Trade Policy of Pakistan

Trade Policy of
Pakistan
Trade Policy of Pakistan
 Centrality of trade;
economists’ views
 Trade not aid slogan
 Trade policy means
export policy
 Many countries have
grown through trade
 Have trade policies in
Pakistan?
Trade Policy of Pakistan
Failure of trade Policy
Framework 2009-2012
 Rs 3 billion disbursed of
Rs 35 billion allocated
• Capacity building of
exporters, undone
• Promotion of exports,
undone
 Though exports
crossed $24.5 bn, more
than the target of $23.6
bn
Trade Policy of Pakistan
 Trade policy focuses on
export targets
• Promoting the export
of established
products
• Export portfolio
remain slim
• 55% share of textile
and clothing, little
diversification
Trade Policy of Pakistan
 Export-oriented
industries needed to be
made efficient
 70-80% of the initiatives
not implemented, lack
of human resource at
MoC
 Product-specific training
of trade officers
 Lack of coordination on
trade policy
implementation
Trade Policy of Pakistan
 Pakistan’s share in food
trade was limited
• Agricultural standards
non-existing
• Supply chains/cool
chains were not
established
 Little focus on domestic
commerce/cottage
industry
 Little focus on inter-
provincial trade
Trade Policy of Pakistan
 Largely focused on
textile, cloth; ignored
other sectors;
undiversified exports*
Trade Policy of Pakistan

Trade Policy
2012-15
Trade Policy 2012-15
 Focus on regional trade
 Strengthening of the
institutional framework
for promotion of exports
 Creation of regulatory
efficiencies
 Export development
initiatives
 Increase exports from
less developed regions
of Pakistan
Trade Policy 2012-15
 Promotion of domestic
commerce
 Strengthen the
monitoring and
evaluation mechanism*
Trade Policy of Pakistan

Reforming Trade
Policy
Reforming Trade Policy
 Economist Sakib
Sheerani suggests
trade policy
“embedded” with
industrial policy
 Common elements of
successful trade
policies (Chain, India,
Vietnam, Bangladesh,
Turkey, Cambodia)
• Export incentives
Reforming Trade Policy
• Under-valued
exchange rate
• Subsidized credit
• Selective liberalization
of imports
 Long term export
strategy needed
 Import-bias need to be
replaced with export-
bias
Reforming Trade Policy
 Musharraf era anti-
export policy bias;
stable exchange rate
 State Bank of Pakistan:
cheap credit for import-
based consumption
 Qaiser Bangali: 85% of
economy constituted by
consumption economy
 Writing off hundreds of
billions of consumer
loans
Reforming Trade Policy
 Drastic reduction in
import tariffs, Free
Trade Agreement with
China in 2006
 In 2008, Pakistani
imports more than $40
bn/exports financing
less than 50% of import
payments
Reforming Trade Policy
 Manufacturing sector
shrank due to imports
• Manufacturing share
in GDP increased in
Asian countries;
decreased in Pakistan
• Tires, ceramics,
footwear
 Under-invoicing,
smuggling affected
industry
Reforming Trade Policy
 Cautious liberalization
of imports; no whole-
sale opening of imports
 Free trade not a
solution: US protects
steel, auto, financial
industries
 Japan: agriculture, steel
 South Korea: Ship
building
Reforming Trade Policy
 European Union:
Subsidies to
agriculture*