For all those Pakistani trade experts who have been blindly pushing this government for further (or complete) liberalization of trade with India without first ensuring reciprocity, the collapse of the recent World Trade Organization (WTO) deal in Geneva should be an eye opener. In fact, most of the member states of the WTO are voicing their disappointment after India’s demands for concessions on agriculture stockpiling led to the collapse of the worldwide trade deal when it unveiled its veto power at the eleventh hour. Back in November 2013 at Bali, Indonesia, after repeated failures to reach any sort of consensus in the Doha round of talks, the WTO struck its first global accord since coming into existence in 1995. Before that over the past 12 years, efforts to reach any sort of agreement in the world-wide negotiations had seemed doomed. Even the Bali success, albeit a modest one, was reached after some hectic and nerve wrecking deliberations. Modest, because the agreement merely covered “trade facilitation” (simplifying customs procedures) and not the broad liberalization that was the ‘original’ aim of the initiative at Doha. Still, the breakthrough covered some useful stuff: by one estimate, cutting of customs red tape and in turn reducing the cost of shipping goods around the world by more than 10%, and by dint of this single saving, to potentially raise annual global output instantly by nearly $400 billion. More importantly, much of this gain was to flow to the developing economies instead of the developed ones. Overall it was estimated that eventually over time, the deal would add $1 trillion to the global trade and 21 million jobs to the world economy with developing economies benefiting the most.

To be fair to India, it has its reasons and some are valid. India has defended its decision by saying that it needed to take a tough stand at the WTO to ensure the survival of its impoverished farmers. It has accused the developed nations of foot-dragging negotiations to give the green light to its stock piling of food. It insists that the deal should be concluded as a ‘package’ alongside a permanent agreement on stockpiling food to feed its millions of poor, and that the government of India is committed to protecting the interests of its farmers against all odds. It feels that if it backs down on its stand, hundreds of thousands of Indian farmers will face suicide and starvation. From an Indian perspective, these are powerful and humane arguments, but at the same time the stand in itself carries a very strong message for countries who aspire to enhance trade with India and especially those who expect significant gains from their respective bilateral trade with it. The message being, that when it comes to protecting its interests, India will stop at nothing and is willing to take on the strongest global powers to protect its own backyard. Pakistan will be no exception and so it shouldn’t surprise us that as the trade between our two countries increases over time, the equation gets further skewed in India’s favor. Unless corrected going forward, liberalization of Pak-India trade cannot be a win-win for both countries.

Further, the collapse of this deal carries wider global implications in general and specific trade challenges for Pakistan in particular. On the global front, this failure serves a great blow to the confidence revived in Bali that the WTO can deliver negotiated outcomes and that it now opens up the dangerous possibility of countries embarking on the route of ‘plurilateral agreements’ – deals whereby groups of countries get together to agree on liberalizing rules on one sort of good or service, with others free to join as and when it suits them. The idea behind such deals is that they are simpler to negotiate than multilateral agreements and they can send a strong message to the ‘laggards’. The message is: Either get on board, or get left behind. The modality being, that a deal between a few interested countries gets on the way and as and when the others sign up the agreement eventually assumes global proportions. Furthermore, it works on the assumption that unlike the endeavour of the November 2013 Bali deal, not all subjects need to be negotiated amongst all WTO members. This fresh phenomenon is now permissible under the new WTO rules, where like-minded countries eager to press forward can come to a mutual agreement (plurilateral talks as opposed to multilateral ones), as long as other WTO members are allowed to sign up later on to any of the resulting agreements. Negotiations on services and on information technology already fall into this category. Emerging economies (like China and Brazil) feel that the plurilateral approach is indeed the right way to move liberalization forward in the future. Within a couple of weeks of this debacle, the United States, European Union, Australia, Japan and Norway have already announced to push ahead under a plurilateral approach. And this surely does not augur well for the future of free and fair multilateral global trade.

What it essentially means for Pakistan is that from now on we cannot be satisfied with simply being a part of a larger system in the hope that the overall trading regime will automatically protect our interests. Instead, from now on we will have to formulate our own homegrown but prudent vision on bilateral, regional and global trade linkages in order to safeguard our national interests, while optimizing our larger trading potential. With India succeeding in what it wanted to do at the WTO forum with regard to keeping its options open on providing agricultural subsidies to its farmers and stockpiling food reserves, Pakistan will also be well advised to carefully strategize its agriculture policy in light of what India can now legally continue to do - To subsidize its farmers and agricultural produce without the risk of violating any international law.

 The writer is an entrepreneur and  economic analyst.