THE World Bank’s latest advice to Pakistan to address its imbalanced preferential trade deals with 10 bilateral partners underscores what many experts have long argued: the country’s preferential and free trade agreements, focusing narrowly on tariff liberalisation for a limited range of goods, are too shallow to protect its economic interests. This is quite evident from the fact that Pakistan’s exports have dropped from nearly 16pc of its GDP in the 1990s to below 10pc in 2024. Not just that, the terms of these pacts have been so skewed in favour of the trading partners that the influx of their exports into Pakistan under these agreements has led to the closure of different industries while rendering others uncompetitive in the domestic market. The Bank notes that almost all countries that have achieved sustained economic growth did so by integrating into global markets. Pakistan, however, has moved in the opposite direction; the periodic growth spurts, when they come, are driven by consumption fuelled by its reliance on debt and remittances rather than from productivity or exports.

Worse, its exports continue to be dominated by low-value textiles and agricultural products, with little sign of diversification into higher-value goods and services. The trade bureaucracy’s preference for short-term fixes over sustained trade policy reforms has left exporters to operate in a policy framework that makes them uncompetitive. The Bank estimates that the country has missed exports worth nearly $60bn. The Bank’s advice to deepen existing trade agreements and widen their scope beyond tariff liberalisation to cover services, investment and digital trade, besides strengthening institutional capacity for trade agreement negotiations and monitoring, is sound. It also has advised regular consultations with exporters and industry stakeholders to align the nation’s trade policy with actual business opportunities. Yet the challenge lies not in identifying solutions but in executing them. That Pakistan has failed to utilise the preferential trade agreements as instruments for growth through investments and trade facilitation had become obvious a long time ago. Yet no action has ever been taken to rectify the situation. The Bank’s advice is timely and needs to be heeded. If Pakistan is to make a policy shift towards an export-led growth model, as has repeatedly been iterated by top government officials, it must renegotiate all bilateral trade pacts to integrate into global value chains and attract investment.

Published in Dawn, November 4th, 2025