ISO certifications indicate a complete management system and by implementing them a company cannot only cut the cost but also improve the quality of its products
By Shujauddin Qureshi
The European Union announced in late February 2007 that it has de-listed all the fish processing factories of Pakistan to export to any European country on quality grounds, thus putting a ban on more than $80 million worth of exports. According to the EU no consignments of fishery products will be accepted to enter into the European countries after April 12, 2007.
This is not the first time Pakistan is facing such a ban on fisheries exports; it had faced a similar ban a few years back which was later lifted on improvement of conditions at the Fish Harbour and processing factories. The European Union continued to monitor the conditions of Pakistani factories and harbour, but its experts were not satisfied resulting in a ban which was clamped across the board.
Similarly, other industries had also faced partial or full bans from the European countries and the US on grounds such as quality, violation of child rights or environmental issues. Despite repeated warnings, Pakistani companies have failed to comply with international standards Although many companies have started adopting international standards, a large number of Pakistani companies are still reluctant to adopt quality standards.
Globalisation and growing competition in the international market has made the quality of products the sole criteria for success in trade. Buyers ensure whether the selling company is adopting international standards or not. In a cut-throat competition environment, the countries are encouraging their business establishments to adopt the international standards in order to accelerate their trade.
European countries being more quality conscious are not ready to compromise on quality at any cost. Recently PIA flights were banned in European countries because of poor quality service and safety standards.
After implementation of World Trade Organization (WTO) regime the quota system has been abolished enabling every country to sell its products in the international market without any restrictions. Many developing countries with cheaper labour and other input costs, but high quality products, have started capturing the market and traders are facing problems even in their traditional markets due to quality and competitiveness.
The International Standards Organization (ISO) has developed a set of standards, which are applicable from the industrial and business organisations of all types to the governments and other regulatory bodies. These standards are of various types. For examples, the famous ISO-9000 is used for quality management systems in an organisation. There are many more standards in the ISO 9000 family, many of them not even carrying ISO 9000 numbers. For example, some standards in the 10,000 range are considered part of the 9000 family.
ISO, itself does not certify any organisation. Many countries have formed their own accreditation bodies to authorise certification bodies, which audit organisations applying for ISO 9000 compliance certification.
A company or organisation that has been independently audited and certified to be in conformance with ISO 9000 may publicly state that it is ISO 9001 certified or ISO 9001 registered. Certification to an ISO 9000 standard does not guarantee the compliance of end products and services; rather, it certifies that consistent business processes are being applied.
In Pakistan the federal government has also established a separate body called Pakistan Standards and Quality Control Authority (PSQCA), through an Act in 1996. It started functioning in December 2000 and now it is a regulatory body for inspection companies in the country. It is currently testing and assessing industrial raw materials and finished products to establish their quality, grades and compositions with reference to national or international specifications in the fields like textile, chemical and mechanical engineering, electrical and electronic goods and appliances, and building materials etc.
Besides ISO-9000 standards, the other crucial standard as far as Pakistani companies are concerned is ISO-14000, which is environmental management standard. This helps organisations to minimise their operations' negative affects on the environment or adverse changes to air, water, or land, and how they can comply with applicable laws, regulations, and other environmentally oriented requirements, and continually improve on the above. As with ISO 9000, certification is performed by third-party organisations, which is accredited in a particular country.
So far many companies have adopted these ISO standards in Pakistan. According to unofficial estimates about 5,000 Pakistani companies have adopted these international standards. These companies range from producing factories to service sector organisations and public sector corporations.
"A company starts performing well when it implements management systems according to international standards," said Syed Arshad Hashmi, CEO and Principal Consultant at Quest Consultants, a firm dealing in international standards.
He said that in Pakistan the trend of adopting international standards is growing and now more and more companies, organisations and associations are adopting these standards.
"The ISO-9000 standards help companies achieve cost effective and quality assurance methods. Companies, which are not certified under ISO standards would not be able to export their products as the international consumers have now become more quality conscious," he added.
Pakistan had realised the importance of certification much before implementation of WTO regime and various steps were taken to encourage companies to adopt standards. A serious effort was made in 1997 to encourage manufacturer exporters to obtain ISO 9000/14000 certification for sustained export growth in future. In the Trade Policy for the year 1997-98, the Ministry of Commerce had announced an incentive of Rs. 150,000 for manufacturer-exporters who wanted to obtain ISO 9000/14000 certification. This incentive continued till June 30, 2000 and a number of Pakistani export houses availed the opportunity.
Similarly, the Ministry of Science and Technology had also launched a scheme to help small and medium enterprises to improve industrial productivity and management quality and to obtain ISO 9000/14000 certification. This scheme provides 50 per cent grant in aid for undertaking professional studies. A maximum amount of Rs.50,000 per study is available under this scheme. This is, however, subject to the provision of a matching amount by the selected small and medium industrial units manufacturing goods, preferably for export.
Many organisations and associations, which are not directly engaged in exports are also seriously considering to adopt ISO standards to provide better services to their stakeholders.
Karachi Chamber of Commerce and Industry (KCCI), the largest body of traders and industrialists in Pakistan, is presently passing through the process of acquiring certification under ISO-9001 standards. "With the implementation of standards we can improve efficiency and management becomes easier," said M. Ishaq Subhani, Director Research at KCCI.
The response and responsibilities are clearly defined and it is easy to make decisions in an ISO certified organisation, he added. The main aim of these standards is to streamline the operation of a company by removing unforeseen hurdles caused by lack of planning or insufficient documentation. However, it does not seek to impose any unnecessary burden.
A misconception still exists in many minds that an ISO certificate is required to satisfy international buyers and there is no real need to rigorously implement the standards in the organisation.
"These standards give a complete management system and by implementing these standards a company cannot only cut the cost but also improve the quality of its products," said Arshad Hashmi. The most crucial role in this regard is that of the chief executive of the company. It is his prerogative that he is fully convinced of its benefits and is determined to implement them in the organisation.
