Impact of WTO’s Trade Liberalisation on Selected Food Crops in Pakistan

Shahzad Sharif, M. Siddique Javed, Azhar Abbas, Sarfraz Hassan


There is a great potential in Pakistan for production of all
types of food commodities due to vast natural resource base, covering
various ecological and climatic zones. Most of the agricultural
commodities produced in the country are consumed by the local population
while the rest is exported in the form of primary products and some
value added products. Previously, Pakistani products had a good market
overseas with no restrictions of quality and quantity but under the
changing environment affected by WTO, it is expected that Pakistan will
face a strong competition in the agriculture sector from its competitors
in the world market. According to the neoclassical trade theory, trade
flows and pattern will develop along the lines of comparative advantage
and competitiveness that can act as indicators of trade potential and
direction. There has been extensive government involvement in the
determination of the overall structure of agriculture and its patterns
of production, employment and trade. Pakistani government has been
intervening in agriculture sector in the past in order to support
agricultural production, income supports, ensure food security, improve
the balance of trade, reduce consumer prices, address environmental and
regional concerns and to pursue sanitary and phyto-sanitary objectives
[Hassan (1995)]. Pakistan is a founding member of the General Agreement
on Tariffs and Trade (GATT) since its creation. Following the Uruguay
Round negotiations, all agricultural products were brought under
multinational trade rules by WTO, under the Agreement on Agriculture.
This established a framework to begin liberalising agricultural trade
through the reduction of import duties (tariffs), trade-distorting
production subsidies and export subsidies. Prior to the Uruguay Round,
trade in agriculture was highly distorted. Market access for
agricultural products was limited as most markets were restricted by
physical import barriers. The presence of massive domestic subsidies led
to overproduction of temperate crops in the developed countries that led
to excess supply, and export subsidies were used to dump the surplus
agricultural output in international markets. This resulted in depressed
market prices and, in spite of being low-cost producers of agricultural
products; developing countries could not compete with the subsidised
exports from developed countries.

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