Among the various social and economic measures identified to arrest growing poverty, particularly in low income developing countries, high or rather accelerated economic growth rate is considered as the most effective and speediest tool to achieve economic well-being of the people.
For attaining sustained high economic growth rate, apart from strengthening their internal economies, these countries need to make extensive move for achieving sustainable and ever expanding market for their exportable products and services for improving foreign exchange reserves.
Despite persistent trade barriers imposed for products of developing countries in the form of quota restrictions (applicable until recently), lavishly granted subsidies by industrially rich countries to their agriculturists and barring flow of services from developing countries, China and India, who until recently were reckoned among low income developing economies burdened with fastly growing poverty, are now fast catching up with industrially advanced countries.
Due to rising economic power of these two countries, the National Intelligence Council in their widely cited study on global trends titled as 'Mapping the global future' concludes that 21st century will be Asia's century. These countries have succeeded in overcoming obstacles to expanding and diversifying their exports.
India, achieving high rank even among leading countries with regard to development of software and all IT-related technology, is able to earn sizable foreign exchange through export of software and related manpower and above all through winning sizable IT-related outsourcing contracts from industrially advanced countries.
China's emergence on the world map as an economic giant is indebted to rapid economic growth, vast expansion of its trade and building of vast reserves of foreign exchange, which if sustained for the next two decades, it is claimed that China will become the second largest economy of the world.
Korea is another example of refurbishing its economy through its widely expanded export trade. In all the three cases strengthening of their external economies has played an important role in accelerating their economic growth rate and bringing favourable impact on poverty situation with the creation of employment opportunities.
Astounding development on trade front of China in current decade has made its trade account surplus to rise to $70 billion in 2004 alone. The volume of its export grew at the rate of 30% on average each year since 2001, particularly due to low labour cost.
On the other hand, unfortunately majority of developing countries in Asia including Pakistan met little success in expanding and diversifying their export trade. Majority of these countries having agrarian economies mostly rely on primary products. Their exports mainly comprise agro-based products, which continue to face stagnant demand from rich industrial countries as they continue to grant liberal subsides to their growers contrary to their commitment under WTO regime to remove these subsidies gradually.
Since the enforcement of WTO regime developing countries, particularly low-income nations, are found apprehensive of their getting integrated in global trading system. They fear that their products would get outclassed by products from developed countries or be driven out from the global market by cheaper products from countries like China, which enjoy comparative advantage in cost of production of those commodities due to cheap labour.
The lack of competitiveness of the products and services from Least Developed Countries (LDCs) on account of high production cost, lack of product diversification and also for quality reasons are the impeding factors for entry in global trading system.
This category of countries needs to enhance their productive sector through investments both from indigenous and external sources, acquiring latest technology and applying effective management skills. Further, these vulnerable developing economies need to undertake social impact studies before entering Free Trade Agreements, particularly with industrially rich countries, ensuring that it does not bring overall adverse effect on indigenous industry.
Developing countries access to industrially rich countries markets is also denied on account of high cost associated with the requirement of adherence to health and technical standards of the products and services as stipulated under WTO regime.
WTO however recognises the capacity constraints of developing countries and has committed assistance to such countries for their capacity building and also relating to their accessibility to and application of new technology so as to enable them to bring adjustments and diversification in their process of production, which in turn would make these countries enter trade negotiations with industrialised countries with full commitment of adherence to health and technological standards.
Developing countries, particularly those having agrarian economies have been deliberating at each forum of WTO the issues regarding preferential treatment to be extended to developing countries in all trade negotiations relating to agriculture products particularly those which come under the purview of ensuring food security, livelihood security and sustained development of their rural sector. Similar protection is demanded for industrial products of developing countries by binding developed countries to extend special treatment to LDCs by enhancing greater flexibility in WTO rules, thus saving them from getting marginalised in global trade arena.
Despite provision for above discussed flexibilities in WTO rules and protection to be accorded to developing countries, it has been noted that preferential treatment approach when put in practice for selected countries in a block of countries of same economic and environment status for providing greater access to their exports to developed countries markets, it plays havoc with export trade of the countries not falling within the purview of Special and Differential Treatment (SDT) arrangement as has happened in case of Pakistan until recently.
Preferential treatment extended by USA and European countries to Bangladesh for export of textile apparels had deprived Pakistani exporters of wide market for their textile products. No doubt Ministerial Conference held at Hong Kong this year in July had addressed this issue and now preferential treatment is to be extended to exports of all the countries of same economic status in a geographic region. However implications of this amendment are yet to be seen.
Developing countries apprehensive of having bilateral/multilateral trade agreements with countries enjoying comparative advantage in cost of production of certain items which are produced indigenously by these countries, may result in influx of cheap imports in the country, have been provided remedy under WTO that they can impose antidumping duties, whereas in practice things turned out quite contrary to it.
Mostly in the matter of exports of textiles and electronic items, developing countries have been subjected to anti- dumping duties. Pakistan's exports of bed ware to European countries have been imposed antidumping duties, thus affecting the market viability of bed ware industry in Pakistan.
In order to survive in global trade arena effectively after liberalisation of merchandise trade, apart from demanding total elimination of access barriers to economically developed countries, developing countries themselves have to reform their trade regimes. Despite restricted access to rich countries' markets quite a number of middle and high income developing economies of Asia have been able to expand their export trade volume through continuous improvement in quality and also diversification of exportable items, yet there is need to enforce open access of developing countries exports to global markets to give fillip to their entire economic process.
No doubt in Ministerial Conference of Hong Kong industrially rich countries have given different time frames for removing subsidies granted to their agriculturists, but in order to enhance access of agro based developing economies to global markets deletion program of subsidies need to be shortened further.
A lot has to be done to enhance manpower export to developing countries. Under WTO framework rich countries are required to provide work visas to both skilled and unskilled manpower from developing countries on non-discriminatory basis, yet quite a number of countries from south Asia including Pakistan are being discriminated at this count.
Pakistan despite achieving a strong external economy, depicted through foreign exchange reserves hovering around $12 and $13 billion and having more or less a stable currency for the last 3 years is now faced with an astounding trade deficit of $11.64 billion for the fiscal year 2005-06, almost double of last year figure. Despite some improvement in exports earnings, abrupt rise in oil import bill, sizable increase in import of machinery, food items, cement and unguarded import of reconditioned cars have aggravated the balance of trade position.
Thanks to overseas workers' remittances, attaining the level of $4.168 billion this year, have given some support to balance of payment position.
In order to rectify the position country's exports, which are just 13% of the GDP, need to be improved substantially. For that the country needs to enter Free Trade Agreements ( FTAs) with countries not only in South East Asia and Middle East, but also Central Asian States.
Since regional integration is gaining momentum in recent years, the government must enter all such regional trade agreements without political reservations.
Participation in South Asia Free Trade Area ( SAFTA ) agreement already entered into must be with full enthusiasm. FTAs signed with China and Sri-Lanka are to be made more meaningful. More access is to be achieved to Indian markets through Sri-Lanka as agreed.
During the current fiscal year Pakistan's export to China had amounted to $300 millions, whereas for Chinese markets Pakistan's exports have wide potentials of about $16 billion. This market need to be fetched through cost effectiveness, diversification and continuous improvement in quality of exportable goods and services.
The Recently announced trade policy has set an export target of $18.6 billion. This is not difficult to achieve if the strategy spelled out to achieve this figure is followed in letter and spirit.
Exports of semi precious stones, quality carpets, poultry items and meat need to be provided promised incentives and new destinations of exports identified in the policy need to be tapped on immediate basis for entering Free Trade Agreements with them.
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