Implementations of WTO Regulations on Pakistan's Industrial Development

Topics: World Trade Organization, International trade, Free trade Pages: 8 (2565 words) Published: December 5, 2012
QS. Discuss the implementations of WTO regulations on the industrial development of Pakistan with special emphasis on the following industries: a.       Textile
b.      Health
c.       Automobile

ANS : Pakistan was one of the 23 founders of GATT in 1947. It actively participated in all the subsequent GATT negotiations and was involved in the Uruguay Round that resulted in the creation of the WTO. Pakistan was thus also one of the founding members of WTO that was established in 1995. There is a considerable impact of WTO on all sectors of Pakistan's economy, particularly, its industry, textile, agriculture and services. The nature of impact is predictable for some sectors, whereas, it is difficult for others in view of global developments in trade and degree of complexity involved.Pakistan agreed to join WTO in 1994, one of the benefits of which is the integration of the textile sector into General Agreement on Tariff and Trade (GATT). Looking at 2005, people mostly believe that the major impact of WTO on Pakistan would again be on the textile sector. However, WTO comprises several protocols and agreements focusing on various sectors and has different implications for different sectors and thus the impact might not just be limited to the textile sector. For example, a few subjects or agreements signed by the government mentioned below show which sectors will be the most affected:1) Improved access to foreign markets (reduction/binding of tariffs, abolition of quotas)

2) Subsidies, countervailing and anti-dumping measures

3) Agreement on Textiles and Clothing

4) Trade-related Aspects of Intellectual Property Rights (TRIPS)

5) Trade-related Investment Measures (TRIMs)

6) Agreement on Agriculture|
As far as the industrial sector is concerned, Pakistan’s main exports are textile and related products. The non-textile exports of Pakistan are negligible but have a potential to grow tremendously under the WTO regime. On the import side, Pakistan has been rationalizing its tariff structure to a large extent under the trade liberalization principle as envisaged by WTO. The average tariff in Pakistan is around 17 percent however, there is a need to ensure that there are no adverse affects of trade liberalization on the domestic producers. This calls for a need to make adjustments in the policies for the domestic industry, so that they may be able to face the increased competition from global market.The following industries have had these implications due to the world trade organizationTextile industry The complete integration of all textile and clothing products into the free trade environment under the Agreement on Textile and Clothing (ATC) on 1st January 2005 was one of the most significant changes for Pakistan under the world trade regime. Pakistan’s economy finds itself heavily dependent on the textile and clothing (T&C) sector. It is because of the nature of textile industry being labor intensive and requiring less capital and technical skills. However, a quota-free trade era calls for structural and operational adjustments in the textile sector, to enable Pakistan's exporters to be globally competitive. China is the biggest challenge to Pakistan T&C exports in this post ATC regime. In a nutshell, at present Pakistan maintains a fairly liberal trade regime, where all quantitative restrictions on imports have either been removed or converted into tariffs. It is noteworthy that the applied tariffs in Pakistan are well below the bound tariffs under WTO, translating into market access. However, quality control is integral to competitiveness of Pakistan's exports. Low quality products fetch low price in the international market. The obvious problems of quality for Pakistan are those of technical precision, grading and specialization. The WTO Agreement on Technical Barriers to Trade is relevant in this regard. Proper...
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