STPF 2015-18: A review — I

The approximate value of potential to be harnessed in 2015-18 of Strategic Trade Policy Framework Review (STPF) was around US$ 45 billion. But despite passage of almost 6 years our exports minus textile are only US$ 10-11 billion. There were a lot of measures like providing and certification development, drawback of taxes and levies 50% support on cost of machinery and plants, imported in under developed regions.

However, neither figures are available nor there were specific amounts available under any of measures to achieve the desired results. This is one of the reasons of non-achievement of our export targets. It is stated that Pakistan’s export bucket and global import compositions are mismatch, 55% of Pakistani export are in textiles whereas its global share is a mere 4% in total world merchandise.

TARGETS:

1. Enhancement of annual exports to US$ 35bn.

2. Improve export competitiveness (Quality Infrastructure, Labour Productivity, Access to Utilities & Level of Technological Development)

3. Transition form factor Driven Economy to Efficient Driven Economy.

4. Increase share in Regional Trade.

KEY ENABLERS:

1. Competitiveness

2. Compliance to Standards: (Convergence of local & international standards, protections of 1.Ps, effective & efficient dispute resolution mechanism).

3. Policy Environment: (Monetary, tariff & tax regime & synergic industrial & investment policies).

4. Market Access: (Multilateral, regional & bilateral).

PRODUCT SOPHISTICATION & DIVERSIFICATION

Seven sectors namely Fans, Home Appliances, Cutlery, Sports Goods, Surgical, Leather & Pharmaceuticals were identified in all the three STPFS, to have potential of robust growth.

For achieving the potential targets, Research & Development (R&D) value addition, and branding were considered vital. Likewise following agro products were also identified to enhance our export level to 35bn per annum.

We are almost non-existing in engineering goods, transport which has over 40% share in global imports. So it was once again reiterated that we need to move towards alignment and as well as develop sector wise policy plans for products upgradation and diversification through (R&D).

But there is no data available to prove that the government made any concrete effort to achieve the ambitious targets of USD$ 35 billion in 3 years i.e. from 2015-18; except for sustaining GSP+ Status for Pakistan in this period, we did not take any other step which could boost our exports to world markets. There is a political price of adhering to harsh conditions of EU like adhering to 31 International conventions through enactment by legislature; we survived in two reviews of GSP plus status by the European Union (EU).

Now coming to exploring new markets, we are still stuck in our traditional and weird way to expand our market share in new markets. Either we were inconsistent in our efforts or we were not competitive in terms of cost of products & product sophistication in our value added textiles. Our main dependence in textiles is on home-furnishing & textile clothing of Denim products.

If we analyze our textile policy, we have not achieved any significant improvements in value-added products as the use of man-made fibers is still very limited in our export products’ range. Insofar as opening of new trade missions, which is just an orthodox method of boosting exports, is concerned, we could hardly open any new trade mission and we are yet to see the results in that respect in our export growth.

The number of trade exhibitions and delegations is on the decline as cash starved-governments have also subjected to severe cuts the budget reserved for such initiatives. In selected exhibitions, the elements of subsidy by government have gone down and the number of delegations has also been on the decline since 2007-08. Hardly any trade delegation is now sent abroad with the support of our trade missions for arranging B2B contacts.

Trade Development Authority of Pakistan (TDAP) is a mere white elephant, which has miserably failed due to lack of aptitude and expertise on the part of top management at Ministry or TDAP level. Lack of resources is another big hurdle. An EXIM (Export-Import) bank is yet to see the light of the day to support trade-related activities on the pattern of EXIM Bank of China.

On account of trade diplomacy, we have a pathetic record of concluding Free Trade Agreements (FTAs) with neighboring and friendly countries. Through FTA with China, we have honestly provided free market access to Chinese goods in almost every field and balance of trade is heavily tilted in favour of China. Pakistan has succeeded in exporting around US$ 1.5 billion to China against imports of USD 15 billion from there. The local industry of daily use items has been mostly closed as they were unable to compete in quality and prices with their Chinese counterparts.

It needs a serious revision and also poses question on the ability of our trade negotiators, which are not at all trained or having deep rooted knowledge of trade implication and world trade exigencies. There is not a single FTA, except with Sri Lanka where we have some edge, which have enhanced our export share with them.

(To be continued on Sunday)

(Sajid Hussain is retired senior officer of commerce & trade group. His last posting was Executive Director General, Trade Dispute Resolution Organisation, till April 2020. Dr Ikramul Haq, Advocate Supreme Court, is Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellows of Pakistan Institute of Development Economics (PIDE))

Copyright Business Recorder, 2021