The WTO’s Council for Trade in Goods on Wednesday approved a European Union (EU) waiver on customs duties for 75 items which are expected to boost Pakistan’s exports to the EU by an approximate €900 Million for products which include, non-value added textiles, textile garments, home textiles, value added leather, footwear, raw leather, ethanol and vegetables.

While the package still has to go to WTO’s General Council for formal approval later this month, this is a big achievement for the current government, as not only were they able to block the opposition from all member countries, but on formal approval this will also set them on the path to attaining GSP-Plus status with effect from 2014.

While this is currently overshadowed by the news of possible indictment of the Prime minister, one must wonder if we tend to overlook the economic efforts made by the elected government. While our view may generally be marred by the effects of inflation, high fuel and energy prices, a weak rupee amongst various other things, one must understand that some of these effects have been inherited and some inevitable. That is illustrated by the current energy crisis which has gripped our livelihood at large, along with the downfall of major state institutions, such as the Pakistan Railways and PIA, which had always been bloated, over-staffed bureaucratic entities whose eventual fall had been predicted way before the current government was elected.

But what about our trade stats? While imports have risen significantly year on year, we have witnessed a major boost to our exports where both traditional and non-traditional goods and services have witnessed significant growth trends since 2009. Remittances had achieved record levels, where at certain times we have recorded current account surpluses on monthly levels.

One of the various macro-economic initiatives that achieved attention recently, more because of the quantum of its effect and numerous stakeholders involved, is the granting of Most Favoured Nation (MFN) status to India. The issue has been highlighted with various perspectives of how it will affect us economically, politically, strategically and most sensitively our stance on the Kashmir issue. That being said, all stakeholders have more of a joint view of it, where not only will we have a larger export market but we will also have the option of substituting to imports from India where freight and logistic costs would be reduced. While Pakistan may still be the net importer on a bilateral level (which it still is), the granting of the MFN status would be instrumental in reducing trade costs due to proximity which would favour overall imports.

Various trade agreements, both concerning preferential and free trade, have been executed. Most recently, a Free Trade Agreement (FTA) with Indonesia has been executed on a fast-track basis to facilitate exporters of fruits, vegetables and other agricultural items. Before that, it was the president who was instrumental in pursing the Sino-Pak FTA on trade in services with China, our fair-weather friend and more agreements are being pursued with Russia, South Korea and Singapore.

Another huge step largely overlooked by the media has been the signing of Currency Swap Agreements (CSAs) with China and Turkey holding values of $3 billion and $1 billion respectively. The same are also being pursued with Iran and Russia, where previously cold relations prevailed. One may argue the effectiveness such agreements with regards to currency stability, but that can only be seen with time.

While one must look at the challenges we face within, namely the power crisis, crumbling state institutions, high fuel prices, inflation and the constantly hampering burden of bureaucracy, one most not overlook milestones we have achieved in terms of strengthening our position in global trade and improving our macro-economy. If we compare the efforts of the present government to the previous one, there is a marked difference in our strategy, where our emphasis on trade is much more than that on aid.

While the various faux pas of the current government with regards to the local and political economy cannot be overlooked in light of the above, one must remove the embedded impression that prevails to be able to look objectively at their efforts, or the lack of them.

The writer is a Multimedia Content Producer at Dawn.com


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Comments (11)

