WORLD TRADE WT/MIN(98)/ST/48
18May1998
ORGANIZATION(98-2031)
MINISTERIAL CONFERENCE Original: English
Second Session
Geneva, 18and20May1998
PAKISTAN
Statement Circulated byMrM.Ishaq Dar,
Minister ofCommerce andHead ofDelegation
1. Itisanhonour torepresent Pakistan atthisimportant Ministerial Conference oftheWorld
Trade Organization.
2. Wearegrateful totheGovernment andpeople ofSwitzerland forthewarm hospitality and
superb arrangements made forthisConference.
3. Iwishalsotothank theChairman oftheGeneral Council, Ambassador JohnWeekes, andthe
Director-General oftheWTO, Mr.Renato Ruggiero, forthecontributions theyhavemade inpreparing
forthesuccess ofthisConference.
4. ThisMinisterial Conference isimportant forseveral reasons:
- Itmarks 50years oftheexistence oftheMultilateral Trading System;
- itistaking place inthemidst ofamajor economic crisis emanating inEastAsia, which
hasraised concerns regarding theglobal trade andeconomic system;
- thisConference 'sdecisions willsignal thefuture directions oftrade negotiations.
5. TheGovernment ofPrime Minister Nawaz Sharif iscommitted toeconomic andtrade
liberalization. Oureconomic regime isamong themostliberal andopenintheworld. Finance and
investment canflowfreely; tariffs havebeensignificantly reduced andquantitative restrictions virtually
eliminated, notwithstanding balance-of-payments andfiscal constraints. Thus, Pakistan hasastrong
commitment tothemaintenance andstrengthening oftheMultilateral Trading System.
6. Fiftyyears aftertheHavana Charter launched theGATT, wecanlookbackwithconsiderable
satisfaction atthegeneral success oftheprescription ofliberalization andfreemarkets. Inthelast
halfcentury, theglobal tradehasexpanded exponentially dueinlargemeasure tothereduction oftariff
andnon-tariff barriers. Progressively opentradehasbeenthepropellant forgrowing global economic
growth. Theconclusion oftheUruguay Round Agreements -asa"single undertaking" -andthe
creation oftheWTO, represented themostambitious stepstorealize comprehensive liberalization of
allforms oftrade -goods, services, intellectual property andinvestment. And, forthefirsttime, it
wasagreed thattwosectors ofspecial interest tothedeveloping countries -textiles andagriculture -
were alsotobesubjected tothediscipline offreetrade.
7. While appreciating thebenefits ofliberalization, andthesignificance ofitsachievements, we
cannot ignore thedarker sideofthepicture. Increased tradeandinvestment haveby-passed themajorityWT/MIN(98)/ST/48
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ofdeveloping countries. Thegains fromtradeliberalization havebeendisappointingly asymmetrical.
Areas ofspecial interest todeveloping countries -Textiles, Agriculture, theMovement ofNatural
Persons -arebeing liberalized ataslower pacethanother areas. Themove towards freemarkets in
thepastfewyears hasbeenaccompanied byaslow-down inglobal economic growth. Wealth has
become more concentrated, among andwithin countries.
8. Atthesame time, thegrowing integration ofthedeveloping countries intheworld 'stradeand
financial markets hasalsoenhanced theirvulnerability toexternal factors, particularly volatile capital
flows overwhich theyhavelittlecontrol. Moreover, blindfaithinunrestricted liberalization hasreduced
thesense ofurgency forresolving thestructural impediments todevelopment -thecrippling debtburden
ofthedevelopingcountries,theneedforconcessionaldevelopmentfinanceandrestrictionsonthetransfer
oftechnology.
9. Thecurrent global economic crisis, which emanated inEastAsia, hasledtonewreflections -
evensome doubts -about theaccelerating process ofglobalization. Thiscrisis hascrystallized an
appreciation thatprofound changes havetaken place, andareunderway, inthemanner inwhich goods
andservices areproduced, distributed andtraded intheworld economy. Ithas,above all,highlighted
theimpact ofrapid, uncertain andlargely uncontrolled capital flows, specially innewly-liberalizing
economies.
