Trade Policy of Pakistan

Project Presentation

Group Members:

Amjad NawazSameed SohailTaimur KhalidZaman Ali

Sameed Sohail

Trade Policy Trade policy is a collection of rules and regulations

which pertain to trade.

Every nation has some form of trade policy in place, with public officials formulating the policy which they think would be most appropriate for their country.

The purpose of trade policy is to help a nation's international trade run more smoothly, by setting clear standards and goals which can be understood by potential trading partners. In many regions, groups of nations work together to create mutually beneficial trade policies

Trade Policy Things like import and export taxes, tariffs,

inspection regulations, and quotas can all be part of a nation's trade policy.

Some nations attempt to protect their local industries with trade policies which place a heavy burden on importers, allowing domestic producers of goods and services to get ahead in the market with lower prices or more availability.

Others abstain from trade barriers, promoting free trade, in which domestic producers are given no special treatment, and international producers are free to bring in their products.

Trade Policy of Pakistan In order to address the challenges confronting

Pakistan on the economic fronts, Ministry of Commerce has launched a comprehensive three years Strategic Trade Policy Framework (2009-12) document.

It would provide the reference to different trade measures by the Ministry of Commerce and other ministries from time to time.

The overall objective of the STPF is to achieve sustainable high economic growth through exports with the help of policy and support interventions by the government, industry, civil society and donors.

Amjad Nawaz

Purpose The Strategic Trade Policy Framework sets out the policy

guidelines and identifies the principle action areas

Need for developing and effectively implementing a national export competitiveness program.

To provide the reference to different trade measures by the Ministry of Commerce and other ministries from time to time.

To achieve sustainable high economic growth through exports with the help of policy and support interventions by the government, industry, civil society and donors.

For active collaboration of the Pakistan Institute of Trade and Development (PITAD) within a short span of time.

PurposeOther factors include:

◦For growth with Equity◦For greater Opportunities for gainful

employment◦For sound macro-economic framework for trade

environment◦For concern with poverty eradication and

environmental protection◦For investing in Human resources◦For targeting Poverty alleviation◦For promoting private sector as engine of growth◦For focus on small scale sector particularly in

agriculture

Objectives to be obtained Enhance the competitiveness of Pakistan’s exports

Reducing Cost of Doing Business

Protection and promotion of SMEs

Focus on products with higher sophistication potential

Promote agricultural development through exports

Enable Pakistani exporting companies overcome the negative effects of global demand contraction

Export Competitiveness First, overcome the most pressing supply-side

constraints such as the shortage of energy, cost of capital and difficulties linked with adverse travel advisories.

Second, enhance competitiveness of textile and clothing, with the help of Textile Policy due to be announced shortly which focuses on new investments, modernization of machinery and increasing total factor productivity.

Third, deepen and diversify export markets particularly our major trading partners US and EU as well as countries with which Pakistan has signed a free trade agreement such as China, Malaysia and Sri Lanka.

Taimur Khalid

Review of Minister’s Speech

According to the speech, the government seeks to expand Pakistan's export product range in the medium term.

The following measures may affect international commerce:◦ Compensate inland freight cost to exporters of "cement, light

engineering, leather garments, furniture, soda ash, hydrogen peroxide, sanitary wares including tiles, finished marble/ granite/ onyx products.“

◦ To support the textile industry, import duties on sizing chemicals may be abolished.

◦ To promote the export of live sea food, the government has decided to grant 25 percent of freight cost to such products exported by air.

◦ To support exports of processed foods, the government wants to compensate exporters partially for necessary research and development investments. This reimbursement could amount to 6 percent of export value.

Review of Minister’s Speech

To increase international market access for electrical appliances, the government decided to bear half the cost of certification through Underwriters Laboratories.

In an attempt to increase overall competitiveness, the government promised to "zero rate" exports completely.

To allow improved development of pharmaceutical and engineering services, the government plans to ease export restrictions on the industries.

To encourage local vaccine production, the government plans to restrict imports to World Health Organization-approved plants only.

Positive Aspect of Trade Policy Monitoring and Evaluation Method

◦ the Pakistan Institute of Trade and Development Islamabad, an independent policy think tank of the Ministry of Commerce, would undertake a systematic evaluation of the impact of Trade Policy 2009-12 on the trade performance of Pakistan.

Insurance cover for visiting buyers◦ Complete Insurance cover for buyers coming over to Pakistan for

buying.

Research and Development◦ A fund is planned to be dedicated to support these activities named

Technology, Skill and Management Up-gradation Fund of Rs. 3 billion is being established.

Brand Development◦ It has been decided that surgical instruments, sports goods &

cutlery sector would be granted 25% support on brand development activities.

Export TargetsTargets 2009-10 2010-11 2011-12

Exports $18.8 Billion $20.7 Billion $23.4 Billion

The trade policy envisaged an export growth of 6 per cent (18.8 billion dollars) for 2009-10, 10 per cent (20.7 billion dollars) for 2010-11 and 13 per cent (23.4 billion dollars) for 2011-12.

Zaman Ali

Challenges Trade policy 2009-10 would face many challenges.

The problems being faced by the economy involves infrastructure deficit, severe energy shortage, poor innovation and technological infrastructure, low labour productivity, low levels of manufacturing value addition.

Furthermore, there is little foreign direct investment in manufacturing and exportable sectors, lack of surplus, absence of economies of scale in the production processes.

All these challenges may make the desired targets difficult to achieve.

Reaction of Business Community

Many businessmen rejected the trade policy 2009-10, terming it directionless and flawed. Some termed it wishful list.

Other labeled it insufficient. Many chambers of commerce interpreted it differently. But majority showed their deep concerns about its different measures, concessions and mechanism.

Federation of Pakistan Chambers of Commerce and Industry president said that the trade policy seems a medium-term policy framework for the next three years.

Reaction of Business Community

Some said that the problems of foreign exchange reserves, higher trade deficit and consequently low investment, unemployment and low GDP growth will continue.

It is the second time that import targets were not mentioned in the trade policy.

The government has fixed export growth target of 6 percent for 2009-10 and 2010-11 and 13 percent for each of the successive years.

Pakistan Tanners Association (PTA) appreciated the government's initiative for launching comprehensive leather and leather products export plan in consultation with the major players of the leather sector.

Conclusion“No books it sounds all nice and great, but problem

lies in the implementation stage where our government fails.”

After going through the whole trade policy of Pakistan we conclude that it covers almost each and every aspect of trade. Policy making is directly linked with implementation of those policies, and this is the place where our government fails to graduate from.

Some of the trade targets were too optimistic, the ministry failed to understand the condition of the local industry. Increased decline in manufacturing because of lack of energy like electricity and gas has affected the industry on the whole. Therefore increasing the trade targets means that they won’t be able to achieve those trade targets.