Trade policy framework

A new trade policy is on the anvil, one which envisages Pakistan to fetch up to $46 billion over the next five years. But will it deliver the results, it aspires to achieve?

To be fair, there have been a slew of trade-positive developments over the last two years that would have reaped at least some fruits had it not been for Covid-19 that has hit economies hard across the globe. This includes price-signals like a move towards market-based exchange rate; relatively cheaper electricity for exporters; rationalization of import tariffs and the revised Pak-China FTA; allowing exporters to keep extra dollars outside of Pakistan to facilitate business development; and Look Africa policy which is a good decision in principle, even if not very well carried out.

The draft policy document states that “enhancement of exports is a national effort and not just the responsibility of Ministry of Commerce”. This is absolutely true. Perhaps this is why it has been reportedly decided that a cross functional team headed by the PM would monitor and evaluate implementation of the latest trade policy.

This team reportedly comprises of advisor to PM on commerce; advisor to PM on finance; minister for energy; minister for National Food Security; Governor State Bank of Pakistan; Secretary Commerce; (viii) Secretary Finance; Secretary Industries; Chairman Board of Investment and; Chairman FBR. Other departments or private sector are expected to be co-opted on need basis by the committee.

Surprisingly though, for a policy whose success in the authors’ own admission rests on ‘national effort’, the absence of structures that allow for provincial representation has not gone unnoticed. Clearly, at least seven out of the eighteen priority sectors squarely lie in the provincial domain, of which five pertain to agriculture. This warrants provincial representation in the cross-functional monitoring and implementing team. Or otherwise substantial reforms in other platforms of interprovincial coordination.

In the same vein it is equally important to strengthen various business or trade and investment support organizations in public and private sector. There are hardly any institutions at provincial level that boast adequate informational and learning management models and can claim to offer servicers at all levels of value chain in the various priority sectors the trade policy aims to target. This list includes business associations; extension services departments; research councils; vocational/technical training departments and institutes for skill development; and so forth.

Lastly, but perhaps most importantly, some introspection at this stage would be particularly useful. Considering that eventually the policy is carried out by bureaucrats and their rusty machinery, and not the politicians and their principal accounting officers who oft have revolving portfolios, it would serve well to understand why didn’t previous policies work. Were the failures only a function of rigid exchange rate, high cost of electricity, poor utilization of export development fund or were there governance failures, or perhaps too lofty plans. Not knowing the list of precise wrongs in the last few times is a strategic mistake.