By Kaleem Omar
Opposition parties seem to spend much of their time enumerating the problems the country is facing, but seldom offer any solutions. Ruling parties, on the other hand, tend to give the impression that everything is fine.
Caught in the nutcracker between the opposition's incurable pessimism and the ruling party's equally incurable optimism, many problems tend to be either blown out of proportion or brushed under the carpet as being of little or no consequence. That's why it is said that when all is said and done, more is usually said than done.
Take literacy, for example. For years, successive governments have been telling us that full literacy is around the corner or around the next corner anyway. The reality on the ground, however, suggests that that corner is still very far away.
Between 1990 and 2000, literacy in this country grew at an average rate of 0.6 per cent per year, according to independent estimates. At that rate it's going to take us at least another five decades or more to achieve full literacy.
For economic progress, however, in today's increasingly competitive world, people also have to be taught a whole bunch of other things, both in technical disciplines as well as in the humanities. This may be a truism, but what are we doing about it? The answer is: not as much as we should be.
In recent years, the private sector has got into education in a fairly big way, not only at the school level but also at the level of higher education. Many private universities have been established, with more due to come on-line over the next few years.
All this is to the good, of course. But it's still going to take a great deal more than this for Pakistan to be able to properly educate its burgeoning population, 40 per cent of whom are below the age of 15.
So what's the answer? More polytechnics, for one thing. Not just a few here and there but hundreds and hundreds of them all across the country, offering diploma courses in a wide range of technical disciplines. Only an educated industrial workforce can give us higher productivity in our factories.
A survey carried out a few years ago found that the productivity of the average Japanese female factory worker was four times higher than the productivity of the average Pakistani male factory worker. To change this, our factory workers need to be better educated.
Another problem that needs to be urgently addressed is the quality of education imparted in state-run schools. Thousands of schools in the rural areas have a dire shortage of teachers and teaching materials. Many rural primary schools have no teachers at all and are schools only in name. Buildings don't make a schools, teachers do.
But where are these teachers going to come from when they are paid a pittance? Teachers' salaries need to be substantially raised, to at least bring them at par with what a truck driver or a carpenter earns. Why should a person become a teacher when he can make more money as a truck driver?
Education is not a boon conferred by the state; it is the fundamental right of every citizen. The state has a duty to educate the people and not just a privileged few but the whole population.
Governments, for their part, say they are aware of the problem, but claim they lack the resources to make the massive investment in education that is needed.
This argument won't wash. If money can be found to give government bureaucrats a 50 per cent raise in salaries, as happened a couple of years ago, money can surely also be found to pay teachers higher salaries and invest in other areas of education.
Experience enables one to recognise a mistake when one makes it again. That's why it is said that one learns from one's mistakes. We, in this country, however, seem to have stood this adage on its head. Here, experience has come to be regarded as something that causes us to make new mistakes instead of old ones.
It is high time we rejected this kind of negative thinking and got down to putting things right. The problem, said Marx, is not to understand the world but to change it.
Herman's Law says a good scapegoat is almost as good as a solution. We have scapegoats aplenty in this country, but where are the solutions? We are not going to find the solutions in Washington, or in the IMF, or in the World Bank, or in conferences on poverty held in the Bahamas or other swanky watering holes. Nor are we going to find the solutions in prescriptions handed down by trickle-down-theory economists. We have to look to ourselves, to our own experience, for solutions.
The trickle-down theory of development favoured by some western economists and their local surrogates doesn't work. Take the case of Mangla Dam, for example. Before it was built in the late 1960s, the nearby small town of Dina was an impoverished community with hardly any civic infrastructure or employment opportunities. More than 360 million dollars were spent on building Mangla Dam. Yet Dina, only six miles from the dam site, saw hardly any change as a result of all that money being spent. Or take the more recent example of the building of a huge naval base at Ormara on the Balochistan coast. When construction of the base began in the mid-1990s, the village of Ormara was one of the poorest communities in the country. Four billion rupees of spending later (the cost of the base), the village of Ormara is still as impoverished as it was.
We can't solve problems by using the same kind of thinking we used when we created them. The adage, 'You have to know what you want to do before you can do it,' contains the definition of both strategy and organisation, knowing what to do and knowing how to do it.
Strategy is the plan for future survival. Organisation is the current arrangement for day-to-day application. A good strategy with poor organisation is a thoroughbred horse without a rider, trainer, stable, or track. In principle, strategy precedes organisation and the two are closely related; in practice, often they are not.
In the industrial context, organisation always lags behind strategy. Because of the assumption that you have to know what it is you want to do before you know how to do it, all organisations based on the industrial model are created for businesses that either no longer exist or are in the process of going out of existence. The inherent weakness of this model is that no organisation can ever be in sync with time, or totally appropriate for carrying out its mission or purpose.
What applies to organisations also applies, in a wider sense, to nations, Most developing nations can do no better than catch up with the present, and there is even a catch-22 to catching up. When they get there, there isn't 'there' anymore, so to speak.
Strategy is always focused on the future, but it is rooted in the present, or even in the past, if nations are inefficient. How, then, can we, as a developing nation, implement our strategic plan with actions that are appropriate to the present-future rather than ones that are catching up with the past-present?
That, for us in Pakistan, today, is the central question, as indeed it is for developing countries around the world.
The cult called Bhutto
Bhutto's policies were a step forward towards strong economy and true democracy
By Hussain H Zaidi
On April 4, 1979, Zulfikar Ali Bhutto, the first popularly elected prime minister of Pakistan and the founder of the country's largest political party, was executed after being convicted in a murder case. With Bhutto's death one of the stormiest chapters in Pakistan's political history came to an end. Whether economically or politically, Pakistan was better off during the Bhutto era (1971-77), Whether he was an exponent of democracy or mobocracy? On questions such as these opinions remain sharply divided. The purpose of this article is to briefly look into the economic and political policies of the government of Z.A. Bhutto without trying to resolve these controversies.
