ISLAMABAD: At a time when each province is bargaining to secure a larger share in the $46 billion China-Pakistan Economic Corridor, the World Trade Organisation’s (WTO) Director-General Roberto Azevedo has cautioned that Pakistan can only reap benefits from the physical infrastructure by enacting efficient business-friendly rules, regulations and procedures at the borders.
“The CPEC is not just about hardware or mega projects in terms of infrastructure, improving roads and fixing energy problems,” he said. “All these things are very important, but they are simply not enough.
“It does not help to have the physical infrastructure if rules, regulations and procedures at the border are inefficient,” Mr Azevedo told Dawn in an exclusive interview during a recent two-day visit to Pakistan.
To maximise the project’s benefits, he suggested the Pakistani government to also focus on capacity-building of human resources, build institutional capacity and business-friendly regulations so that regional integration could take place in the most expedited fashion.
Mr Azevedo was referring to the implementation of the Trade Facilitation Agreement (TFA) which would streamline, simplify and standardise customs procedures, thereby reducing the time and cost of moving goods across the border. Studies show that when fully implemented, the agreement could reduce trade costs for Pakistan by around 13pc.
A group of WTO members struck a deal to expand the WTO’s Information Technology Agreement (ITA). This deal will eliminate tariffs on 201 IT products, including the latest generation of semi-conductors, GPS devices, advanced medical products and machine tools. Trade in these products is worth around $1.3 trillion annually.
There is divergence of opinion whether Pakistan should ratify this agreement or not. “Pakistan should look very carefully at the possibility of joining the agreement,” the DG said, adding that any trade agreement has to meet the strategic objective of the country.
Revival of multilateral trade negotiations
In the last two ministerial meetings, some historic decisions were taken paving the way to revive the stalled talks. In Nairobi, the DG said that member countries decided to abolish agriculture export subsidies. “This is the biggest reform in agricultural trade rules in the last 20 years and a big win for Pakistan,” he said.
Eliminating export subsidies will help level the playing field in agriculture markets for the benefit of farmers and exporters in Pakistan.
Asked whether the proliferation of bilateral and regional preferential agreements will have an impact on the multilateral trading system, he said that such agreements compliment the multilateral trading system. “The problem was that WTO was not negotiating, but now it is,” he said.
Domestic subsidies in agriculture are an issue of major concern for many countries. However, the DG said that domestic subsidies have become more important and sensitive politically. As a result of falling commodities and the global economic slowdown, the number of countries that provide these subsidies in a significant way has increased.
After the positive results of Bali and Nairobi, members have started a discussion on how the WTO can do more, and faster. It is clear that all WTO members want to deliver on the so-called Doha negotiating issues, such as domestic subsidies in agriculture and improved market access for agricultural produce, industrial goods and services. However, they do not agree on how to tackle them.
“I think the single undertaking that we were negotiating earlier is very unlikely to succeed in the near future for many reasons,” Mr Azevedo painted a bleak picture for the breakthrough in the stalled so-called Doha round.
“In case the single undertaking is possible,” he said, “let’s push it by all means.” However, he said if it is not possible let’s push elsewhere.
Some members of the WTO would like to start discussing other issues as well. A range of issues have been suggested — fisheries subsidies, investment promotions, e-commerce, small and medium-sized enterprises — to name a few.
The WTO secretariat is monitoring trade regimes of member countries. “We provide a forum for members to talk to each others on restrictive trade measures for its resolution,” the DG said. WTO also provides dispute settlement mechanism to members.
In just 20 years, WTO has successfully dealt with more than 500 trade disputes. Pakistan has been an active user of this mechanism, having participated in 17 cases in different capacities: as a complainant, respondent and an interested party.
There are two committees on technical barriers to trade (TBT) and sanitary and phyto-sanitary measures (SPS) that offer member countries a forum to discuss behind-the-border measures that might restrict trade flows.
Asked about the expected outcome of the WTO ministerial meeting in 2017, Mr Azevedo said it would be difficult to predict how much one could expect from it. “I think we have built-in agenda like public stockholding of grains for food security purposes and many other areas where negotiations are ongoing,” he said.