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