Bhutto's Pakistan Peoples Party (PPP) was committed to a command or socialist economy, which envisaged the state as the major player on the economic scene. Therefore, after attaining power the party started a nationalisation programme. In the first phase of the programme, a number of basic industries were nationalised. In the second phase, the state took control of financial institutions including banks and insurance companies. In the third and final phase, rice-husking units were nationalised.
The nationalisation policy of the Bhutto government has come in for sharp criticism. It is alleged that nationlisation of industries and financial institutions did serious damage to the efforts for economic development during 1960s and resulted in economic inefficiency and mis-allocation of resources. Some critics have even alleged that nationlisation was not occasioned by any philosophy or doctrine; rather it represented the attempts of feudals led by Bhutto himself to clip the wings of industrialists, who had grown immensely strong under President Ayub.
Undeniably economic growth slowed in the wake of nationalisation. This is corroborated by the fact that whereas during 1960s, Pakistan's economy grew on average at 6.8 per cent per annum, during 1970s, growth rate fell to 4.8 per cent per annum on average. It is also true that most of the nationalised units went into loss, because decisions were not market-based. However, rapid economic growth is not the only macro-economic objective of a government. The government has also distributional objectives so as to reduce economic disparities. During 1960s rapid economic growth was accompanied by concentration of resources in a few hands.
Hence, when Bhutto assumed power, there was a popular demand for breaking the concentration of economic power. And it is doubtful whether that was possible without the state increasing its economic role. Besides socialism was still a powerful economic doctrine during 1970s and a party's pursuit of socialist ideals was not surprising. Today, of course, things are much different as governments all over the world are pursuing market-based policies. In Pakistan as well, all major political parties, including the PPP, are wedded to market economy.
As far as political policies of Bhutto government are concerned he deserves the credit of inculcating political consciousness among the people. With Bhutto, democracy was restored in Pakistan after a long spell of despotism. Democracy is essentially a faith in the power of the people, and only politically conscious people can constitute that power. Thus a foremost task of a leader in a democratic polity is to infuse that consciousness in the masses. Before Bhutto the people were merely passive spectators in the game of politics deficient markedly in political consciousness. Politics was entirely dominated by feudals and the country lacked a politically influential middle class, which is so inevitable for democracy. Though during the Bhutto period feudals continued dominating politics, Bhutto himself being a feudal lord, a politically conscious middle class came into being. Since that class had pretty adequate representation in the legislatures, it wielded some influence as well.
Bhutto made the masses realise, in a way none had done before in Pakistan, that they were not a non-entity, and that they had their rights as well as obligations as citizens of a democratic state. The popular expression 'roti, kapra aur makan' was not merely a political slogan but a driving force in arousing the masses. Without having access to these necessities of life, the people cannot be free. As one great revolutionary leader of the last century puts it, 'a starving man has no opinion.' Only a free people can fulfil their responsibilities as members of a democratic order.
The 1973 constitution was another major contribution of Bhutto. Constitution making has remained a serious problem in Pakistan. It took the country nine years to draw up its first constitution, which was abrogated only after two and half years. The second constitution, the 1962 constitution, was a mockery of constitutionalism as it had made the president all-powerful but responsible to none. The 1973 constitution, which is still in force despite having been suspended twice by generals, if seen in its original form, is an excellent document. It not only provides for a responsible form of government but also reconciles the apparently conflicting principles of full autonomy and federation's integrity. What is remarkable about the constitution is that it was adopted unanimously by the people's representatives.
Bhutto also took the momentous decision that Pakistan start its nuclear programme in response to that of India. Whether right or wrong his decision bears testimony to the fact that the Bhutto government did not knuckle under tremendous pressure to abandon the nuclear programme. Moreover, it testifies to the strong character of the man at the helm.
The late prime minister will also be remembered for presiding over a fundamental shift in Pakistan's foreign policy. Disappointed with the US role in 1971 Pak-India war, Bhutto decided it was high time Islamabad shunned its dependence on Washington and instead look to the Muslim world for support and strength. The hosting of the second OIC conference at Lahore in 1974 created a semblance of Muslim unity.
Nevertheless, the Bhutto regime was not without its dark side. The late prime minister had indomitable lust for power, which made him frequently overstep his authority. Bhutto was given the mandate for a democratic, responsible government but he tried to turn the same into a licence for authoritarianism. His amendments to the 1973 constitution by force of brute majority, his attempts to encroach upon provincial autonomy guaranteed in the constitution, manhandling of opposition leaders both inside and outside parliament, and his humiliation of his own partymen who dared oppose him are some of the examples.
His creation of the federal security force (FSF) to harass and victimise the opposition and his intolerance of any criticism depicts his dictatorial bent of mind. If democracy is the government of the masses, it is also the rule of law in an environment of political tolerance. Bhutto's intolerant attitude and his extra-legal steps weakened democracy. It is pertinent to mention that throughout the Bhutto era, emergency remained enforced in Pakistan and he never shrank from using the powers that emergency provisions had conferred on him.
Bhutto tried to strengthen himself at the expense of institutions, whereas the success of democracy depends not so much on strong leaders as on strong institutions. The personality cult of which Bhutto and most other democratically elected leaders in Pakistan have been guilty may be so important for dictatorship but is definitely a lot detrimental to democracy. That Bhutto tried to put himself above institutions is best demonstrated in his dealings with the Armed Forces. Instead of strengthening his grip on power by strengthening democratic institutions, Bhutto tried to do so by appeasing the senior command of the army. Under Bhutto, the size of the army increased and public discussion of the troops' debacle in Dhaka was banned.
To ward off any danger of coup d'etat, he appointed a junior office as the army chief. But ironically that very person whom the late prime minister believed to be meek and personally loyal to him toppled his government and had him hanged.
