Wto and its impact on pakistan economy
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Wto and its impact on pakistan economy

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Wto and its impact on pakistan economy Wto and its impact on pakistan economy Document Transcript

  • SUBJECT Pakistan Eco. Environment TOPIC WTO & Its impact on Pakistaneconomy SUBMIITTED TO Sir,Prof. Ali Asghar Ghayour SUBMITTED BY Wajahat Ali Ghulam ROLL NO. 01 CLASS BBA 5 th (Morning) SESSION 2010 – 2014 SUBMISSION DATE 01, March 2013 FACULTY OF ADMINISTRATIVE SCIENCES UNIVERSITY OF - 1 - AZAD JAMMU &
  • PREFACE In a beautiful and aesthetic, but subtle, way the Quran guides us toward acquisition ofknowledge observing and studying the elements of nature regards as the signs of Allah, thinking,reflection and researching in his sign and eventually realizing coquets over the elements of naturefor the service of mankind as well as for an upward spiritual movement. In this assignment I havediscussed the expected points related to WTO & Its impact on Pakistaneconomy I am also thankful to my Honorable Sir. Prof Ali Asghar Ghayour -2-
  • ACKNOWLEGDEMENT Preliminary thanking, bow my head before Almighty Allah who given me wisdom andan opportunity to undertake this exploring work. Also to m y parents whose prayers always doa miracle for me. Infect I was not able to prepare this assignment individually; definitely there are manysupports who have provided me information and encouraged to complete this assignment. It is our training towards our upcoming life and future. -3- View slide
  • Sr. # Particulars Page #i. Pakistan Economy in the Frame of WTO 2ii. WTO, Definition 2iii. Major Activities of WTO 3iv. What WTO means for Pakistan?? 4v. Major export agricultural opportunities in Pakistan 5vi List of exports & imports 6vii. Agriculture of Pakistan under WTO, Opportunities 7viii. Threats 8ix. References 9 -4- View slide
  • Pakistan Economy in the Frame of WTO Economy: Definitions  Activities related to the production and distribution of goods and services in a particular geographic region.  Economy is a field that is related to every day human activities, which include, production, distribution, exchange and consumption of goods and services. All the professions and occupations apart from the economic agents, economic activities contribute to the economy.  Economy is basically a social system, which is responsible for production, exchange, distribution, and consumption of goods and services or a nation Pakistan Economy: The economy of Pakistan is the 27th largest economy in the world in terms of purchasing power, and the 48th largest in absolute dollar terms. Pakistan has a semi-industrialized economy, which mainly encompasses textiles, chemicals, food processing, agriculture and other industries. The economy has suffered from decades of internal political disputes, a fast growing population, mixed levels of foreign investment, and a costly, ongoing confrontation with neighboring India. Since the beginning of 2008, Pakistans economic outlook has taken stagnation. Security concerns stemming from the nations role in the War on Terror have created great instability and led to a decline in FDI from a height of approximately $8 bn to $3.5bn for the current fiscal year. WTO: Definition: The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. Its main function is to ensure that trade flows as -5-
  • smoothly, predictably and freely as possible. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and approved in their parliaments. Mission Statement of WTO: The World Trade Organization — WTO — is the international organization whose primary purpose is to open trade for the benefit of all. Director General (Mr. Pascal Lamy) Goal of WTO: The ultimate goal is to help producers of goods and services, exporters, and importers conduct their business. Explanation: The World Trade Organization (WTO) is the successor to the General Agreement on Tariffs and Trade (GATT) established in 1948. WTO was founded in 1995, though WTO is one of the youngest of the international organizations, the multilateral trading system that was originally set up under GATT is already 50 years old. The last half-century has witnessed an exceptional growth in world trade; goods exports grew on average by 6% per annum. Global trade in 1997 increased 14-fold as compared to 1950. GATT, and its predecessor the WTO, takes credit to help create a strong and prosperous trading system contributing to unprecedented growth. The creation of WTO came in phases through a series of trade negotiations, or rounds, held under GATT. The first rounds dealt mainly with tariff reductions but later negotiations included other areas such as anti-dumping and non-tariff measures. The latest round — the 1986-94 Uruguay Round, led to the WTOs creation. The negotiations continued after the end of the Uruguay Round. In February 1997 agreement was reached on telecommunications services, with 69 governments agreeing to wide-ranging Liberalization measures that went beyond those agreed in the Uruguay Round. In the same year 40 governments successfully concluded negotiations for tariff-free trade in information technology products, and 70 members concluded a financial services deal covering more than 95% of trade in banking, insurance, securities and financial information. Banks, insurance firms, telecommunications companies, tour operators, hotel chains and transport companies looking to do business abroad can now enjoy the same principles of freer and fairer trade that originally only applied to trade in goods. Objectives: The WTO’s overriding objective is to help trade flow smoothly, freely, fairly and predictably. It does this by:Administering trade agreementsActing as a forum for trade negotiationsSettling trade disputesReviewing national trade policiesAssisting developing countries in trade policySolving Issues, through technical assistanceTraining programsCooperating with other international organizationsRaising standards of living,Ensuring full employment and a large and steadily growing volume of real income and effect demandDeveloping the full sense of the resources of the world and expanding the production and -6-
