Factors behind export woes

Poorly negotiated Free Trade Agreements (FTAs), Preferential Trade Agreements (PTAs), energy crisis, deteriorating law and order situation, economic crisis in Euro Zone, persisting irritants in relations with the United States are cited as key factors for 4.71 percent negative growth in exports in 2012-12 as compared to previous year.
Pakistan's exports declined to $23.641 billion in 2011-12 against $24.810 billion last year, despite the fact that the government spent millions of dollars of the public money on trade promotion foreign tours undertaken by Commerce Minister, Makhdoom Amin Fahim, his close associates and senior officials.
"I personally know that millions of dollars were wasted on official tours of Commerce Minister and his personal staff members in grave violation of government rules. But exports declined instead of showing growth," said an official on condition of anonymity.
Commerce Minister met Prime Minister Raja Pervez Ashraf on July 11, 2012 and received appreciation for $25 billion exports in 2011-12, in inaccurate statistic as neither last year nor this year exports touched $25 billion mark. Commerce Ministry claims that it achieved export target of $23.6 billion as projected in the Strategic Trade Policy Framework (STPF) 2009-12; it projected 6 percent export growth for 2009-10, followed by 10 percent for 2010-11 and 13 percent for 2011-12.
According to the official, another reason for the decline in exports was three year Finance Ministry's funding-based Strategic Trade Policy Framework (STPF) 2009-12 which was prepared by a professor instead of Commerce Ministry's concerned officials keeping in view ground realities. STPF 2009-12 was drafted on the premise that Rs 10 billion funding from Finance Ministry for exports related initiatives would be forthcoming, however, only Rs 1 billion was released after tireless efforts by former Secretary Commerce, Zafar Mahmood who even complained to Prime Minister against the non cooperative attitude of Finance Ministry but to no avail. Pakistan's energy crisis and poor law and order situation are also major reasons impacting the exports negatively. A number of textile units have shifted to Bangladesh due to energy crisis.
"When industry of any country is not provided with gas and electricity which are basic inputs, how can exporters meet their orders on time - a factor that has lost exporters their buyers who are not ready to visit Pakistan due to law and order problems," he continued.
The official further elaborated that economic crisis in Euro Zone is also another reason for decline in exports to European Union (EU). In 2010, the EU had promised to allow entry of 75 Pakistani items to the EU without duty mainly to support flood affectees, but the package is yet to be approved in the Trialogue comprising European Parliament, European Council and European Commission despite the fact the EU has already conveyed to Islamabad that 24 out of the 75 items will now come under Tariff Based Quota (TBQ). Pakistan's imports, however, showed 11.13 percent growth and reached $44.912 billion in 2011-12 as compared to 40.414 billion last year. The sources said Commerce Ministry did not negotiate FTAs and PTAs appropriately due to which growth in imports is higher than exports. "We negotiated FTAs and PTAs very poorly except with Sri Lanka. Iran is not implementing PTA in letter and spirit. Mauritius and Indonesia are also creating hurdles in implementation of PTAs," the official maintained. FTA with China is also not in Pakistan's favour.