The tribals seem to have identified the presence of foreigners as a major obstacle in their progress and want them to leave the area
By Zaman Khan Afridi
Gun battles between foreign militants and local tribesmen in South Waziristan, bordering Afghanistan, have so far claimed about 200 men, though most of them include foreigners. Yet it is being widely seen by the general public that a delay in launching a full-fledged campaign by the government against the foreign militants would leave the local tribesmen in a lurch. The public thinks now is the time for the government to come to the tribals' help and clear the region of al-Qaeda and Taliban terrorists.
Clashes between foreign militants and local tribesmen in South Waziristan resumed last Friday after a jirga consisting of ulema and tribal elders failed to a ceasefire between the warring factions. According to reports, a jirga was convened in Wana to discuss the future of foreign militants in tribal areas. Some tribesmen suggested that the foreign militants should be disarmed and given asylum in the Mahsud area, but most participants rejected the suggestion. NWFP Governor Ali Mohammad Jan Aurakzai, while talking to journalists last Friday, said about 130 foreigners have been killed in the four-day gun battle in the South Waziristan Agency.
Tribesmen have also captured 62 foreigners. About 30 locals have been killed in clashes in the Azam Warsak area of South Waziristan since March 18. According to government estimates the number of foreigners in South Waziristan is about 200, but it seems that 400 to 500 foreigners are still living in the area and there are indications that the leader of Islamic Movement of Uzbekistan Tahir Yaldeshiv is present in the area.
Situation is said to be tense in the wake of murders of some prominent tribal elders and closure of various roads by the foreign militants. Both sides are reportedly entrenched in their positions and the tense situation may lead to eruption of fresh fighting as majority of the local tribesmen are tired of the excesses being committed by the foreigners mostly of Uzbek Islamic Movement. Newspaper editorials demand that the government and law enforcement agencies do what is needed of them and to cleanse the area from the foreign terrorists. They are present not only in South and North Waziristan but in other agencies backed by well-wishers of the militants.
As the NWFP Governor says, the tribesmen have now realised that the presence of foreigners in the area is a major obstacle in their progress. They have put them in trouble, causing social problems and widespread unrest. Not only the developmental projects have been halted, the children are unable to go to their schools, patients are also facing problems and business and trade activities have come to a standstill due to the tension.
It is noteworthy that unlike the past the tribal people have developed an increasing tendency towards education and openness. They are now well aware of the need to overcome the hindrances in social and economic uplift and cultural development.
There seems a pragmatic approach when we see the tribesmen taking up arms against the foreigners. Their endeavour to broker a peace deal with the combatant foreigners is an indication of resolving their problems through peaceful means. They want the foreign militants to leave the area and let them live in peace and harmony.
The ongoing clashes between the tribesmen and foreign militants, is a vivid indication of their patriotism. Out of their centuries' old cultural and social traditions, many of them gave temporary shelter to a number of fleeing al-Qaeda and Taliban men considering them Muslim brothers. That's why they primarily resisted the government's moves against them. But with the passage of time they realised that those foreigners while exploiting their social and cultural norms started using the area for launching acts of terrorism inside and outside Pakistan. This also divided the locals' opinion for and against their 'guests'.
A jirga consisting of the influential, including Maliks, clerics and political figures, was formed to negotiate with the government on one side and the foreign militants and their local collaborators on the other, to reach an understanding. The aim was to convince the foreigners to either get themselves registered and avail amnesty from the government or to leave the area to avoid confrontation. The peaceful tribal leaders reached an agreement with the government in September last year under which they took the responsibility of keeping the foreigners under control or forcing them to leave the area.
In the latest development, as reports suggest, the tribal jirga that was actively trying for a cease fire between the foreigners and tribal militants failed to exact a peace deal last Friday. Talks collapsed when the local militant commander Maulvi Nazir linked permanent truce with the surrender of foreign militants residing in the tribal region. Maulvi Nazir had tabled two conditions for a ceasefire -- surrender of the foreigners and a guarantee by them that in future they would demonstrate good conduct. But foreigners and their local collaborators turned down both the conditions. MNA from tribal area Maulvi Mirajuddin, an influential tribal Malik Maulana Ainullah, Bakhta Jan, militant commander Baitullah Mahsud and Sirajuddin Haqqani, son of the prominent Afghan commander Maulvi Jalaluddin Haqqani, were negotiating to broker a ceasefire.
Taliban upsurge in Afghanistan is basically the problem of Kabul government, not Islamabad. The recent Taliban insurgency speaks volumes of the inability of Karzai government that is virtually confined to the walls of Kabul. Manning of more than 80,000 troops by Pakistan along the Pak-Afghan border has ensured no movement of cross-border infiltration from Pakistan's side, a fact which the NATO and ESAF commanders have endorsed in their statements. The clashes between the foreigners and local tribesmen nullify Karzai administration's claims that the FATA people are supporting the Taliban for launching attacks inside Afghanistan. Kabul's demand and Washington's pressure on Pakistan to do more makes no sense because in President Musharraf's words, 'NATO, ISAF and Kabul government have to play their part on the other side of the border more actively and effectively.'
Now according to a latest report that appeared in The Sunday Telegraph, militants linked to Osama bin Laden have been offered a safe haven by the Taliban in Afghanistan, bringing them into conflict with British troops patrolling the lawless province of Helmand. 'Uzbek gunmen, who fought a series of bloody battles last week with Pakistani tribesmen in the border region of Waziristan have been told they should join the Taliban insurgency in Afghanistan instead.' According to the paper this raises the prospect of a major upsurge in violence in Helmand, where 43 British soldiers have been killed in clashes with militants over the last five years.
