THERE is no excitement in the market over the upcoming trade policy 2006-07, scheduled to be announced today. The stakeholders are taking it in stride.

“What is there to be excited about?”, asked a veteran of 55 years in business and trade, who went on to say: “Let me tell you that you will hear the policy makers making all the right noises. There would be claims to boost exports. However, there is little hope for a subsidy package or a reduction in production cost or greater market access for exportable surpluses”.

In the face of an alarming rising trade deficit and deteriorating current account balance, export promotion has to be the most logical goal for the trade policy. Over the last two years, sharp growth in imports has outpaced exports by a big margin, further widening the trade gap.

In circumstances such as these, the natural choice for the commerce ministry would be to put together a policy package that facilitates full realisation of the export potential.

This is an era of fast changing world. The old tried and tested strategies would fall on the wayside. Offering subsidies is not an option, for it can evoke countervailing duties against Pakistan.

A report prepared by the Pakistan Institute of Development Economics, titled ‘Impact of export financing and rebate scheme on exports of Pakistan’ stated in no uncertain terms that there was no direct relationship between export rebate and quantum of exports.

The report pointed out that export financing schemes had impacted outflow of goods in a negative way. The analysis of the statistics brings to the fore, the fact that there has been a continuous increasing trend in exports accompanying a decreasing trend in export financing at concessionary rates as percentage of exports. What does that imply? Simply speaking that means that big exporters were not utilising the export financing scheme.

Talking from Islamabad, Secretary Commerce Asif Ali Shah confirmed to this scribe that subsidies will not feature in the trade policy 2006-7.

What else is to be expected? Reducing cost of doing business was considered as falling outside the scope and mandate of the commerce ministry by its senior officers who ruled out that possibility. “How can issues related to cost of doing business be addressed in a trade policy? A country’s budget is supposed to take care of broader economic issues”, commented a senior officer in the ministry.

As for the new markets or making inroads into old ones, there is nothing innovative that can be expected to be announced. During the outgoing year FTA was signed with Sri Lanka. An early harvest treaty was signed with China and Malaysia. Pakistan also ratified SAFTA though trade with India is still governed by a limited positive list. India has given most favoured nation (MFN) status to Pakistan but we have yet to decide on reciprocating to the gesture.

The country is in an advanced stage of negotiations with many nations and trading blocs including Bangladesh, Turkey, Kenya, China, and others. Also on the list are ASEAN and GCC. These specialisd trade arrangements will only be announced in due course of time when such an agreement materialises.

When queried about what they expected to come out of the trade policy bag, the third generation textile tycoons from Karachi were skeptical as they saw export promotion directly linked to industrial expansion.

“Unfortunately for a variety of reasons investors are not inclined to commit their resources towards industrial expansion”, said a young textile mill owner, adding that most investors found it more rewarding to trade. He felt that the cost of doing business was prohibitively high and infrastructure too fragile to support any expansion.

Many private sector representatives reached for comments saw the glass half empty. They felt that the policy makers lack dynamism and were too slow to measure up to challenges thrown up by the global trading system. “They are incapable of fashioning initiatives keeping in view the country’s reality and the need for continuous realignment of trade strategies in face of new developments”, said an entrepreneur.

But it has to be pondered if the situation really is that grim, with no space for the commerce ministry’s hierarchy to maneuver? Is it not worthwhile to look around and see what other countries are doing in the region? Like it or not a comparison is almost always drawn with the neighbouring India. That country with stronger protectionist legacy has managed to sell an image of a freer economy.

Indian exports with its rival and partner China has increased at astonishingly high rate from a few millions dollars in 2000 to over $13 billion by the end of 2005-06. Total trade between Pakistan and its all-weather friend China just managed to crawl up to $3 billion by 2005-06.

Secretary Commerce, Syed Asif Ali Shah, did not like the idea of drawing parallels between India and Pakistan. “Why hop to India?” he asked, sounding greatly agitated. If you must compare, then compare the 2005-06 trade figures of Pakistan with last year or year before and you will see that we have come a long way”.

Stand alone, Pakistan has doubled its exports in seven years and has increased its trade to GDP ratio from close to 26 per cent in 1999-2000 to an estimated 34 per cent in 2005-6. Back in 2003-04, the trade to GDP ratio was 35 per cent in India.

An economist closely associated with government’s planning exercises-though of course he did not want to be named-expressed clear disappointment over the policy decisions, since he felt that the government lacked both capacity and commitment to thrash out international trade issues and handle them innovatively.

He thought that good command over the economic matrix of the country with a fair knowledge of current developments on international trading arrangements was required to provide the right direction and thrust to a policy.

Another native expert in international trade lamented the casual and hands-off attitude of the commerce ministry towards the poor portrayal of Pakistan by prestigious trade watchdog bodies. An example is the Heritage Foundation of Wall Street Journal, which ranked Pakistan 110th amongst 161 countries on the basis of its 2006 Index of Economic Freedom.

Pakistan has, nonetheless, fared marginally better in a recent report by the World Bank that judges countries on the basis of bureaucratic controls over market. It is said to have ranked Pakistan at 40th against India on the 68th place and Bangladesh at a low 80th.

When asked if the upcoming trade policy has been focused to address issues that could have contributed to negative markings in international rankings, secretary commerce expressed ignorance about any such report on international trade that might have portrayed Pakistan in a bad light.

The official’s attitude was understandably so, for as administrative head of commerce ministry, the man must be busy finalising the finer details of the policy now so nearing its announcement. He must also be under pressure as reconciling interest of sometimes conflicting powerful lobbies in a policy is not all too easy

Earlier, it was reported that the new trade policy would announce establishment of trade authority that would replace the Export Promotion Bureau (EPB). How an authority will achieve what the bureau has not been able to establish is left to readers’ imagination. Will the change of name, also change the fame?

However, it is to be regretted that over the years, one of the most expensive ministry has been handling trade related issues in a manner, unworthy of its costs. May be it is about time that people and their representatives are informed about the expensive projects abroad and evaluate cost against benefits of half-baked, ill-conceived initiatives of people at the helm of affairs in this ‘department’.

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