A strategic trade framework

In another delayed but much-awaited announcement, the government unveiled a medium-term Strategic Trade Policy Framework 2015-18 that plans to boost the country’s exports by almost 50 per cent to $35 billion by the end of fiscal year 2018. The framework was announced a day after the government also put forward the automotive policy for the next five years, signaling that the authorities have finally heeded to, and finalised, its economic goals in writing. However, increasing exports by assigning an ambitious target will be a very difficult task to accomplish, as general statements like “export competitiveness would improve by focusing on quality infrastructure, labour productivity etc” are not going to improve a field Pakistan has struggled in for years.

Even so, the positive aspect here is that the energy crisis may be on its way to being resolved and the influx of LNG and falling oil prices are going to help industries focus on production. For long, the very basic issue for Pakistan has been to provide enough energy to businesses to run their operations. In such a scenario, increasing exports seemed like an improbable task. But as the country maintains its momentum in resolving its power woes, a part of the problem could be resolved.

The focus on improving compliance with international standards — especially in the case of edible items — is one key area that can help Pakistan improve its export competitiveness. An economic slowdown in Pakistan’s favoured markets and increased competition in its favoured sectors have already led to a decline in exports. A solution to the problem of declining exports is diversification — not just in the kinds of products being made, but the markets the items are sent to. Here, diplomacy and the private sector need to take the lead. Businesses need to be able to persuade and impress the government enough for it to allow them some incentives that would enable them to tap unexplored markets. The trade policy framework is trying to do that. What is now needed is for the private sector to make the requisite effort as well. A demand-driven growth model is needed, but it has to be complemented by an export-led model that can boost the economy. Too much dependence on either is always problematic. This is what our policymakers and the private sector need to realise.

Published in The Express Tribune, March 25^th, 2016.

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