The Pakistani media is demanding, not only the government's full support to the tribals, but also expulsion of illegal Afghan immigrants, not only in FATA but also in other cities of Pakistan. Experts estimate that three to four million foreigners are illegally staying in Pakistan including those from Bangladesh and India and Afghans in different cities, with a majority being in Karachi. They are not only involved in crimes on one hand but are also a burden on country's economy as hundreds of thousands of them are employed in garment and fish industries at the cost of Pakistani labour force.
It is time that the operation against illegal immigrants is expanded to all parts of the country with stern warnings to the responsible departments to nab all illegals and then deport them to their countries of origin.
Corrupt governments are working in tandem with corporations in order to meet their various political and economic agendas
By Mazhar Farid Chishti
In his book, 'Roads to Freedom', Bertrand Russell writes, "If a man is offered a fact which goes against his instincts, he will scrutinise it closely, and unless the evidence is overwhelming, he will refuse to believe it." In recent years, we have seen that military spending has diverted valuable economic means into a dangerous direction which may satisfy the instincts of a few warmongers but a vast majority of the world is asking for the overwhelming evidence.
Global military expenditure and arms trade form the largest spending in the world at over 1 trillion dollars per annum, and have been rising in recent years, close to the Cold War levels. As the world trade becomes globalised, so does the trade in arms. In order to make up for the lack of domestic sales, newer markets must be created. USA, Russia, France and Britain do the largest businesses of arms trade in the world. Sometimes, these arms sales are made secretly and sometimes openly to human rights violators, military dictatorships and corrupt governments. And this does not promote democracy in those nations.
Here is a summary of the key details scripted in the Stockholm International Peace Research Institute (SPIRI)'s 2006 Year Book on Armaments, Disarmament and International Security:
* World military expenditure in 2005 is estimated to have reached $1,001 billion at constant prices and exchange rates, or $1,118 billion in current dollars.
* This corresponds to 2.5 per cent of the world GDP or an average spending of $173 per capita.
* World military expenditure in 2005 presents a real terms increase of 3.4 percent since 2004, and of 34 percent over the 10-year period of 1996-2005.
* The USA, responsible for about 80 per cent of the increase in 2005, is the principal determinant of the current world trend, and its military expenditure now accounts for almost half of the world total.
SIPRI also comments on the increasing concentration of military expenditure, that is, a small number of countries spend the largest sums:
* The 15 countries with the highest spending account for 84 percent of the total;
* The USA is responsible for 48 percent of the world total, distantly followed by the UK, France, Japan and China with 4-5 percent each.
Another organisation, Center for Arms Control and Non-Proliferation, provides similar date (tabulated further below), showing the breakdown of spending by countries.
High and rising world market prices of minerals and fossil fuels is also a factor that has aided the upward trend in military expenditure, says SIPRI. For example, Algeria, Azerbaijan, Russia and Saudi Arabia have been able to increase spending because of increased oil and gas revenues, while Chile and Peru's increases are resource-driven, "because their military spending is linked by law to profits from the exploitation of key natural resources."
Also, "China and India, the world's two emerging economic powers, are demonstrating a sustained increase in their military expenditure and contribute to the growth in world military spending. In absolute terms, their current spending is only a fraction of the USA's. Their increases are largely commensurate with their economic growth."
SIPRI's data also shows that while in raw dollar amounts some nations are increasing spending at large amounts, their percentage increases may vary.
The United Nations which was created after World War II with leading efforts by the United States and key allies and was set up on the basis of its commitment to the preservation of peace through international cooperation and collective security. And, if we compare the military spending with the entire budget of the United Nations, we will be surprised to know that the United Nations and all its agencies and funds spend about $20 billion each year. The UN's entire budget is just a tiny fraction of the world's military expenditure, approximately 2%. Yet, for the past about two decades, the UN has faced financial difficulties and it has been forced to cut back on important programmes in all areas. Many member states have not paid their full dues and have cut their donations to the UN's voluntary funds. As of October 31, 2006, members' arrears to the Regular Budget topped $661 million, of which the United States alone owed $526 million (80% of the regular budget arrears).
It seems ironic that the world spends more on things to destroy each other (military) and to destroy ourselves (drugs, alcohol and cigarettes) than on anything else.
Being the most formidable military power, it is worth taking a look at the United States' spending. Generally speaking, the US military spending has been on the increase, of course since the 9/11 terrorist attacks, but also before that. The following table details the US military expenditure per year, and is compared at constant 2007 prices:
U.S. military spending versus rest of the world
While FY 2008 budget requests for US military spending are known, for most other countries, the most recent data is from 2005 (at the time of writing). Using US spending at that time, we can compare US military spending with the rest of the world:
* The US military spending was almost two-fifths of the total.
* The US military spending was almost 7 times larger than the Chinese budget, the second largest spender.
* The US military budget was almost 29 times as large as the combined spending of the six 'rogue' states (Cuba, Iran, Libya, North Korea, Sudan and Syria) who spent $14.65 billion.
* It was more than the combined spending of the next 14 nations.
* The United States and its close allies accounted for some two thirds to three-quarters of all military spending, depending on who you count as close allies (typically NATO countries, Australia, Canada, Israel, Japan and South Korea)
* The six potential 'enemies', Russia, and China together spent $139 billion, 30% of the U.S. military budget.
Tabulated data is as follows:
* 2004 Figure.
Source uses FY 2008 for US figure (and includes Iraq and Afghan spending). I have used 2005 to try and keep in line with other countries listed (but I have NOT included the Iraq and Afghan operations cost which would be another $75 billion. Other items as described above are not included either. If they are included, the gulf between US spending and others might be even wider). Due to rounding, some percentages may appear as zero.
Generally, compared to Cold War levels, the amount of military spending and expenditure in most nations has been reduced. For example, global military spending declined from $1.2 trillion in 1985 to $809 billion in 1998, though in 2005 has risen to almost one trillion. The United States' spending, up to 2007 requirement was reduced compared to the Cold War era, though still close to Cold War levels.
