The trade policy lays emphasis on ‘trade diplomacy’ to improve the country’s competitive position in the international market.

Although the objectives of trade diplomacy and the activities / modus operandi to achieve them would vary, its prime objective can be classified into four categories (i) enhanced market access, (ii) improved competitive position in foreign markets, (iii) protection of goods from foreign competitors, and (iv) countering efforts of other interest groups.

Since market access negotiations, held both at multilateral and bilateral levels, involve WTO concepts like reciprocity, mutually advantageous basis, and consideration of the individual protection needs of an industry, only companies equipped with negotiating skills, update knowledge of WTO rules and the market of their interest can undertake this job in collaboration with the government’s trade managers.

Tariff negotiations for acquiring market access have very important and far reaching implications for the economy and the industry of a country, especially a developing country like Pakistan as they affect the protection levels for the domestic industry. The trade policy 2007-08 describes its trade diplomacy as ‘Look East’ a success in securing market access and creating economic linkage with China and a number of other countries in East and South Asia. The policy further states “that a historic full fledged free trade agreement (FTA) is now effective as of July 1, 2007. The FTA with China has opened the door to a huge and friendly market and created enormous opportunities for FDI in the manufacturing sectors. As a result of this FTA, all the core products like textiles, fruits and vegetables, gems and jewelry, engineering goods, leather products and sports goods, surgical goods, marble products and industrial alcohol can enter the Chinese markets at zero duty or concessionary duties”, whereas Pakistan will import machinery and raw materials from China.

The arrangement seems to be quite ambitious and the ground realties are much different and require a deeper look. The local market is already flooded with Chinese consumers and other goods. The industry is being adversely affected by Chinese goods with special reference to textile (made ups and fabrics, table ware, shoes, toys, tyres etc.). Chinese goods being poverty- friendly are in great demand.

Even the plan to negotiate a bilateral agreement with the entire ASEAN on 10+1 basis (i.e. one non-member with the ten members), as envisaged in the trade policy does not sound practical. The trade policy 2007-08 itself acknowledges the challenges faced by the country on account of (i) low competitiveness, lack of productive capacity, low end and low quality products, fragmentation of export industry, lack of compliance on social, environment and health standards etc.

Mere signing of FTA’s without production of competitive goods confirming to the products standards laid down in terms of the WTO’s Technical Barriers to Trade and Sanitary and Phytosanitary, will not help. Pakistan may find no market abroad and it may only result in one-sided trade with these countries with which Pakistan signs the FTA’s. In other words, the trade diplomacy efforts have to be backed with the strategy and arrangements to produce high value added and competitive goods conforming to the international standards.

In international trade, firms often push for improved access to foreign markets and support regulations pertaining to protection to intellectual property rights or mutual recognition of standards that improve their competitive position in those markets.

Countries often engage in trade diplomacy to protect their trade interest and goods from foreign competitors through tariffs and other protective measures. WTO recognises the need for protection through tariff in certain cases, such as (i) weak economies which can only support low standards of living (ii) are in the early stages of development, or (iii) for support to infant industry. These aspects are covered under article XVIII of GATT 1994.

Trade diplomacy could also effectively be used to “counter-balance” the efforts of other interest groups. One instance where the trade diplomacy could have yielded results was the European Union’s drug related Generalized System of Preferences (GSP) incentive to Pakistan textile products which ended in 2005 to the disadvantage of the country. This enabled China and India to benefit from the withdrawal of market access /competitive edge available to Pakistan in the EU. EU’s prospective FTA with India would further aggravate the situation unless trade diplomacy efforts, as envisaged in the trade policy for 2007-08, are not initiated.

The above mentioned aspects of trade diplomacy raises some basic questions (i) how can the private sector and the public sector benefit from trade diplomacy programme as envisaged in the trade policy (ii) how can the objectives of trade diplomacy be identified and defined, and (iii) who should initiate and steer the trade diplomacy negotiations. There can obviously be no recipe for the strategy that ensures success; however, objectives could be based on overall prioritised economic goals and identifying the basic available options.

For successful trade diplomacy, negotiations and trade policy should be consistent, coherent and demonstrate public interest focusing on well defined trade policy issues.

It would be worthwhile to prescribe a check list for the domestic industry before they come up with specific proposals on account of trade diplomacy for the government.For any successful trade diplomacy efforts, the industrial association or the company should adequately be equipped to (i) analyze trade policy issues, including developments in the WTO regime, (ii) maintain contacts and provide intellectual inputs into trade policy decisions, (iii) ensure leadership and give administrative support to the trade policy debate, (iv) participate actively and competently in formal consultations on trade policy matters, improve access to decision-makers, and (v) speak out for or against policy proposals that are likely to affect the industry and corporate performance.

The industry should properly organise itself by creating a special unit in charge of monitoring trade policy developments of interest in export marketing.