  • exchange of goods Major Activities of WTO:Negotiating the reduction or elimination of obstacles to trade (import tariffs, other barriers to Trade) and agreeing on rules governing the conduct of international trade (e.g. antidumping, Subsidies, product standards, etc.)Administering and monitoring the application of the WTOs agreed rules for trade in goods, trade in services, and trade-related intellectual property rightsMonitoring and reviewing the trade policies of the members, as well as ensuring transparency of regional and bilateral trade agreementsSettling disputes among members regarding the interpretation and application of the agreementsBuilding capacity of developing country government officials in international trade mattersAssisting the process of accession of some 30 countries who are not yet members of the organizationConducting economic research and collecting and disseminating trade data in support of the WTOs other main activitiesExplaining to and educating the public about the WTO, its mission and its activities.The WTO provides the forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the agreements and a framework for the implementation of the results of such negotiations, as may be decided by the Ministerial Conference. The WTO is an international institution with 148 member countries and a permanent secretariat based in Geneva. Created in 1995 its role is to decide the rules that govern international trade. You could say it is like the United Nations (UN) for trade, only with sharper teeth. WTO rules, agreed by member countries, limit the role that governments can play in their national economies. These include the level of taxes charged on goods coming into a country, goods quotas, support for national industry, and subsidies for farmers. Virtually any economic policy (and some social policies) that a government can make is restricted by what is agreed at the WTO. This means that elected governments do not have a full range of policy options open to them – their range is narrowed by the WTO. Another country can take them to a special WTO court. If the court finds a country guilty of breaking the rules then it gives the complainant the right to impose sanctions. These can include placing higher taxes on the goods coming from the offender or suspending other WTO rules until the offender complies. The WTO is dominated by the world’s most powerful countries and trading blocs: the United States, the European Union, Japan, Canada and Australia are key rich countries. Recently some of the bigger developing countries have also become key players: Brazil, India, China and South Africa. Through negotiations. The WTO supposedly operates on the principle of ‘one member, one vote’. The problem is that the WTO does not hold votes (if it did the rich countries would always lose!). Instead it works by ‘passive consensus’ – this means that a country is understood to agree unless it explicitly says ‘no’. The reality is that the rich countries put pressure on the poor countries to ‘agree’ to what they want. In the past they have used threats of aid cuts, demands that ‘difficult’ poor country representatives be sacked, and sometimes promises that they will do some of what poor countries want in the future. So it’s a small carrot, big stick approach. What WTO means for Pakistan?? Pakistan is the participant of the Uruguay Round and also the WTO. As a member it has to abide by the WTOs objective of putting an end to the import duties which have been reduced from maximum over 80 per cent nine years ago to 30 per cent at present. So what does it mean for the many industries that have taken long years to take root in Pakistan. -7-
  • To start with, Pakistan still basically remains an agriculture-based country where cotton andtextiles make up 60 per cent of export earnings and rice also plays an important part. UnitedStates is one of the top trading partners of Pakistan and offers a good test case of therelevance of the promises of fair and equitable trade the WTO assures.Critics accused the US to promote free trade only in sectors, which benefit it. As far as othersectors, like textiles, are concerned it chooses to resort to protectionism. Opening up moresectors for free trade will give the developed countries more access to the resources of thedeveloping countries. The US enjoys an immense influence in the WTO, which is quite often used to furtherexpand its markets. This well-planned and corporate-driven expansion is too self-centeredbecause it does not give any benefits to other members. Tariff restrictions and wholesale useof anti-dumping laws is still exercised to deny access to its market by the developingcountries. Pakistan has faced many anti-dumping and quota related problems with the US forexporting its cotton and textile products. Many other developing countries have faced thesame problems. While WTO claims to work only as a mediator, developed countries have found aresourceful way of interpreting the WTO agreements to protect their industries. For instance,the US has opened its market in textiles and clothing selectively, which does not benefit thedeveloping countries. Not surprisingly, the U.S. has resorted to use the transitional safeguardmeasures to protect its domestic industries from sudden increases in imports by introducingits own Rules of Origin to identify where a textile or clothing product comes from, changingthe conditions of competition and adding to the restrictions against the low-cost textileexports from developing countries. The US influence on the WTO agricultural policies will have a devastating effect onthe developing countries, particularly those that are suffering from shortage of food crops.This is mainly due the US-led WTO policies, which promote food availability through tradethus discouraging countries to attain self-sufficiency. The situation is further worsened thatmany countries in the developing world have scarce foreign exchange to lift the food from theinternational market even if it is available at a comparatively low price. The Trade Related Intellectual Property Rights Agreement (TRIPS) is another exampleof inequality in a forum, which claims to promote fair and equitable trade among nations.While TRIPS protects the rights of corporations it allows the shared knowledge of indigenouscommunities to be patented by others, particularly in medicine. Thus transnational companiesare poised to earn billions in rent transfers to the rich countries, which enjoy an almost totalmonopoly on the medical trade and at the same time will control the patents of the developingcountries. For a developing country like Pakistan, which has been able to establish a range ofindustries to cut its dependence on imports to save foreign exchange which most of the timeremains at a precariously low level, the free trade means an uneven competition. Theindustries producing a range of finished products in Pakistan are still heavily dependent onimported basic and raw materials. The increasing cost of utilities, it is needless to mentionfrequent increase in power, gas and petroleum prices during last 18 months in particular andlast few years in general — have pushed the production costs to an uncompetitive level. Thishas resulted in less demand locally due primarily to a declining purchasing power, increasingunemployment level and a spreading sense of uncertainty. It has also taken its toll on exportsby rendering products uncompetitive against such traditional rivals as India, China,Bangladesh, etc. -8-