Trade and poverty alleviation

Prime Minister Imran Khan, while addressing civil servants in Lahore, stated that the "new Pakistan" constituted a change in the mindset of the bureaucracy to focus on providing protection to the common man from the politically influential. The Pakistan Tehrik-i-Insaaf (PTI) government, he added, would not exert any influence whatsoever on the bureaucracy with the objective of enabling it to improve its governance. Targeting recent provocative statements from senior Indian military leadership as well as the decision by the Modi administration to withdraw the initial acceptance of talks between the two foreign ministers on the sidelines of the UN General Assembly meeting, the Prime Minister stated that had the Indian leadership been receptive to Pakistan's overtures for peace in the region the two countries, as well as the entire region, would have benefited from enhanced trade which, in turn would have alleviated poverty both in Pakistan and India; and India must not construe Pakistan's support for peace as weakness, he maintained.
Even those baffled by the several different topics that the Prime Minister touched upon during his speech acknowledge that poor governance in our bureaucracy, inclusive of massive corruption and red-tapism, accounts for lacunae that impede growth/development and have disabled the state from meeting our fundamental rights guaranteed by the constitution. In other words, to improve governance would not only require hands-off by the political leadership but also a change in the rules and regulations dealing with the setting up of new industry as well as ensuring that utility tariffs are comparable to those of our regional competitors to ensure our industry a level-playing field in the international market place.
Enhancing trade is a more challenging subject at present and requires the setting up of a task force to identify the threat to globalization posed by Trump's protectionist policies including raising tariffs on imports from China, Canada and the European Union. Pakistan can of course meet some of the products that the US was reliant on importing from these countries. However, with respect to trade with India, the Prime Minister must not lose sight of the fact that India has an extremely insular import policy that limits imports of several items, including those that constitute the bulk of Pakistan's exports; and additionally practices non-tariff barriers (NTBs) on most imports but particularly those sourced to Pakistan. India has invariably argued that Pakistan must open its borders to all Indian products that are allowed under Pakistan's extremely liberal import policy while it will restrict all Pakistan's imports based on its rigid import policy. In other words, the seeds of unfair trade are contained within the two countries' import policies.
China, however, presents opportunities for Pakistan that have sadly not been considered to-date. The Communist Party of China Central Committee and the State Council jointly issued a Medium-and a Long-Term Development Plan (2010-2020) focused on raising the ratio of Chinese with higher education background from 9.2 percent to 20 percent by 2020 with the objective of transforming the country from a labour- intensive to a talent-intensive country. The reason: Chinese unskilled labour is no longer cost effective relative to other regional countries. While, at first, Chinese industry relocated to the country's interior where labour was cheaper than in coastal areas yet with the challenge to globalization by the US and the levy of high tariffs on Chinese imports, China has begun to relocate its industry to other countries including Vietnam, Malaysia, Thailand, and Indonesia. Disturbingly, Pakistan remains oblivious to the benefits of attracting Chinese industry to relocate to Pakistan.
Wang Tao, head of China Economic Research, UBS Securities, stated that "gradual wage increases will help China move to a more consumption based economic growth model" while Tao Dong, chief Asia economist of Credit Suisse stated that "it has become a must for China to restructure its economy. In the coming years, China has no choice but try to increase consumption; otherwise, its growth rate will drop." While the China Pakistan Economic Corridor (CPEC) does envisage industrial estates where Chinese companies would be able to set up manufacturing plants and export through Gwadar port yet there is a need for the PTI government to facilitate their relocation to Pakistan. Not much work has been done on this count and one would hope that the PTI government would focus on this aspect of the CPEC.