December 30, 2012
Ministry of Commerce (MoC) is reportedly making utmost efforts to restrain farmers from opposing the grant of Most Favoured Nation (MFN) status to India from January 1, 2013. Well- informed sources revealed that the Senior Commerce Minister, Makhdoom Amin Fahim, Secretary Commerce, Munir Qureshi and Shahid Malik recently visited Tariq Bucha, President Pakistan Farmers” Alliance and requested him not to create hurdles in the way of MFN status to India.
However, the troika was requested by the farmers” representative to fight the case of Pakistani farmers instead of Indian farmers. Unconfirmed reports suggest that President Asif Ali Zardari has convened a high level meeting of different Ministries on Monday (tomorrow) to discuss the concerns of different sectors with regard to phasing out of the negative list.
India had granted Pakistan MFN in 1996, yet Pakistan has roughly 15% share of the Indo-Pak bilateral trade and in case Pakistan grants India MFN status, the trade balance will be in favour of India even more. The vast majority of Indian exports into Pakistan today are agricultural products, whereas Pakistan”s main exports are cement and gypsum.
India has maintained a favourable trade balance with Pakistan despite having granted MFN to Pakistan because India heavily protects its agriculture, both through high tariff barriers, particularly in agriculture, and through a complex scheme of non-tariff barriers. India”s applied MFN tariff rate (trade weighted average) of five per cent for goods in 2010 whereas for agriculture goods tariff was 44.7 per cent as compared to 10.3 per cent for non-farm goods and 9.2 per cent for agriculture goods. India also maintains a diverse array of Non Tariff Barriers (NTBs) to further protect agricultural goods.
“India heavily subsidises its agricultural sector. Pakistan does not and will not be able to subsidise its agricultural sector due to fiscal constraints,” said Bucha while talking to Business Recorder. India provides staggeringly large direct and indirect subsidies to its agricultural sector, he added.
“Based on our current research of publicly available information, India provides $66 billion per annum to its agricultural sector. Undisclosed and hidden subsidies would increase the bill greatly,” he continued. India”s capacity to use trade remedy laws (anti-dumping duties, countervailing measures for subsidies and safeguard measures) is much greater than those of counterparts in Pakistan. India will be able to protect itself further through using those remedies, whereas we will not be able to do the same until we improve the capacity in our NTC by giving agriculture due and effective representation.
In 2003, India became a major user of anti-dumping duties. Between 1994 and 2003, there were 369 anti-dumping petitions in India and almost ninety percent of the 360 determinations led to imposition of duties. Pakistan”s NTC has only conducted about 30 anti-dumping investigations in the past ten years, and to date never levied any countervailing duties.
“Compromising on our domestic agriculture will endanger Pakistan”s food security, which will render us further dependent on other countries for imports of even basic staple crops, undermining our already weak sovereign status. We will oppose any such moves to leave our food security to any other country,” said Hamid Malhi, President Pakistan Basmati Growers Association. Pakistan Farmers Alliance will strongly oppose any such unilateral move that does not ensure a level playing field for Pakistan”s farmers, since over 100 million people are dependent on agriculture (directly or indirectly) for their subsistence.