10. ThisConference offers aninvaluable opportunity todistinguish between themyth andreality
ofthecurrent crisis. Clearly, wemust notallow thefears thathaverevived toreverse theprocess
oftrade liberalization. Yet,itisalsoessential toacknowledge thatliberalization isnotagoalinitself;
thatitscentral objective istopromote theeconomic well-being andprosperity ofallourpeoples.
11. Thefirstvictim oftheconcerns arising from theinequity ofbenefits among countries, and
social dislocations within thesecountries, willbethefragile structures andprinciples ofthemultilateral
trading system. Thus, theasymmetry inthetradeandeconomic benefits ofliberalization andtheuneven
growth andwidening disparity among WTO members, should beanissue ofcentral concern atthis
Conference.
12. ThisConference mustaffirm thattheoutcome oftradeliberalization negotiations mustcontinue
toprovide mutuality ofbenefits forallWTO members andensure abalance intheinterests ofthese
members. Intheabsence ofthis,thelegitimacy ofthemultilateral trading system willbeseriously
eroded.
13. Wemustreiterate theprimacy ofthemultilateral trading system andensure thatregional trading
arrangements donotdistort trade flows anddonotexclude ordiscriminate against thedeveloping
countries.
14. ThisConference should alsohelptoaccelerate theprocess ofaccession totheWTO byalarge
number ofdeveloping countries including China, Saudi Arabia andOman, which should notbesubjected
tomore excessive demands thantheexisting commitments ofWTO members. Intheabsence ofsuch
major countries, theMultilateral Trading System cannot becalled global orcomprehensive.
15. Themaintaskbefore thisMinisterial Conference istoinitiate acredible andeffective process
which cancontribute toredressing theunequal benefits oftheUruguay Round Agreements forthe
developing countries:
- Byaddressing theproblems thathavearisen intheimplementation oftheseAgreements
orareinherent therein;WT/MIN(98)/ST/48
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- byamore sincere andfuller application oftheprinciple ofspecial anddifferential
treatment; and
- byconfronting boldly thenewforces ofprotectionism, which aredisguised asconcerns
about theenvironment, social conditions orlabour standards.
16. Itisquitenatural forPakistan -likemostdeveloping countries -toattach thehighest importance
toaneffective review oftheUruguay Round Agreements. Thetradebenefits which arelikely toaccrue
touswillcomemostlyfromliberalizationofthesectorsandareasalreadyincorporatedintheAgreements
concluded atMarrakesh, rather thannewareas ofliberalization. Thereview process which mustbe
initiated bythisConference should notbeamechanical exercise, asthose conducted inthevarious
Committees andCouncils. Itshould beabroader economic andpolitical evaluation which would:
- One, assess whether theanticipated benefits oftheUruguay Round Agreements are
being achieved;
- two,identify theproblems encountered inthecourse ofimplementation orinherent
intheagreements; and
- three, suggest ways andmeans toredress these problems andmeet anticipations
regarding thebenefits supposed toflowfrom these Agreements.
17. Theoverall objective ofthereview exercise should betopromote thebalance andmutuality
ofbenefits which werethebasisfortheconsensus achieved onthe"single undertaking" atMarrakesh.
Unless thisbalance isrestored, itwould beunrealistic toexpect developing countries toaccept new
areas ofliberalization, whether under theso-called Built-in Agenda, theSingapore Work-Programme
orentirely "new issues".
18. Pakistan isseriously concerned withthemanner inwhich various Uruguay Round Agreements
arebeing implemented and,insome instances, notimplemented. Ourconcerns relate inparticular
totheagreements onTextiles andClothing, Agriculture, Anti-dumping andRules ofOrigin.
19. TheAgreement onTextiles andClothing wasdesigned tobring anendtothelong-standing
systemofquotarestrictionsundertheinfamousMulti-FibreArrangementinaten-yeartransitionprocess.
Thisprocess envisaged progressive integration oftextiles trade intoGATT 1994aswellasincreased
quota increments over"normal" increases toachieve complete elimination oftheMFA quota restraints
by2004. Itwasanticipated thattheimplementation oftheAgreement onTextiles andClothing would
yield early, significant andprogressively larger market access fortheexporting countries. Some
reputable studies estimated thattheearnings oftextile exporting countries could increase byover
$300 billion.
