Pakistan's WTO Agriculture Challenges

Under the AoA, members agreed to negotiate in three areas: market access, domestic support, and export subsidies. In terms of market access, non-tariff barriers were converted into tariffs through a process known as tariffication. Developed countries committed to average tariff reductions of 36 percent, while developing nations such as Pakistan committed to average reductions of 24 percent, with a minimum reduction of 10 percent per product line (Chishti & Malik, 2001).

The AoA classifies domestic support into three policy boxes: the Amber Box (trade-distorting subsidies), the Blue Box (production-limiting programs), and the Green Box (minimally trade-distorting support such as research, environmental protection, and rural development). Empirical data indicates that Green Box and Blue Box provisions are structurally biased toward developed countries, which can continue providing substantial support to their agricultural sectors without violating WTO regulations (Khan & Ashfaq, 2018). Global notifications to the WTO in 2018 showed Amber Box support at USD 62.5 billion, Blue Box support at USD 6.4 billion, and Green Box support at USD 265.5 billion, reinforcing the systemic favoritism toward high-income nations.

Pakistan's experience illustrates the asymmetry between bound and applied tariffs. While the bound tariff ceiling for agricultural products averages 60.8 percent, the applied Most Favored Nation (MFN) tariff is approximately 10.4 percent, suggesting that Pakistan has theoretical policy space to increase tariffs if necessary (WTO Trade Policy Review, 1995). However, this space has remained largely unused due to budgetary and administrative constraints. For Pakistan's principal exportable commodities like cotton, rice, and sugar, the Aggregate Measurement of Support (AMS) has been negative, indicating minimal trade-distorting domestic support (Sharif et al., 2008). Export subsidies have been virtually eliminated in compliance with WTO obligations, though initial notifications flagged freight and marketing support to exporters. These empirical indicators suggest that Pakistan suffers from a relative structural disadvantage compared to developed nations that maintain extensive subsidization (Khan & Ashfaq, 2018).

Current Trade Performance and Structural Challenges

Despite theoretical expectations that international competition should improve efficiency and expand production in the most productive sectors, Pakistan's agriculture faces severe structural barriers. The sector is characterized by a large and growing number of smallholders. According to the latest census, there are approximately 11.8 million farmers in Pakistan, with 95 percent owning less than five hectares and only a few animals (Ali, 2026). This fragmentation limits economies of scale and constrains farmers' ability to respond to liberalization.

Recent trade data reveals deepening challenges. In the first half of fiscal year 2026, rice exports including Basmati, the country's flagship agricultural export, fell by nearly 50 percent compared to the same period last year. This decline has been attributed not to cyclical factors but to systemic failures, including high energy costs, expensive financing, inflated inland transport costs, and rising farm input prices (Hussain, 2026). The situation is further complicated by the fact that a significant number of Pakistani rice exporters have established overseas entities to re-route exports through the United Arab Emirates, Kenya, Madagascar, and other African countries, allowing them to maximize rebates while inflating declared prices. Meanwhile, India has overtaken Pakistan in both coarse and premium Basmati rice markets, including segments traditionally dominated by Pakistani exports in the United Kingdom, European Union, Saudi Arabia, and Gulf Cooperation Council countries (Hussain, 2026).

Beyond rice, broader agricultural trade performance remains concerning. The sector generates an annual trade deficit of approximately USD 4 billion, with the actual deficit likely higher when imported input costs are included (Ali, 2026). Projections for fiscal year 2026 indicate that cotton imports could rise by USD 1.06 billion, while textile exports may decline by USD 300 million. Rice and sugar exports could fall by another USD 561 million, together inflicting a USD 1.93 billion blow to Pakistan's current account (Climate Finance Pakistan, 2026).

Developmental Implications and Market Structure

Several structural factors limit agriculture's ability to contribute to rural development under the current policy framework. Productivity growth has lagged significantly behind population growth. Over the past 25 years, wheat yields increased from 878 kilograms to 1,322.5 kilograms per acre, a compound annual growth rate of just 1.66 percent, compared with a population growth rate of 2.5 percent (Daily Times, 2026b). Similar low yield growth has been observed for rice, sugarcane, rapeseed, mustard, and potatoes. Decades of underinvestment in agricultural research have limited the development of high-yielding, climate-resilient seed varieties.

Harvest and post-harvest losses further constrain output, with estimates suggesting up to 10 percent losses for grains and oilseeds and 30 percent for fruits and vegetables (Daily Times, 2026b). Poor storage, outdated equipment, and contamination risks have led to millions of tonnes of produce being wasted and export shipments rejected due to aflatoxin. The supply chain itself remains dominated by traditional wholesale markets governed by provincial legislation commonly referred to as the Market Produce Act, which requires buying and selling to take place within officially notified wholesale markets. This system concentrates trading power among commission agents (arthis) who provide credit to farmers and control access to trading space, creating cycles of dependence that limit farmers' bargaining power (Hanif, 2026). Despite the expansion of digital marketplaces, technology platforms currently handle no more than 2 to 3 percent of fruit and vegetable volumes, leaving the broader supply chain largely unchanged.

