WTO (World Trade Organization) Opportunities The World Trade Organization (WTO) is the only global international organization

dealing with the rules of trade between nation. At its heart are the WTO agreem ents, negotiate and signed by the bulk of the worlds trading nations and ratified in their parliaments. The goal is to help producers of goods and services, expo rters, and importers conduct their business. The WTO was born out of negotiation s, and everything the WTO does is the result of dialogue. The bulk of the WTOs cu rrent work comes from the 198694 negotiations called the Uruguay Round and earlie r negotiations under the General Agreement on Tariffs and Trade (GATT). Where co untries have faced trade barrier and wanted them lowered, the debate have helped to open markets for trade. But the WTO is not just about opening markets, and i n some circumstances its rules support maintain trade barriers for example, to p rotect consumers or prevent the spread of disease. At its heart are the WTO agreements, negotiate and signed by the bulk of the wor lds trading nations. These documents provide the legal ground rules for internati onal business. They are basically contracts, binding governments to keep their t rade policies within agreed limits. Although negotiated and signed by government s, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing government to meet social and ecological objectives. The systems intervening purpose is to help trade flow as freely as possible so lo ng as there are no undesirable side effects because this is important for econom ic development and well-being. That partly means removing obstacle. It also mean s ensure that individuals, companies and governments know what the trade rules a re around the world, and giving them the self-assurance that there will be no ra pid changes of policy. In other words, the rules have to be transparent and predic table. Trade relations often involve differing interests. Agreements, including those c arefully negotiate in the WTO system, often need interpret. The most pleasant wa y to settle these differences is through some neutral procedure based on an agre ed legal foundation. That is the purpose behind the dispute settlement process w ritten into the WTO agreements.

WTO Opportunism for Pakistan While signing the WTO Agreement members committed to reduce trade barri ers, discipline the use of subsidies, countervailing measures, and tech nical barriers; tighten antidumping rules; eliminate certain limitin g trade-related investment measures; regulate the use of warning protect actio ns; strengthen and clarify procedures for the settlement of trade disputes among members; and increase the transparency of national policies. The DCs, in partic ular, pledge to pursue more lenient trade policies so that imposing protection a gainst the LDCs exports will now be more difficult than it would have been otherw ise. They agreed to provide special dispensation for the LDCs to give them enough time to adjust to the post-UR realities. With the completion of the agreement Pakistans major exports would receive significant tariff reduction from the DCs and the LDCs. Tariffs facing basic man ufactures in the LDCs such as textiles and clothing will decline by 8.9 percent, agricultural products by 5.1 percent, minerals and fuels by 13.3 percent and mi scellaneous manufactures by 7.5 percent. On the other hand, in the DCs, tariffs on basic manufactures are expected to reduce by 2.2 percent making th e export weighted average post-Round tariff as 6.5 percent. In other major ex ports such as agriculture and various manufactures, tariffs are expected to d ecline by 3.6 percent and 2.5 percent respectively. Thus, the average post-Round

tariffs for these products are likely to be 3.4 percent and 10.8 percent, respectively. As a result, Pakistans total merchandise exports to the DCs and LDCs will benefit from a weighted average tariff reduction of 2.4 perc ent and 6.9 percent, respectively. therefore, Pakistani exports will face a we ighted average post-Round tariff of 6.9 percent in DCs markets and 9.1 p ercent in LDCs markets Agreement on Textile and Clothing The Multi-Fibre Arrangement (MFA) is an international arrangement to manage textile and clothing trade. It is this method which has not only locked export o pportunities for the LDCs but also delayed industrial adjustments in the DCs. Ir onically, the MFA only restrict exports from selected LDCs, including Pakista n. The MFA is clearly unfair and thereby openly violates the basic principle o f the WTO. Pakistans textile and clothing exports are largely directed towards quota countries, particularly the high value added products whose quota utiliza tion rates are very high . This suggests that the MFA is a binding constr aint on Pakistans high value added textiles. Thus, Pakistan should benefit g reatly from the eventual removal of the MFA in 2005.

