“Unless we add a good number of value added items of decent quality and diverse products to our export profile, there is no way exports can take a quantum leap,’’ a senior trade analyst remarked when asked about the options for drawing up 2008-09 trade policy.

“Pakistan needs to push up exports and substitute imports with local products’’ he responded.

The trade policy 2008-09 is likely to be announced on July 22 with the government facing a staggering $20 billion plus imbalance in the international trade. Import bill is approaching $40 billion and exports have just managed to touch $19 billion.

The government wants to increase exports to about $22 billion and contain imports at about $38 billion and cut trade gap to about $16 billion in the current fiscal year.

According to knowledgeable sources, the trade policy for 2008-09 would elaborate on a strategy that is expected to set short and long-term objectives of import substitution for fuel oil, edible oil and food items.

Similarly, measures are being proposed to improve production techniques, cut down on wastages and encourage clusters of small and medium size export units to bring down production cost and make exports globally competitive.

On export side, analysts working on the next trade policy found that 200 export items accounting for 91 per cent of export enjoy hardly 19 per cent share of world market. ‘’It means Pakistan does not figure at all in 81 per cent of the products being traded in the world right now,’’ a well placed source said.

‘’We are trying to identify those products for which we have potential to manufacture and for which there is a vast market and for which investors would be lured,’’ the source said. Out of a total of over 5,000 items being traded in the world, Pakistan has hardly 1,400 items in its kitty which are mostly of low value.

Pakistan is also being denied trade concessions given to other less developed countries like Bangladesh and Sri Lanka because for last several years the government has claimed to have made substantial increase in per capita income, now stated as close to $1,000. Unlike Bangladesh and Sri Lanka, Pakistan does not qualify for Generalised Scheme of Preferences (GSP) of the European Union and US.

A big cause of disappointment for the business and government has been poor export performance of textiles in 2007-08 and in 2006-07. Textile exports showed an impressive performance with a double digit growth till 2005 when quotas were removed. Since then textile has been struggling. In 2006-07, the sector managed to show a growth of only six per cent which turned into negative 3-4 per cent in 2007-08. This negative growth came after the government doled out more than Rs30 billion subsidy.

The research and development subsidy for textiles has been stopped and the government is exploring more effective ways of helping the industry and is considering linking its financial support with performance of the exporter. A committee of ministers and secretaries is looking at a new scheme. Once finalised, the scheme is expected to be announced in the trade policy. However, the exporters are benefiting from a fast depreciating rupee.

A fall in textile exports has also reduced its share in overall export from 68 to 58 per cent while sales of other items have picked up. Officials identify petroleum products with export more than $1.1 billion: cement $350 million and rice more than $1.5 billion. ‘’Our strategy is to consolidate this performance’’, an official indicated.

A strategy to push up exports of denim and leather products is being explored to open import channels for a variety of chemicals, preferably from India. Export industry will be given a boost by allowing zero rated import of a variety of raw material items. It was during 2007-08 that the government created a sixth slab of import tariff of zero rate.

‘’The import of what people call luxurious items is hardly worth $250- 300 million,’’ a senior officer in the commerce ministry in Islamabad said. His argument was that $300 million import in a total import bill of about $40 billion was insignificant.

But he agreed that the food bill approaching $4 billion needs a hard look and that is being done. Edible oil import has jumped up by over 100 per cent to over $1.2 billion. The government is expected to address this issue by providing incentives to agriculture for production of oil seed.

Import of milk powder can be substituted by dairy farming which in the long run has export potential. A good ground has already been covered in last few years and some more incentives are expected in future.

“Farmers’ terms of trade for their produce needs to be addressed in the trade policy,’’ Khair Bux Junejo suggested. A former federal minister, Junejo is now a member of the food security task force headed by Sartaj Aziz. He is confident that farmers can not only give the country food autarky but also a trading surplus for exports, if good prices and market access are offered for their crops..

Officials in Trade Development Authority of Pakistan (TDAP) seem upbeat on success achieved in Industrial Cluster Development Programme. Initiated in 2001, with some co-funding from UNIDO, the project has achieved considerable success in consolidation of industries producing electric fans, cutlery in Wazirabad, garments in Lahore, leather and leather products in Korangi and gems and jewellery in Saddar (Karachi).

Under this programme, four or five small companies get together to pool their resources for improving production, cutting down on unnecessary expenditure, take up research and development and come out with a better product and market it aggressively in domestic and export market.

A Cluster Network Development wing is being developed by Sialkot Chamber of Commerce and Industry for which indications are that trade policy will put $0.5 million. It will work on five clusters, sports goods, surgical instruments, gloves and personal protective equipment, sports wear and leather and leather products.

‘’Clustering is consolidation of small and medium units,’’ an officer explained who pointed out that the pace is slow but there is all likelihood of the process picking up as it has improved performance of the enterprises and revenue generated for the partners. ‘’Formal mergers of these entities is still a distant cry,’’ he said but hoped that clustering will eventually enhance export of a large number of products.

Ejaz Khokhar, a pioneer in sports wear wants the government to help in setting up a textile processing and a textile weaving plant in Sialkot. ‘’Sialkot generates more than a billion dollars in exports from cutlery, sports goods, leather items and sports wear,’’ he said and proposed that an investment of about Rs500-600 million for setting up of processing and weaving plants will push up Sialkot products export to more than three billion dollars in just a few years.