Duty-free imports: Farmers fear they will lose in import deal with India

Concerns surface that MFN status being granted to India without risk assessment.

ISLAMABAD:

The prime minister’s secretariat has raised serious reservations regarding a list of agriculture items importable from India through land routes, signalling concerns that granting the Most Favourite Nation (MFN) status to India was done without proper cost-benefit analysis of its impacts on Pakistan’s economy.

Opening land trade routes for Indian agricultural goods is being pushed by the Foreign Office, which has made the measure a part of its confidence building measures with India. The government plans to grant the MFN status to India by the end of December, and, according to a plan, land routes will be opened for trade with India by January next year.

According to a list prepared by the commerce ministry, sugar, cotton, potatoes, wheat, pulses and red chillies, along with many other items, would be importable from India if the plans are implemented.

Sources told The Express Tribune that the prime minister’s secretariat has now questioned commerce ministry higher-ups whether a study was conducted about the economic impact of importing agricultural produce from India before the plan was tabled. The commerce ministry has so far failed to respond. Another question raised to the commerce ministry asks whether other countries which share borders have had similar experiences.

Sources said that the commerce ministry had informed the prime minister’s secretariat that sugar and wheat were already being imported by public sector entities like the Trading Corporation of Pakistan (TCP); therefore, imports of these goods from India would not hurt the farming sector in Pakistan.

However, fearing loss of control over the economically-important foodstuffs, some officials were of the view that the private sector could take to the courts if it was not allowed to import wheat and sugar freely from India. They also said that different stakeholders had expressed concerns that the import of sugar, pulses and red chillies would affect the Pakistani market adversely.

When contacted, former chairman of All Pakistan Sugar Mills Association (APSMA) Sakandar Khan said that the sugar industry was capable of competing with Indian substitutes, but the Pakistani farming community would require some incentives on the government’s part. Khan said that Indian farmers were enjoying huge subsidies; therefore, the government would have to give equivalent subsidies to bring domestic growers at a level footing with their Indian counterparts.

Okara Potato Growers Association Director Afzal Razwi said that the duty-free import of potatoes from India would destroy Pakistani farmers. “Indian farmers are getting $88 billion in subsidy and Pakistani farmers will not be able to compete with that,” he said; adding that the government should impose a regulatory duty equal to the subsidy given to Indian farmers.

He said that Pakistani farmer bears Rs12 per kilogramme (kg) for growing potatoes, excluding transportation costs, whereas Indian farmers bear only Rs7 per kg. He also said that while the World Trade Organization supported the opening of markets, it also discouraged subsidies.

“India is still giving subsidies; therefore, the Pakistani market should not be opened for agricultural goods,” Rizwi said. He said that pressure groups for the auto and industrial sectors had succeeded in putting their products on the sensitive lost to protect their sectors, and the agriculture sector should not be put to the stake just to open duty-free trade with India.

Tariq Bucha, president of the Farmers Associates Pakistan (FAP), said that it must be realised that the country’s agriculture sector is incapable of competing with India because of the latter’s support of its agricultural sector through “huge” subsidies.

“If we open the doors of trade with India without undertaking a proper analysis of our agricultural sector and capabilities, without providing similar subsidies to our farmers, and without negotiating for reciprocal treatment and market access for our agricultural goods in India, we can clearly foresee the imminent danger of labour looking towards Chandigarh and Amritsar for employment. There will be no employment opportunity left on our side of the border, encouraging an increase in the crime rate,” Bucha said.

Published in The Express Tribune, November 16^th, 2012.