Agreement on Agricultural Commodities This agreement has without doubt created situation that will restrain further gr owth in agricultural protectionism. Consequently, it is expected that Paki stans agricultural commodities would become competitive in internation al markets, provided existing domestic policies which discriminate again st the agriculture sector are made to order according to the requirements of t he agreement. However, these losses will be offset by potential efficiency gains f rom improved resource allocation due to removal of policy distortion. These loss es will be further reduced provided Pakistan spread its agricultural exports by exporting spices, vegetables, fruits, flowers, and plants, where th e DCs have agreed to considerably reduce tariffs. However, a fuller utili zation of Pakistans export potential for these commodities would require consider able improvement in the areas of storage, transportation, and especially packagi ng which must conform to international standard General Agreement on Trade in Services (GATS) The GATS has extended bilateral rules to a number of tradable services. The firs t round of talks has achieved limited liberalization, however, it has opened the door for further liberalization in future. Participation in the GA TS provides Pakistan an opportunity to increase the economic effectiveness of it s services sector, greater access to lower cost/higher quality service in puts, and increased market access for its own competitive service exports, suc h as building services and professional services. With a vast majority of low wa ge skilled labour, service is an area that provides vast potential growth to Pakistan. Pakistan can gain by specialize and exploiting the newly grante d market access, and by attracting foreign investment in the services sector. For Pakistan a competitive and efficient services sector would create income directly and would motivate competitiveness elsewhere in the economy. Services The biggest challenge facing Pakistan in trade in services is the duty to open i ts own services sector to foreign competition. This challenge is particularly acute in financial services wherein Pakistan has undertake a number of s pecific commitment regarding foreign contribution and national treatmen t. However, Pakistan has filed MFN exemptions in banking and other financial s ervices. Pakistan has also made a limited offer in telecommunications. However, in future Pakistan will have to open up services sector to foreigners. For the future Pakistan needs to frame rules and policy for the services sector which c onform to the WTO rules.

. For Pakistan the most important agenda for the WTO should be the effective imp lementation of the agreement and to ensure that it shares the maximum benefits from the new trade regime. Following actions can further strengthen the current initiatives taken by the government to meet the global challenges. Government should prepare a plan to restructure the textile and clothing indus try, of course, keeping an eye on the possibility of importing countr ies deviating from their ATC commitments. The government should administer MFA q uota system through an allocation mechanism, which should aim at promoting valu e addition and quality. The government efforts should be to ensure full utilization of quota. A shortfa ll in quota utilization will provide excuse to importing countries to delay thei r textile and clothing trade liberalization. . Pakistans multilateral trade negotiation agenda on textiles and clothing sho uld also include that there is no linking of future integrat ion programmers of the importing countries with any further market access on the part of the exporting countries. . Government should prepare a plan of productivity and efficienc y improvement in each area so those domestic firms can effectively compete with foreign firms once the WTO agreements are fully implemented. This would requir e restructuring of Pakistans ailing innovation system, provision of efficient soft and hard infrastructure, and development of skills. Furth ermore, in order to gain a larger market share local producers/exporters shoul d start observing internationally recognized quality standards in all fi eld of economic activity. Pakistan should take some credible measures by further liberalizing e conomy and by modifying its laws on intellectual property protection, anti-d umping, countervailing and safeguard based on the principles of fair competition which should be clear, unambiguous and compatible with WTO agreements, and by adopting international enforcement procedures in order to give clear signals that it is committed to the preservation of a rule-based international trading system. In this way Pakistan can link additional and meaningful market a ccess with its actions through bilateral negotiations. It is worth noting that negotiators care only about the bound rate not the appli ed rate. Pakistan can draw considerable long-term benefits if its actions do not unnecessarily create the impression that it is not fully committed to a mult ilateral trading system. Pakistan should actively participate in the future WTO negotiations so that its own agenda is ultimately incorporated into various agreements. In this regard, P akistan can benefit by forging alliances with other countries having com mon interest