. Since then, the group's focus has mainly consisted in turning some of these outcomes into legally-binding decisions.
According to the draft document, WTO members agreed last month at a dedicated session of the organisation's Committee for Trade and Development that the secretariat would complete a study on the implementation of Hong Kong ministerial decision on DFQF market access by mid-November 2015. This study will serve as a tool to provide "necessary inputs towards finding convergence" in implementing DFQF market access "in time" for the Nairobi conference, the draft submission says.
"Preference granting countries shall make DFQF market access binding through appropriate scheduling," the document suggests. The 2013 Bali decision on DFQF market access called on developed and developing country members in a position to do so "to improve" their existing DFQF coverage if they have not yet provided such market access for at least 97 percent of products originating from LDCs. Last year, some countries - China, India, and Chile - made announcements in that regard, with Chile submitting a formal notification.
Many LDCs benefit from non-reciprocal preferences, which are granted primarily by developed countries. Applying DFQF to all LDCs, however, could effectively result in some of these countries losing some of the competitive advantages that these preferences have provided.
With no substantial progress on DFQF in recent years, the debate has focused largely on potential gains under a 97 percent DFQF scheme versus full coverage and on related rules of origin. According to some informed sources, the LDC Group is proposing to resolve the DFQF issue for all LDCs by conducting a tariff line analysis with regards to clothing. The objective is to determine which tariff lines should be included under DFQF while preserving preferences under the African Growth and Opportunity Act (AGOA) and the Cotonou Partnership Agreement. These allow the US and the EU, respectively, to provide trade preferences to specific LDCs.
"If the issue surfaces in Nairobi Ministerial, which is not evident as of now, Pakistan would reiterate its stance earlier taken in Hong Kong Ministerial and would strongly resist any decision in this regard," said an official document. The draft submission also praised the results of indications made at the high-level meeting held this past February regarding the planned preferential treatment to LDC services and service suppliers, in line with the 2013 Bali decision on the operationalisation of the services waiver, as well as the notifications submitted so far.
Ahead of the Nairobi ministerial, the document further encouraged the actual notification of preferences to the Council for Trade in Services (CTS), including information about "preferential treatment made available, the sectors or sub-sectors concerned and the period of time during which the member is intending to maintain those preferences."
Some sources indicated that LDCs have also been exploring ways of extending the waiver beyond market access. Though there is a provision in the waiver decision to allow such an extension, notifications so far - with a few exceptions - have restricted themselves to Article 16 of the General Agreement on Trade in Services (GATS), which deals with market access. Non-market access measures are not automatically covered, but can be authorised by the WTO CTS.
The LDC Group's draft submission links the definition of "preferential treatment" in the context of the services' waiver to "the removal of restrictions, and/or the provision of, special access or procedures, in favour of LDC suppliers over non-LDC suppliers, unless the preference is accorded to LDCs drawn from other pre-existing or future preferential arrangements." In this vein, the document encourages preference-granting members which have already notified to improve their notifications.
According to some experts familiar with the draft submission, the inclusion of a paragraph related to the reduction of administrative procedures and fees for visas, work permits, resident permits, and licenses in favour of LDC service suppliers and independent professionals appears to be important, though is likely to be very sensitive to address. In cases where preferential treatment was given to LDCs based on existing commitments or from their applied regimes that contain restrictions, the document stipulates that WTO members "shall remove such restrictions for LDCs." The document also calls for a modification of the duration of the services waiver so that notified preferences can apply for 15 years from the date of notification. Pakistan has no objection on the services waiver for LDCs.
The draft submission also calls upon preference-granting countries to streamline and simplify preferential rules of origin (RoO) so that these are no more barriers to LDCs to fully avail their non-reciprocal market access opportunities. An informal open-ended consultation on preferential rules of origin for LDCs held on Tuesday reportedly examined a formal proposal on the subject from the LDC Group, in the context of the overall Nairobi ministerial preparations. However, sources familiar with the meeting noted that reactions to the rules of origin proposal were mixed, with some delegations raising concerns that the terms were too ambitious given the few weeks remaining before the ministerial conference. Other questions that were raised included whether some of the proposal's elements would entail creating legally-binding obligations, along with whether the terms of the proposal were significantly different to what is covered in the 2013 Bali decision on the subject.
"If any ministerial decision is proposed, Pakistan would analyse the situation and then decide, however, as of now, no such proposal is in the pipeline. Generally, Pakistan has no defensive interests in this proposal," the sources added. The draft submission also refers to the difficult issue of cotton, calling for a "satisfactory solution" on the subject as part of the Nairobi decisions. The document raises four points related to DFQF market access for cotton and cotton-by products specifically; the reduction and elimination of domestic support and cotton export subsidies; as well as technical and financial assistance".
Regarding food security, the draft submission calls for a ban on applying export restrictions by any non-LDC WTO member on foodstuffs imported by LDCs if the exporting member is a net exporter of the foodstuff concerned. The text also provides for an exemption of the de minimis calculation for purchase of food at administered prices by LDCs under public stockholding schemes for food security purposes. Pakistan has not yet fully committed to DFQF on cotton; however, we have given positive signals to DFQF on C4 proposal and have also highlighted Pakistan's efforts to regularise its cotton sector.
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