Supporters of America's high military expenditure often argue that using raw dollars is not a fair measure, but that instead it should be per capita or as percentage of Gross Domestic Product (GDP), and even then the spending numbers miss out the fact that US provides global stability with its high spending and allows other nations to avoid such high spending. In regards to the high spending allowing other nations to spend less, that is often part of a supportive theory of the global hegemony being good for the world. Granted, other nations in such a position would likely want to be able to dominate as much of the world as possible, as past empires have throughout history.
However, whether this global hegemony and stability actually means positive stability, peace and prosperity for the entire world (or most of it) is subjective. That is, certainly the hegemony at the time, and its allies would benefit from the stability, relative peace and prosperity for themselves, but often ignored in this is whether the policies pursued for their advantages breeds contempt elsewhere (in the modern era that may equate to 'anti-Americanism', resorting to terrorism and other forms of hatred). Unfortunately, more powerful countries have also pursued policies that have contributed to more poverty, and at times even overthrown fledgling democracies in favour of dictatorships or more malleable democracies.
So, the global good hegemony theory may help justify high spending and even stability for a number of other countries, but it does not necessarily apply to the whole world. To be fair, this criticism can also be a bit simplistic especially if an empire finds itself against a competitor with similar ambitions, that risks polarising the world, and answers are difficult to find.
In this new era, traditional military threats to the US are fairly remote. All of their enemies, former enemies and even allies do not pose a military threat to the United States. For a while now, critics of large military spending have pointed out that most likely forms of threat to the United States would be through terrorist actions, rather than conventional warfare, and that the spending is still geared towards Cold War-type scenarios and other such conventional confrontations.
Many studies and polls show that military spending is one of the last things on the minds of American people. But it is not just the U.S. military spending. In fact, as Jan Oberg argues western militarism often overlaps with civilian functions affecting attitudes to militarism in general.
Permanent UN Security Council members USA, UK, France, Russia, and China dominate the world trade in arms and they are top five countries profiting from the arms trade. While international attention is focused on the need to control weapons of mass destruction, the trade in conventional weapons continues to operate in a legal and moral vacuum.
Here, we can see that developing nations are top recipients. And these nations continue to be the primary focus of foreign arms sales activity by weapons suppliers with roughly two thirds, or $30.2 billion dollars, in arms transfer agreements in 2005 alone (the highest for the entire 1998-2005 period).
The top ten developing nations that are recipients of arms sales accounted for just over two-thirds of the total developing nations arms market, and there is a continued concentration of major arms purchases by developing nations among a few countries. These countries were mostly Asian or from the Near East (or Middle East).
It can be concluded that a big portion of the world's GDP is thrown in destructive activities. And, with the arms trade on the increase, corrupt governments and corporations are 'cooperating' to meet their various political and economic agendas.
Year $ Billions At 2007 prices Change from previous year (%)
2008 643.9 643.9 2.84%
2007 626.1 626.1 7.46%
2006 571.6 582.66 -0.05%
2005 554 582.93 0.34%
2004 534 580.93 4.03%
2003 500 558.42 27.97%
2002 382 436.36 8.00%
2001 348 404.03 4.82%
2000 323 385.46 0.81%
1999 310 382.38 4.95%
1998 289 364.35 n/a
For data up to 2005, Chris Hellman, The Runaway Military Budget: An Analysis, Friends Committee on National Legislation, March 2006, no. 705, p. 3
For 2006, 41% of Your 2006 [US] Taxes go to War, Friends Committee on National Legislation, February 15, 2007
For 2007 and 2008, Highlights of the Fiscal Year 2007 Pentagon Spending Request and Highlights of the Fiscal Year 2008 Pentagon Spending Request, both from the Center for Arms Control and Non Proliferation.
1998-2006 includes Department of Defense spending, Department of Energy's nuclear weapons program, the costs of the wars in Afghanistan and Iraq, and 'other items' (i.e. military spending by other agencies, foreign military financing and training, mandatory contributions to military retirement and healthcare).
2007 and 2008 do not include 'other items'.
Congress has already approved over $500 billion in supplemental funding for operations in Iraq and Afghanistan. Fiscal Year 2008's budget request includes a supplemental $141.7 billion to cover Iraq and Afghanistan operations. 2007's was $93.4 billion. (See Center for Arms Control and Non Proliferation source mentioned above.)
2007 constant prices calculated using Federal Reserve Bank of Minneapolis Consumer Price Index Calculator
Compared to the rest of the world, these numbers are indeed staggering.
Military spending in 2005 ($ Billions, and percent of total)
Country Dollars (billions) % of total Rank
United States 420.7 43% 1
China * 62.5 6% 2
Russia * 61.9 6% 3
United Kingdom 51.1 5% 4
Japan 44.7 4% 5
France 41.6 4% 6
Germany 30.2 3% 7
India 22 2% 8
South Korea 20.7 2% 10
Italy 17.2 2% 11
Turkey 9.8 1% 15
Israel* 9.7 1% 16
Indonesia* 7.6 1% 20
North Korea* 5.5 1% 25
Pakistan 3.7 0% 33
U.S. Military Spending vs. the World, Center for Arms Control and Non-Proliferation, February 5, 2007
Figures are for latest year available, usually 2005. Expenditures are used in a few cases where official budgets are significantly lower than actual spending.
Arms sales by supplier nations
Arms sales (agreements) ranked by Supplier, 1998-2005 (in constant 2005 million
US Dollars and percentage of world sales).
