ISLAMABAD, Jan 16: The group of G-33 developing countries has rejected the World Bank’s sponsored report of special products (SPs) saying the report ignored the reality of the prevailing agrarian structures in most of the developing countries.

The group pointed out that the paper was fundamentally flawed in its assumptions and methodology and misinterpreted the proposed operation and impact of the special products on the developing countries.

Pakistan is an active member of the block to protect its products from any possible tariff reduction in the WTO agreement on agriculture.

The G-33 group of 46 developing countries has sent a detailed critique on the initial draft paper authored by Maros Ivanic and Will Martin for the World Bank, a copy of which was obtained from the Pakistani ministry of food and agriculture.

The group has urged the World Bank to undertake a more useful study that examines these phenomena, but does not seek to generalise misleading findings. At the very least, the G-33 has urged the World Bank to substantially modify this fundamentally flawed paper as a matter of priority.

The G-33 Group of countries (including Pakistan), which is pushing for SPs in the WTO agriculture negotiations, has cautioned that such a misleading paper could have adverse consequences for the Doha Round negotiations of the WTO.

The initial draft paper titled "Potential Implications of Agricultural Special Products for Poverty in Low-Income Countries” was presented by the authors to the World Bank president in October 2006. The paper was subsequently revised by the authors.

G-33 is dismayed that the revised draft paper which remains essentially the same, with the slight difference, instead of assuming a direct price increase of 50 per cent, it assumes unjustifiably high import substitution elasticity to get a similar effect on prices. Clearly, the objective of the instrument of SPs has not been understood by the authors.

The G-33 has repeatedly explained that the aim of SPs is not to raise prices of qualifying products over an extended period of time. Rather, SPs are a flexibility intended to enable developing countries to address externally generated shocks that could disrupt incomes and food security, particularly for low income and resource poor agricultural producers.

The paper makes a sweeping generalisation that if poverty is to be successfully reduced, there is a need for caution in using the flexibility provided by SPs.

This is despite the fact that the G-33 critique had clearly mentioned that the product coverage in the study was very narrow, its scope was confined to only four countries, and that the situations, which were sought to be simulated were completely arbitrary.

The G-33 has pointed out that the Ivanic-Martin paper ignores the reality of price declines, price volatility and predatory competition, including dumping of heavily subsidised products, which raises the risk levels of developing countries without providing an adequate safety mechanism or flexibility to deal with the adverse impacts of trade policy changes for their vulnerable agricultural sectors.