Trade policy and beyond

The Strategic Trade Policy Framework (STPF) 2015-2018 has successfully achieved failure (to meet $35 billion exports by 2018). Not surprisingly, given the government’s failure to overhaul governance engines. If the STPF 2018-2023 does not address those concerns, its targets of $61 billion exports by 2023 would face a similar fate given the starting point (full year FY18 export projections) is seen around $23-24 billion.

According to media reports, the new policy will revolve around eight key factors: “institutional strengthening, trade promotion and branding, trade facilitation, marketing access and regional connectivity, services strategy, product development, compliance and gender mainstreaming.”

That’s hunky dory. But that’s what the last STPF focused on as well. Here is what the last document said: “STPF 2015-18 has identified four main pillars on the basis of (i) key enablers, (ii) evaluation of STPF 2012-15, (iii) emerging global trade scenario and (iv) extensive consultation with the private sector and other stakeholders.

“These pillars are as follows: (a) Product sophistication and diversification (research and development, value addition, and branding); (b) market access (enhancing share in existing markets, exploring new markets, trade diplomacy and regionalism); (c) institutional development and strengthening (restructuring, capacity building, and new institutions); and (d) trade facilitation (reducing cost of doing business, standardization, and regulatory measures).”

Similarly, the latest STPF is seen to include export competitiveness. But that’s also not a new idea. The last STPF clearly spelled out that improving export competitiveness is one of its targets, whereas improving competitiveness was also one of its key enablers across various factors including quality infrastructure, labour productivity, access to utilities, and level of technological development. That hasn’t been achieved either.

Before releasing the details of the latest STPF therefore, the government should first clearly present what it did or did not achieve from the last policy, together with the reasons. Also, while ongoing stakeholder consultation is a good step, the government should resist the temptation to announce the policy without sharing the draft with the wider public at large.

Announcing the policy in a hurry without taking a feedback on the draft version would be a stamp on the notion that STPF’s announcement just months before PML-N’s term is due to be over, is only an exercise borne out of the need to have feel-good speech pointers for the election campaign.

Second, as Vaqar Ahmed of the SDPI writes in his latest book, “an independent valuation of TDAP’s programmes and projects is still missing”, and therefore the government would do well to present to the public what it thinks about the TDAP before relying on the body to meet the lofty export targets.

Titled, ‘Pakistan’s agenda for economic reforms’, the book rightly points out that the last STPF remained silent on how the inter-ministerial and inter-governmental working relationships will deliver on export targets.

This lack of focus is despite the fact that several tax reform commissions have advised the government to form working groups between the Ministry of Commerce (MoC) and FBR; MoC and Ministry of Finance; MoC and SMEDA; MoC and SBP and the MoC and provincial governments.

These working groups, according to their respective domains, were advised to look at a broad range of affairs, including tariff rationalisation, informal trade, release of refunds and export development funds, capacity building for SME exporters, bank lending and getting the provinces going on implementing the conventions under GSP+ conditionality.

On that note, as BR Research stressed in its column titled, ‘Strategic Trade Policy Framework’, November 13, 2017, the STPF ought to be prepared and implemented in liaison with provincial departments because following the devolution a host of economic functions – such as labour – and sectors now lie with the provinces.

Reiterating our November 2017 stance, BR Research would also maintain that the STPF should set up specific delivery units for each of the spotlight sectors considering Pakistan’s consistent failures in public service delivery which is no doubt a complex process requiring coordination of multiple stakeholders.

Lastly, as Vaqar rightly points out in his book, it is time to rethink the mandate of the MoC. Why it is so that in today’s day and age, the MoC manages the administration of state owned insurance companies?

The MoC already has a mandate to “assess and provide actionable intelligence to government entities on both foreign trade and domestic commerce” in addition to MoC’s task to look into “how to increase the productivity” in the real sectors. Vaqar proposes to explore a “possible merger” of MoC with the ministries of textile and ministry of industries and production. More on that idea later!