A fair-trade world

Published August 19, 2020
The writer is an attorney teaching constitutional law and political philosophy.
The writer is an attorney teaching constitutional law and political philosophy.

RECENTLY, the World Bank authorised a loan of Rs84 billion to Pakistan. The money was apparently disbursed from the Resilient Institutions for Sustainable Economy programme to the State Bank of Pakistan. It is a lot of money for a country that was supposed to be on the path to self-reliance. The alleged reason for this particular loan is to offset the costs imposed by the coronavirus pandemic, which has led to closures and setbacks globally. Pakistan always has good reasons for taking on more debt.

The bonanza of the debt-ridden will not last forever. Current downturns in the US and the West in general mean that less and less money will be apportioned to the World Bank for developing nations. The developed nations themselves are going to have their own economies to resuscitate, and the isolationist position of the US may get further entrenched if President Donald Trump is re-elected to a second term. And, even if all the money in the world is available, perhaps the country, now inching its way towards the 100–year mark, should at least aim towards being self-sufficient.

One way to self-sufficiency, much touted in election years, is trade. If only Pakistan can raise its exports and be a contender on the world global stage, candidates feverishly proclaim, the country would have the potential of transforming its economy and the standard of living of its inhabitants. Young people would not have to abscond to work in foreign lands, leaving loved ones behind and plunging themselves in lifetimes of exile. So much could happen, were this so.

While these sort of fantasies of future self-sufficiency are a regular indulgence in the public discourse of the country, there is little transparency on why this is not already the case. If goods are being produced, if manufacturers can make them at a lower price than most in the world, if companies from this or that corner of the world are willing to buy them, then why is it that things do not improve?

While fantasies of being self-sufficient are a regular indulgence in Pakistan, there is little transparency on why we are not already so.

Some answers (if not solutions) can be found in what small- and medium-sized export businesses say about the barriers to trade. A recent report produced by the International Trade Centre, compiled after interviewing over 1,000 small- and medium-sized businesses, tells a story of what continues to keep Pakistan behind.

Some of the plot is familiar; like other developing countries, Pakistani exporters struggle to meet the conformity and compliance requirements imposed by European and (non-Saarc) Asian countries. In some cases, obtaining and providing proof of compliance is actually harder than actually producing compliant merchandise.

The fact that European governments impose hurdles on little companies from Pakistan trying to compete on the big world stage is expected; a surprising revelation of the report is that Pakistani regulations comprise a whopping 45 per cent of the regulations that are keeping these firms from doing better. Export inspections, tax refunds and export certification make up these onerous regulations. When it comes to the export of manufactured goods, 55pc of the non-tariff hurdles to trade come from Pakistani regulations, procedures and the export companies’ efforts to satisfy them.

This statistic alone should give Pakistanis some pause regarding the story that is told regarding the country’s efforts to become self-sufficient. That story routinely situates the rest of the world as the weight that keeps Pakistan down. The actual story reveals that Pakistani government procedures are just as, if not more, responsible for stalling progress.

The surveyed firms reported that it was not that the regulations were too strict but rather slow processes, high fees and convoluted certification requirements that cause problems. In sum, a whole system created by none other than the various bureaucrats that keep the rest of the country down. The customs official threatening to stall a shipment at a border where no refrigeration facilities are available, another implying that the shipment will be ‘lost’ if his palms are not greased with the right amount of cash — and you have the picture of why we are we are where we are.

These issues bear revisiting because the current government did get elected on the promises of helping harken a less debt-ridden, less beggarly, less aid-dependent Pakistan. According to the report, this could still happen by 2024 if steps are taken to remove the hurdles and pointless procedures that make it a royal hassle to get anything out of the country for export.

It is time for Pakistanis to begin questioning the current government on its failure to remove the barriers to trade within the country. While it may be hard (although incredibly beneficial) for the government to instal equipment that will make it easier for exporters to prove compliance with European and Asian regulations, it is easier and cost-free to slash procedures and pointless paperwork requirements.

It is not news that one or another European country imposes differential tariffs, etc, which can give one country a more darling status in terms of its ability to export and access their consumer market.

What is news or should be news is that the biggest hurdle to self-sufficiency via increased exports is entirely and completely our own fault. When Pakistan and Pakistanis are done celebrating yet another birthday, clapping at the marvel of merely existing, perhaps some thought could also be given to the possibility of thriving.

The first step is clear and entirely achievable, and perhaps be taken very soon: slash the regulations and procedures that shackle and chain Pakistani exporters. Then, perhaps, there really will be something to celebrate.

The writer is an attorney teaching constitutional law and political philosophy.

rafia.zakaria@gmail.com

Published in Dawn, August 19th, 2020

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