Falcon
February 3, 2012 6:03 pm
Yes. We should be objective. I agree that this is one good thing current govt. has done and that is better foreign policy to facilitate trade and economic growth. However, it must be highlighted that signing FTAs with everyone in the world will not bear fruits till the production itself is not competitive enough. Otherwise, due to high input costs, our exports end up getting priced out of the market. Lastly, for your piece on remittances, its rise is also attributed to two factors; perceived increase in economic difficulties of families of expatriates (which itself is not a good sign) and secondly, due to stronger enforcement of money laundering constraints by other countries bringing many offline line transactions online (which has less to do with our govt's capability).
Raoul
February 3, 2012 7:35 pm
No politician in Pakistan is campaigning on the basis of "good goovernance" and "development" and the "economy". Including the latest IK party, all are talking only of issues around sound and fury including religion, how to handle USA, how to manage neighbours and regain International Pride and Get SOVEREIGNITY etc etc.... so much for trade and industry.....
SHAHID HUSSEIN QABOO
February 3, 2012 9:36 pm
Where we give discredits to present Govt. of so many things it has handled not like it should have; we must give credit to it for making efforts to win space for Trade for Pakistani products into EU markets. This is something this relatively bad Govt. has done something really very good, which will surely help us - as a country- a lot economically and financially. SHAHID HUSSEIN QABOOLPURIA, LAHORE, PAKISTAN
shafi
February 3, 2012 10:49 pm
Fabrications....
shafi
February 3, 2012 10:51 pm
Why have our reserves fallen by 2 Billion Dollars?
Zahid
February 4, 2012 3:19 am
While these efforts are laudable, the benefits are at best piecemeal and beneficial to certain sectors of the economy. If the current government was truly sincere about improving the economy of the country, it would have taken radical steps to eradicate corruption from the country, esp. government departments and public institutions. Corruption is the single largest creator of inefficiencies in an economy, leads to low public morale, lowers productivity and innovation, and hinders growth. Rather tackling this key problem, the current government has actually helped increases it. The problems of PIA and railways that you site have indeed pre-existed, but the government has exacerbated them by increased mismanagement (bloating its beaurocracy/staff with PPP jialas and appointing incompetent managers). The bungled rental power plants initiative also lost Pakistan hundreds of millions of $$$. The 1000s of pointless foreign trips the government ministers, PM and Pres. have undertaken also put a dent on the country's treasury, esp. at a time when all other countries around the world are limiting their travel budgets. The global energy crisis is indeed an external factor, but the government could have done a lot more to lessen its effects on the common people…by internalizing it through fiscal and administrative cuts, while creating conditions/incentives for increased employment and consumption in the economy. Part of the reasons for inflation in food prices in Pakistan is due to the artificial supply stoppages created by sugar/wheat mafias... government could have done more here to stop such activities. I could go on and on.
Zahid
February 4, 2012 3:20 am
While these efforts are laudable, the benefits are at best piecemeal and beneficial to certain sectors of the economy. If the current government was truly sincere about improving the economy of the country, it would have taken radical steps to eradicate corruption from the country, esp. government departments and public institutions. Corruption is the single largest creator of inefficiencies in an economy, leads to low public morale, lowers productivity and innovation, and hinders growth. Rather tackling this key problem, the current government has actually helped increases it. The problems of PIA and railways that you site have indeed pre-existed, but the government has exacerbated them by increased mismanagement (bloating its beaurocracy/staff with PPP jialas and appointing incompetent managers). The bungled rental power plants initiative also lost Pakistan millions of $$$. The 1000s of pointless foreign trips the government ministers, PM and Pres. have undertaken also put a dent on the country's treasury, esp. at a time when all other countries around the world are limiting their travel budgets. The global energy crisis is indeed an external factor, but the government could have done a lot more to lessen its effects on the common people…by internalizing it through fiscal and administrative cuts, while creating conditions/incentives for increased employment and consumption in the economy. Part of the reasons for inflation in food prices in Pakistan is due to the artificial supply stoppages created by sugar/wheat mafias... government could have done more here to stop such activities. I could go on and on....the point is, the current government has cost Pakistan more through corruption and mismanagement, than what it has achieved through a few trade negotiations and export advantages.
Adil Jadoon
February 4, 2012 4:08 am
You cannot expect any one to invest in a country where there is no security, complete lack of infrastructure, extreme corruption and most improtantly severe energy shortage. This government has been a failure on all fronts which is not a surprise perhaps if you needed to be a good black market dealer like Mr. Zardari to run the economy the story might have been different.
Abdul Muqtadir
February 4, 2012 6:07 am
One of many benifits of government of the people, by the people, for the people. Next, the government should develop and improvise Infrastructure, Education, Health and Environment by re- allocating the budget from non-productive heads.
Falcon
February 4, 2012 9:00 am
@Raoul...Beg to disagree...I can talk about PTI only...the reason it is important to focus on this rhetoric is because of two reasons, first yes makes for a good political catchphrase...secondly and most importantly, most of our severe problems are a result of badly planned and executed foreign policy which had significant blowback effects...on a side note, PTI's top 4 priorities are education, law and order, corruption, and taxation reforms...unless law and order is enforced foreign and domestic investment is unlikely...similarly, unless tax net expands, infrastructure development such as viable energy solutions can't be deployed in the long-run (even if we were to make stopgap arrangements in the short-term based on loans)...and infrastructure development is an absolute imperative for any developing economy
Shakeel.Quddus
February 4, 2012 9:15 am
"Trade is a wealth of nation", said Daniel Dofoe. Long before the English writer said, the mills were busy getting ready to export. At the background were the schools and colleges well funded from the ruling class. In Pakistan, the out-of-school population is one of the largest in the world. To kill time, they would be spending their time doing the "memorization" and "rot learning." The others who could afford be busy learning about how to make a statistical chart or some other novel stuff. In some distant land. In the mean time, we would be struggling with inflation or huge unemployment and soon would be waiting to get bailed out from the Interantional Monetary Fund since it is impossible to finance the debt. So what is new?
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