Supplier Total Dollars Percentage of total sales
United States out of 97,144 36%
Russia out of 41,600 16%
France out of 30,000 11%
Germany out of 17,000 6%
United Kingdom out of 14,900 6%
China out of 9,100 3%
Italy out of 5,600 2%
Other European out of 33,800 13%
Others out of 17,300 6%
Arms Sales Trends 1998-2005
Arms Transfer Agreements Worldwide, 1998-2005, Developed and Developing Worlds
Compared (in constant 2005 million US Dollars and percentage of total sales in that period)
Year Total Dollars Percentage of total
1998 out of $35,861 12%
1999 out of $41,823 14%
2000 out of $36,320 12%
2001 out of $34,843 12%
2002 out of $31,657 11%
2003 out of $29,250 10%
2004 out of $40,207 14%
2005 out of $44,158 15%
Conventional Arms Transfers to Developing Nations, 1998-2005, Report for Congress, U.S. Congressional Research Service, Library of Congress, October 23, 2006. (Dollar values are constant 2005 dollars)
Each year shown as follows:
* developing countries
* industrialized countries
The Pakistani manufacturers' anti-dumping application against Chinese shoe manufacturers did not succeed because their combined production was less than twenty five per cent of total production in the country
By Mansoor Ahmed
The WTO operates a system of trade rules. It's an organisation for liberalising trade, a forum for governments to negotiate trade agreements and a place for them to settle trade disputes.
Pakistan is the founder member of WTO that became operational on January 1, 1995. However for large number of Pakistanis the WTO regime became fully operational after December 31, 2004 when the textile quotas were abolished. The prime minister still corrects many businessmen when they complain that their textile exports have suffered after full implementation of WTO from January 2005.
He frequently informs them that the multi-fiber agreement under which the textile quotas were abolished came in to effect in 2005 while WTO regime came into existence in 1995 when Pakistan with over hundred countries became the founder member of this organisation.
The World Trade Organisation in facts aims to promote free trade around the globe without any tariff or non-tariff barriers. The member countries are expected to abide by all its rules and regulations concerning fair trade.
Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other. WTO members have agreed that if they believe fellow-members are violating trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally. That means abiding by the agreed procedures, and respecting judgments.
A dispute arises when one country adopts a trade policy measure or takes some action that one or more fellow-WTO members consider to be breaking the WTO agreements, or to be a failure to live up to obligations.
Although the WTO impacts total trade the exporters are more aware of the WTO regime than the industries catering to the domestic market only. The exporters have to comply with all WTO regulation in order to make their goods accepted in the developed countries.
The domestic industries that failed to understand the WTO regime paid a heavy price for their ignorance. When in compliance with WTO rules the government of Pakistan lowered the import duties on finished goods the domestic industries came under severe pressure as low cost quality foreign products flooded the local markets.
The local industry earlier was operating without any fear of foreign competition as the tariffs on imports in Pakistan were very high. Local entrepreneurs felt further heat when some foreign products particularly from China, Indonesia and Thailand edged out local manufacturers from some fields.
If the domestic industry of a country is being hurt by cheap imports and the exporting country is managing lower rates due to subsidies, or other measures it can impose anti-dumping duties on those products to the extent that nullifies that advantage. If a company exports a product at a price (export price) lower than the price it normally charges on its own home market (normal value), it is said to be 'dumping' the product
There is a laid down procedure after which anti-dumping or countervailing duties could be imposed. The duties could be challenged in the WTO where a transparent dispute settlement system exists. Most of the Pakistani businessmen usually do not understand the rules governing anti-dumping duties. The domestic producers expressly supporting the anti dumping application must account for not less than 25 per cent of the total production of the like product by the domestic industry.
The application is deemed to have been made by or on behalf of the domestic industry, if it is supported by those domestic producers whose collective output constitute more than 50 per cent of the total production of the like product produced by that portion of the domestic industry expressing either support for or opposition as the case may be, to the application.
When the Chinese dumped their shoes in Pakistan the local shoe industry of Pakistan was unaware of this necessary requirement to impose anti-dumping duty. The two main manufacturers filed anti-dumping application against Chinese shoe manufacturers. However their combined shoe production was less than twenty five per cent of total shoe production in the country. No proceedings could thus be initiated on their application.
Most of the shoe production is scattered among thousands of small manufacturers scattered around the country and majority of them are not registered. This has given the Chinese shoes manufacturers a free market at the expense of domestic producers.
Another point that local manufacturers and National Tariff Commission (the body that starts anti-dumping proceedings in Pakistan) neglect is that under WTO rules the notices for initiating anti-dumping duties are given to all manufacturers of the dumping country. The anti-dumping duty is then imposed after evaluating the data of each company and the extent of injury it is causing to the domestic industry.
There are cases when NTC imposed provisional anti-dumping duty on several manufacturers of a country but excluded one or two that were also exporting at the same rate as those that were penalised. Probably the notices were not sent to total producers of that product and those that were omitted could technically export their product without paying anti-dumping duty.The efforts of domestic manufacturers were wasted.
The exporters must also understand that if they receive a notice from a foreign country about imposition of ant-dumping duties on their products, they must respond promptly and cooperate with the foreign investigators. A few years back the US issued notices to the entire spinning industry for imposition of anti-dumping duties on their yarn. Only 19-20 exporters responded and cooperated.
The US government after investigation exempted two or three from anti-dumping duty and imposed varying percentage of anti-dumping duties on the rest that cooperated. The highest anti-dumping duty was imposed on those spinners that never bothered to respond to the notices. This probably was due to unawareness on their part but it deprived them of an important market for two to three years.
Pakistan government is providing research and development discount ranging from 3-6 per cent to various exporting sub-sectors of its textiles. The grant is only on exports and in some cases restricted to exports to some specific countries. This falls under prohibited subsidies and could be subjected to countervailing duties. The NTC in its website clearly explain prohibited subsidies that are contingent upon export or export performance. And contingent upon preferred use of domestic inputs as compared to imported inputs. The EU has imposed countervailing duty on Indian bed Lenin on this count and Pakistan would be their next target.
The government seems to think that the people don't need to be taken into confidence where WTO negotiations are concerned
By Nadeem Iqbal
On the pattern of existing WTO wings in the Federal Ministries of Commerce and Agriculture, the government plans to set up similar wings in other ministries. However, the official approach remains that of restricting the WTO related information to certain concerned ministries, departments, business bodies and other qualified stakeholders and would not make the information available for public consumption.
