Resource Poor Farmers Survival under WTO
- Muhammad Rasheed
- Asif Maqbool
- Naeem Qasim
Domestic support
is the support/favor given to the resource poor farmers under the provision of
the World Trade Organization (WTO) in order to improve their present pitiable
condition. This commitment comes under Agreement on Agriculture (AoA). This
support could be direct or indirect to encourage agriculture and rural
development in terms of Government assistance. It can also be provided in terms
of production subsidies, price support or other like measures. However, some of the domestic support
policies are thought to be more trade distorting as compared to others.
The Agreement on
Agriculture provides different rules for different types of measures according
to their impact on trade. Thus domestic support is further subdivided into
three categories. These categories have described into three boxes i.e. Amber
Box, Blue Box, and Green Box.
The
Amber Box measures are actionable i.e. are permitted temporarily but are to
drastically reduced. Domestic
policies that have direct effect on production and trade have to be cut back. WTO members were required to
calculate level of such support for the base period 1986-88 and then reduction
commitments were to be applied according to an agreed formula. Developed
countries agreed to reduce these figures by 20% over six years starting in 1995. Developing countries agreed
to make 13% cuts over 10 years. Least-developed countries do not need to make
any cuts. (This category of domestic support is sometimes called the “Amber
Box”, a reference to the amber color of traffic lights, which means “slow
down”.) As this is trade distorting therefore,
it is subject to reduction commitments. At present no such type of support is
being utilized by Pakistan
Certain direct payments to farmers are also permitted when they are
required to limit production (called “Blue Box” measures). Under this box, special government assistance
to encourage agricultural and rural development in developing countries, and
other support on a small scale (“de minimis”) is allowed but should not be more
than 5% of the total value of the product in case of developed country and 10%
or less for developing countries including Pakistan. The de minims payments are allowed to be paid
in addition to the Green, Amber and Blue Boxes.Any support with minimal impact on trade can be used freely and it is
included in a “Green Box” This category includes, government services such as
research, disease control, infrastructure, and food security. They also include
payments made directly to farmers that do not stimulate production, such as
certain forms of direct income support, assistance to help farmers to restructure their
agriculture, and direct payments under
environmental and regional assistance programmes. These measures are considered
to have no or minimal trade distorting or production related effects, therefore
are exempt from reduction commitments.
The use of Green Box subsides is flexible. There is
no upper ceiling for this Box and any country can provide whatever quantum they
want of Green subsidies provided that those are in conformity with the criteria
laid down in Annex 2 of AoA. The fluidity of Green Box has
been subject to criticism since it is feared that advanced countries with
abundant of resources have used the definition of this category to enhance the
volume of Green subsidies, shifted subsidies from other boxes to this box and
thus have evaded their reduction commitments in a way. For this reason there is
a very vehement demand in the ongoing round of negotiations on AoA,
particularly from developing countries that criteria for Green Box is tightened
to stop its misuse.
Domestic
support need to be given much importance by the Government of Pakistan in the
current scenario, when other developed and developing countries are giving
support to their resource poor farmers. Government should analyze all these
domestic Boxes carefully and then decide about the provision of such
facilities.
As
most of our farmers are resources poor and illiterate and therefore, high
responsibilities went to Government’s shoulder to kept them aware from changes
that are being taking place at the world level and which affect the welfare of
our local producer. Government can not provide price support or other trade
distorting activities under WTO provisions, but can protect these resource poor
farmers by providing information and extension services. As no domestic support
on farmer’s output can be provided by the Government in the trade liberalization
regime and therefore, it would have a negative impact on small farmer’s welfare
that mostly use conventional and traditional methods of farming. After the
implementation of WTO, neither they have resources nor the government
assistance to use new technology. The developed countries with their advanced
methods of cultivation and high crop yield will definitely enjoy more profit in
the WTO regime. Government should make certain policies for the easy access of
the required inputs to the resource poor farmers. Our farmers also have lack of
information about modern technology and it is the need of the hour to
disseminate most recent information about latest methods of production and
modern technology that plays central role to increase productivity at the farm
level. In order to protect these small
and resource poor farmers government should work out Green Box carefully.
Subsidies should be given to small scale farmers as compared to large scale
farmers.
Government can provide subsidy in agriculture sector for irrigation
purposes. It is estimated that meager amount is being given as subsidy in
irrigation water. In the construction of water courses 70 percent share is
contributed by the Government and 30 percent by the farmers. Government should
make such policies for the betterment of farmers’ in present conditions. Tax
holidays and tax relief methods should be adopted for the agriculture and
industrial sector.
Under the WTO rules watched by International funding agencies like the
World Bank, IMF and the Asian Development Bank are not permitting to give
subsidy and domestic support to agriculture sector. Moreover, being an economist it can not be
suggested to provide domestic support or subsidy to our agriculture sector
because it leads to inefficient allocation of natural resources. However, we
need to take care of our agricultural sector by using tools of green box
otherwise; our agriculture sector will become uncompetitive, particularly in
relation to the developed world, where 360 billion US dollars are being given
as subsidy to their agriculture sector.
It is imperative
that only proper measures will enable the agricultural sector to become
competitive in WTO regime. The developing countries like Pakistan will
be able to increase the exports of primary products in which they enjoy the
comparative advantage. There in an ample scope in green box to give domestic
support/subsidy under WTO regime to resource poor farmers. Since the political government is in power now,
therefore, we should renegotiate our commitments with International Funding
Agencies and with WTO partners more tightly that can give us more flexibility
to help our resource poor farmers. It is
high time to redirect and spare more resources to develop our rural communities
and to give greater emphasis to protect small farmers and the disadvantaged
regions.
In Pakistan