20. Infact,thetextile exports ofthese countries haverisenbyonly4.3percentoverthepastfour
years -evenlessthanthegrowth ratesregistered previously under theMFA restraints. Ontheother
hand, thetextile exports ofthecountries maintaining MFA restraints haverisen by9percentover
thesame period. Thereason forthisironic andunexpected asymmetry isnotdifficult todiscover.
Itoriginates fromthewidedefinition ofthe"textiles universe" intheAnnex totheAgreement. This
textiles universe included alltextile andclothing items, restricted andnon-restricted, listed inthe
harmonized system. Inthefirsttwophases ofintegration, themajor restraining countries haveintegrated
(i.e.liberalized) aninsignificant number ofitems subject toMFA restraints. Restraint levels arethus
almost where theywerebefore theATC. Ifthepresent trend continues, only20percentoftheitems
under MFA restraints willbeliberalized within the10-year transition period, leaving 80percentof
textiles tradetobe"integrated" intotheGATT regime attheveryendofthisperiod. WehavelegitimateWT/MIN(98)/ST/48
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reason towonder whether newways willnotbefound atthattimetocircumvent theobligation to
liberalize textiles trade.
21. Meanwhile, farfromliberalizing textiles trade, further restrictions havebeenimposed through
various means. Oneimporting country applied transitional safeguard measures 23times during the
firstyearaftertheATC wasconcluded, freezing, andinsome cases "rolling-back", market access
levels forseveral products. Another importing entity hasresorted totherepeated useofanti-dumping
actions, inoneinstance repeatedly against thesame products fromthesame exporting countries. This
isbeing doneinfullknowledge thattheanti-dumping complaint isunsustainable andthattheinitiation
oftheanti-dumping action willresult ineffectively freezing export levels. Similarly, theunilaterally
formulated Rules ofOrigin aresought tobeusedbyonemajor importer toaddtotherestraint levels
against themost competitive orlow-cost textile exporting countries.
22. Ananalysis oftheoverall benefits flowing fromtheAgreement ofAgriculture ishardly more
optimistic thantheevaluation inthetextiles sector. Duetotheirhistorical maintenance ofhighly
restrictive agricultural regimes, mostofthemajor trading countries andentities -theUnited States,
theEuropean Union andJapan -havebeenabletotransform these intoextremely highlevels oftariff
protection -attimes between 200to500percent-asallowed bytheAgreement onAgriculture.
These tarifflevels aremuch higher thanthose which thedeveloping countries canmaintain, since they
didnothistorically protect agriculture. TheAggregate Measurement ofSupport hasalsobeenused
toapply much lower reductions ofproduction subsidies insensitive sectors. And,market access benefits
havebeeneroded by:inadequate implementation, non-tariff measures, non-compliance withexport
subsidy commitments; allocation ofMFN tariff quotas topreferential suppliers; allocation ofexport
access toState trading enterprises; andlimitations ontheimport ofparticular products.
23. Moreover, themeasures designed toneutralize negative effects ofagricultural reforms onthe
leastdeveloped andnetfoodimporting developing countries haveremained largely unimplemented.
24. Theimbalance andasymmetry which become evident intheimplementation oftheAgreement
onAgriculture needtoberedressed through specific measures.
25. Theambiguity ofcertain provisions oftheAnti-Dumping Agreement -which haveenabled
itsabusive utilization bysome countries forobviously protectionist purposes -alsoneedtoberedressed
through further clarification andrevision, ifnecessary.
26. Theharmonization ofrules oforigin wastobecompleted inJuly1998. There isadistinct
possibility ofitsbeing delayed because ofdifferences oncertain sensitive areas, specially thechapter
dealing withtextiles. Wemust ensure thatrules oforigin arenotharmonized onthebasis ofthe
restrictive notions oftheconcept of"substantial transformation" unilaterally legislated byonecountry.
Welookforward toquick harmonization ofrules oforigin onaliberal, andpredicable basis which
would facilitate international trade rather thanrestrict it.