An official in the Commerce Ministry told TNS that it is the official viewpoint that the WTO (World Trade Organisation) negotiations are a very complex process understood only by people who are directly involved or have the technical know-how of related issues.
TNS has learnt that on some of the issues, even the parliament has also been bypassed -- such as the new Trade Organisations Ordinance, that came into force on December 30 last year. This WTO-related legislation was passed as an ordinance instead of going through the proper procedure of vetting by people's representatives.
Although such ordinances are later presented before the parliament for approval by the government which is expected to rubber-stamp it without proper review of the law. By employing such means, the parliament is simply put in an awkward situation since the official mechanism developed by an ordinance cannot be undone as in the case of the Trade Organisations Ordinance. The ordinance has already been converted into rules via an official notification issued on March 15 this year.
The Trade Organisations Ordinance preliminary says: "An ordinance to provide for the registration and regulation of trade organisations WHEREAS it is expedient to ensure appropriate representation of all genders and business sectors at all levels in trade organisations and that they play a significant role in developing policy framework for improving business environment and economic growth; AND WHEREAS it is imperative to define the purpose, role, responsibilities and operational framework including the code of corporate governance for trade organisations; and for matters connected therewith or incidental thereto..."
It seems that over the years on international issues such as WTO the federal government has adopted a stereotypical mechanism of holding some intra-ministry meetings, consultative workshops with the stakeholders (mainly NGOs) and getting the requisite legislation approved through presidential ordinances. This compromises the principle of involving collective intelligence in official policies and laws.
This approach was also reflected in the WTO-related activities of the Federal Agriculture Ministry in the month of February. These included the approval by the cabinet of Final Plant Breeder's Rights draft bill 2007, while the draft of the Amendment in Seed Act, 1976, after the approval of MINFAL (Ministry of Food, Agriculture and Livestock) has been submitted to the Law, Justice and Human Rights Division for vetting. The public and private seed sectors were again requested to formulate Institutional Bio-safety Committee for considering the issues of Genetically Modified Organisms (GMOs) or Living Modified Organisms (LMOs) as desired by the Pakistan Environmental Protection Agency (PEPA) and a paper on 'Use of genetic engineering in agriculture' has been submitted to the PEPA workshop.
So far the only significant involvement of the public representatives is that of the Senate special committee that was constituted in 2003 with a mandate to suggest ways and means to face the challenges of WTO. The committee held 11 meetings during 2004. Around 36 different stakeholders including three independent economists, government ministries and departments -- Commerce, Science & Technology, Pakistan National Accreditation Council, Industries and Production , Planning and Development, Environment, Health, Food and Agriculture and National Traffic Commission -- appeared before the committee. The other stakeholders included representatives of professional bodies such as All Pakistan Textile Mills Associations, Federation of Pakistan Chamber of Commerce & Industry, Pakistan Pharmaceutical Manufacturers Associations and NGOs like Sustainable Agriculture Action Group and Sustainable Development Policy Institute.
For the next year between 2004 till October 2005 the committee finalised its report prepared by Dr. A. R. Kemal, Director Pakistan Institute Of Development Economics that was spread over 460 pages. However, the report that is available on the senate website in English is more a compilation of official documents and lacks specific guidelines for the policy makers for future approaches. Most of the recommendations are those that are already being pursued by the government.
For example in its conclusions and policy recommendations, the report says: "WTO provides numerous opportunities and challenges for developing countries. Fundamental reforms in agriculture trade; phasing out quotas on developing countries' exports of textiles and clothing; reductions in customs duties on industrial products; expanding the number of products whose customs duty rates are bound under the WTO, making an increase in the import duty rates difficult; and phasing out bilateral agreements to restrict traded quantities of certain goods presents both the challenges and opportunities to the developing countries including Pakistan."
"Notwithstanding trade liberalisation under WTO," the report added, "over the last 10 years, there are still various impediments to gain market access. These include among others, exceptionally high tariffs on the products of the export interests of the developing economies; tariff escalation impacting adversely the exports of value added products; subsidies on agriculture sector, indiscriminate use of anti-dumping and countervailing duties, etc.."
The report suggested that an institutional mechanism needs to be developed where the government, industrialists, agriculturists and service providers, both small and large, and the civil society may be consulted before any agreement is signed. Research institutes should consult various stakeholders before forming their research agenda. Even though there is WTO council which is to meet under the chairmanship of minister for commerce, its meetings have been quite infrequent. The council needs to be activated and there should be a standing parliamentary committee on WTO.
Now it has been over a year, but one does not see any pro-active position by the parliamentarians over the issue. There is no official publication in Urdu for the knowledge of common people. Same is the case with most of the official websites. The only official website that is efficiently updated is that of the Permanent Mission of Pakistan to WTO based in Geneva. The website has outlined the issues and Pakistan's position on Doha Development Agenda. Agriculture is one of the most contentious issues as the major WTO member countries have vast differences mainly on the issues of domestic support (subsidies) and market access (tariffs).
Developing countries want reduction/removal of various forms of subsidies and reduction in tariffs so that the prices in international markets are not distorted and developing countries get reasonable market access in the developed markets.
Pakistan is member of the Cairns Group (an alliance of 18 countries looking for ambitious outcome in the Market Access areas), G-20 (group for safeguarding interest of developing countries in agriculture negotiations) and the G-33 (group of developing countries and LDCs aiming to get preferential terms in market access and special and differential treatment).
In NAMA (Non Agricultural Market Access), the country has an active interest. Non-agricultural products (also known as 'industrial products') cover a diverse range of products. They include all manufactured goods from textiles, clothing and footwear to steel and aluminium, fish and fish products, forest products, chemicals, and minerals. For Pakistan, like most WTO members, non-agricultural products make up an overwhelming majority of their goods trade