MGT601 - SME Management - Lecture Handout 44

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WTO is a reality, which has come to stay. We have to face the emerging challenges and grasp the opportunities. As the Governor, SBP stated that we need to develop strategy to get maximum benefit from globalization.

Foremost areas of concerns

  • The textile sector, which contributes 67% of our total exports, would in 2005 face severest competition from other major suppliers like china, Hong Kong, Thailand and Bangladesh. We have made some progress in facing post quota era under Textile Vision 2005 to take the production of textile good, upwards in the value chain. it is apprehended that the MFA phase out will start another era of non-tariff barriers. With the phasing out of quotas, textile manufacturers in industrialized and some quota free countries may decide to relocate. Government should provide incentive to ensure that they relocate in Pakistan.
  • The country urgently needs to build a strong network of anti-dumping and countervailing duties to protect the local industry against the onslaught of unfair foreign competition. It is heartening to note that Trade policy 2003-04 envisages enhancement of capabilities of NTC and it is recommended that NTC should be restructured and converted into an autonomous body employing private sector professionals.
  • The developing countries face problems in hiring law firms to advice on WTO related issues, which is a constraining factor in seeking relief from Dispute Settlement Body. There is a need to train local lawyers with WTO expertise.
  • Our survival lies in enhancing credibility through adoption of international quality standards, but Pakistan has a long way to go in obtaining certifications of ISO9000, ISO14000 and other standards. We need to set up PNAC accreditation testing laboratories for conformity assessment.

GoP must collect data in respect of standards of manufacturing, food and other agricultural produce in the countries where we are targeting out exports. GoP may amend the policies for manufacturing of engineering goods so that it offsets the effects on their performance due to termination of grace period of TRIMs by end 2003. We should take up our concern at wto for a regarding replacement of tariff barriers by some countries with SPS and TBT- which is evident from increased emphasis being placed on inspection of imported food and agricultural products. As a member of WTO, Pakistan is committed to fulfilling trip’s obligations, for which five law amendments have been promulgated. There is urgency for enforcement of laws regarding infringement of IPRS, a sine qua non for attracting foreign investment, for which necessary rules should be framed and notified on a priority basis. The Government had announced, in Trade Policy 2002-03, establishment of umbrella organization PIPRO for improving the administration and enforcement scenario, but necessary legislation for PIPRO to start functioning is still pending.

Pakistan has done well by undertaking liberalization measures relating to communication and financial sectors well over and beyond its commitments under GATS. But the measures have not been translated into internationally binding commitments. We should undertake partial or full commitments, where feasible, which will provide an assured and relatively stable environment for investment for foreigners and overseas Pakistanis. Attempts may be made to obtain commercial quid pro quo from other countries. Pakistan in collaboration with other LDC's needs to stress for further progress on the issue of movement of natural persons, which is an unfinished agenda of GATS.

According to recent study, the major flaw in Pakistan’s approach that while it paid a great deal of attention to inward flow of foreign investment and technology it did not view gats as a means of export of its services. This needs to be rectified but the Developing countries are still in a low level of economic equilibrium, which was the raison d’etre of grant of grace period. there was, however, one exception relating applicability of WTO norms on “prohibited subsidies”, contingent upon export performance admissible to

20 countries including Pakistan until they attain per capita GNP of US $ 1000. We suggest that other concessions of grace period should like wise be linked with attainment of specific level of economic progress and institutional capabilities.

Besides, most of the provisions of WTO agreements regarding S&D treatment are declaratory. In the absence of implementation modalities, these provisions have not been of any particular use to developing countries. Pakistan should evolve joint strategy with other developing states and press hard at Cancun ministerial for finalization of necessary modalities, as envisaged in Doha development agenda.

In this era of globalization, regionalism has assumed great importance. It is high time that we make SAARC and ECO more proactive to spur up intra-regional trade to ward off the risk of being marginalized. The core WTO related issues are discussed and debated in the technical committees, where our participation is not effective, as it is not backed by background research for submission of technical papers.

This underscores the need for meaningful coordination of efforts at government level and industry level under the aegis of SAARC to ensure effective participation in the meetings. We still do not posses the institutional and technical capabilities to develop, advocate and formulate the standards and legislations to meet the WTO requirements, while WTO, in principle, offers technical assistance to developing countries to develop the capabilities to implement obligations and to benefit from its membership rights; Pakistan has not tapped into these opportunities well.

It is time that we take full advantage of technical assistance and capacity building programs of WTO and other multilateral agencies. There is urgent need for capacity building of private sector institutions for dissemination of information on WTO and provide research feedback to government for policy formulation and for their on going negotiations with WTO under Doha round.

  1. Due to the enlargement of European Union from 15 to 20 countries.
  2. Due to bilateral agreements in which countries of our interest are also GoP should take up studies to ascertain the impact on trade of Pakistan involved. accession of china to WTO.

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