27. Itisclear thatthereview oftheimplementation oftheUruguay Round Agreements should
leadtomeasures forredress, including measures forfurther liberalization oftrade inthesectors and
areas involved. Thisprocess canalsocontribute totherestoring andmaintaining ofthebalance and
mutuality ofbenefits which isthefoundation fortheexistence andsustainability oftheMultilateral
Trading System. Apart fromthisprocess ofreview andredress, WTO members arealsocommitted,
under the"single undertaking" inMarrakesh, toparticipate inthefurther negotiations -suchason
Agriculture andServices -andtoundertake thereview ofvarious other agreements, including TRIPS,
TRIMs, SPS, Anti-Dumping andDispute Settlement between 1998 and2000.WT/MIN(98)/ST/48
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28. Wetrustthatfurther liberalization inagriculture -preparations forwhich canbeinitiated in
1999-willserve toredress asymmetries against developing countries inherent inthepresent structure
oftheagricultural regime.
29. Under theframework ofAgreement onServices, wehavecompleted negotiations onFinancial
ServicesandBasicTelecommunicationServices,whilenegotiationsonMaritimeServicesweresuspended
andthose relating totheMovement ofNatural Persons concluded withmarginal results infavour of
thedeveloping countries. Similarly, theagreement onemergency safeguard measures intheareaof
services hasnotbeenfinalized asenvisaged. Pakistan wishes tocomplete theunfinished business in
theservices sector. We,seek, interalia,further liberalization ontheMovement ofNatural Persons.
30. Themandatory reviews ofseveral agreements arealsoimportant. They willprovide an
opportunity toidentify andcorrect some oftheshortcomings characterizing theagreements tobe
reviewed.
31. Inparticular, thereview oftheDispute Settlement Understanding isofspecial interest tothe
developing countries. While thepresent system isconsidered tohaveoperated more effectively than
thepast, itcontinues tobeweighted against thedeveloping countries. Thecosts ofWTO dispute
settlement arehigh, thesystem iscomplex, panel decisions cannot beimposed against larger trading
partners andprovide nodefinite time-frame forcompliance. Most importantly, theultimate recourse
totrade retaliation isnotacredible option toprovide redress tosmaller countries. Thereview ofthe
dispute settlement system should address these issues. Apart fromthepossibility oftrade retaliation,
itmustprovide forcompensation forlossoftradeearnings. Ontheotherhand, crossretaliation between
different sectors anddifferent agreements should berestricted inthecaseofdeveloping countries.
32. Thefuture negotiations which wehaveagreed toundertake sofarrelate onlytoissues under
Implementation andtheso-called Built-in Agenda. Apart fromthis,wehadtaken decisions tosetup
certain Working Groups toconduct studies butwithout anycommitment toenter intonegotiations.
Weareprepared toconsider thereports oftheWorking Groups onTrade andInvestment, Trade and
Competition andTransparency inGovernment Procurement when these arecompleted andready for
presentation totheGeneral Council. These issues should notbeequated withother areas where there
isalready agreement toconduct negotiations under theWTO rubric.
33. Similarly, newproposals, suchastheonerelating toElectronic Commerce, willneedtobe
carefully examined within theWTO bymember countries before decisions toundertake negotiations
orotherworkcanbetaken. Inconsidering suchproposals fornewissues ornewsectors fornegotiations,
itisimportant tobearinmindtheneedformaintaining thebalance ofinterests among member countries
aswellasthelimitation intheabsorptive capacity oftheWTO members aswellastheOrganization
itself.
34. Thedecisions adopted atthisConference regarding thefuture programme ofWTO activities
must therefore clearly distinguish between thefourelements oftheWork Programme including the
priority andtime-frame forundertaking andcompleting theworkinvolved andthenature ofthedecisions
tobetaken asaresult oftheprocess. Thehighest priority should betosecure fullandbalanced
implementation ofthealready concluded Agreements, inletter andspirit. Thesecond priority isto
fulfilthedecisionstakenwithregardtothenegotiationsonfurtherworkenvisagedintheBuilt-inAgenda.
Thethirdareaisthecompletion ofthestudy phase oftheWorking Groups asagreed inSingapore.
Finally, theproposals fornewissues willrequire initial examination within theGeneral Council before
anydecision canbetaken regarding further work oraction onthese proposals.
35. ThedecisionsweadoptatthisMinisterialConference,orsubsequently,mustbeachievedthrough
thepainstaking process ofconsensus. Anymethod ofwork thatislessdemocratic ortransparent isWT/MIN(98)/ST/48
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likely toerode thecredibility andacceptability ofthedecisions fortrade liberalization thatemerge
from theWorld Trade Organization.
36. Pakistan looks forward toparticipating actively andconstructively inthisprocess.
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