Value chain development remains minimal. Agricultural commodities often fail to meet the quality standards demanded in international markets, reflected in lower export prices compared to world averages. The agriculture market system, distant from producers and controlled by intermediaries, does not transmit consumer demand for quality back to farmers (Ali, 2026). Limited processing of agricultural products in rural areas means Pakistan fails to capture value addition that could generate employment and diversify rural incomes. Experts estimate that if Pakistan could attain yields, quality, and processing at par with world averages, agricultural stakeholders could additionally earn USD 22 billion, with further gains possible through diversification to high-value crops (Ali, 2026).

Policy Responses and Recommendations

Several important non-tariff aspects of the AoA affect Pakistan's agriculture sector structurally. While the agreement's Special and Differential Treatment provisions for developing countries provide longer time frames and lower reduction commitments, domestic policy space remains constrained by scarce administrative and financial resources (Sharif et al., 2008). Recent WTO negotiations suggest some evolution in the policy environment. In March 2026, the chair of the Doha agriculture negotiations, Pakistan's Ambassador Ali Sarfraz Hussain, secured approval for a draft text from many members and coalitions ahead of the 14th Ministerial Conference (MC14), though the United States and Cotton-Four countries expressed opposition on key issues (Third World Network, 2026). The draft text includes recognition of the WTO Agreement on Agriculture's role in supporting global trade and food security since 1995, but significant divergences remain on negotiating approaches.

Sustainable agricultural development under WTO commitments requires balanced policies that integrate trade with capacity building. Experts recommend a focus on crop diversification and value addition, noting Pakistan's comparative advantage in high-value crops such as garlic, turmeric, olives, peas, and groundnuts (Daily Times, 2026b). Supporting small and medium enterprises in agricultural processing, improving supply chains, and securing reliable export markets are crucial for these initiatives to succeed.

Several alternative approaches merit consideration. First, removing policy biases by assuring output prices for low-value uncompetitive crops while ensuring input supplies of seed, seedlings, information, credit and training value chain agents to handle competitive emerging crops. Second, corporate farming models in which corporations provide technologies and training while ensuring output prices through contractual arrangements with farmers. The successful example of corporate-farmer cooperation in maize and potatoes, where yields have increased, exports boosted, and local processing encouraged many-fold in just one decade, demonstrates this model's potential (Ali, 2026). Third, establishing trading platforms furnished with value addition facilities in rural areas, owned by farmer entrepreneur groups, can connect producers directly with markets while ensuring they share proportionately in profits.

Institutional capacity building with particular emphasis on targeted Green Box-compatible programs and mobilizing trade policy flexibility can offer a pathway to sustainable agricultural development. Recent bilateral initiatives, such as tariff concessions with Afghanistan under the Early Harvest Program reducing duties on tomatoes, grapes, pomegranates, and apples, demonstrate the potential for regional trade cooperation to improve market access for agricultural products (Minute Mirror, 2025).

Conclusion

Pakistan's experience under the WTO Agreement on Agriculture illustrates the complex interplay between international trade rules and domestic structural constraints. While trade liberalization creates export opportunities, Pakistan's weak fiscal and institutional capacity limits its ability to utilize Green Box or Blue Box measures that could support agricultural development. The sector's persistent challenges of fragmented landholdings, lagging productivity, inadequate value chain development, and limited processing, require comprehensive policy responses that go beyond trade policy alone.

Empirical evidence confirms that agricultural exports remain concentrated in rice, cotton, and fruits, indicating low diversification and structural reliance on a few products (FAO, 2001). The disparity between support available in Pakistan and developed economies underscores ongoing challenges in achieving equitable access to global markets. To counter these limitations, Pakistan must strategically adopt WTO-compliant policies that support productivity, curtail market distortions, and ensure stability in rural incomes. Without accompanying institutional change and investment in rural infrastructure, research, and technology, liberalization may lead to greater vulnerability rather than increased welfare for the millions who depend on agriculture for their livelihoods.

References: Ali; Chishti & Malik; Climate Finance Pakistan; Daily Times; FAO; Hanif; Hussain; Khan & Ashfaq; Krueger; Minute Mirror; Sadia et al; Sharif et al; Third World Network; WTO.

Please note that the views expressed in this article are of the author and do not necessarily reflect the views or policies of any organization.

The writers are affiliated with the Institute of Agricultural & Resource Economics, University of Agriculture, Faisalabad, Pakistan and University of North America, USA can be reached at syedaliammar22@gmail.com

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