Begging for trade

Trade with other countries is economically the most sensible means to break the kashkol. The mantra of trade not aid, following the prime minister’s visit to the United States last month, needs to be understood in this line of thought. However, the vibes coming out of the deliberations in Washington and the public statements by the ministers on their return home are a source of policy confusion rather than clarity. It seems it will take a long time before our economic establishment rids itself of this beggar’s mentality. Trade requires a conducive set of policies at home, especially in the maintenance and promotion of a competitive edge and diversification. One does not go around the world begging for more trade. Regardless of the ‘goodwill’ generated by the visit, the United States is the largest market for Pakistani exports, with a share of 14.4 per cent in total exports. The share of the United States in our imports is a mere 3.6 per cent. There is, thus, a trade surplus in favour of Pakistan. To do even better, a self-respecting nation should look at policies at home.



In the joint statement issued after the state visit, President Barack Obama “highlighted that the United States remains Pakistan’s largest export market”, while the prime minister of Pakistan “highlighted his keen interest in expanding bilateral trade”. In terms of action, “the two leaders pledged to continue this discussion through the strategic dialogue process and noted that the United States-Pakistan Trade and Investment Framework Agreement (TIFA) is the key vehicle to promote American investments in Pakistan. The president announced that the United States Trade Representative, Michael Froman, would invite his counterpart to Washington for a TIFA Council meeting, at which these issues could be discussed in greater depth.” These discussions about discussion have been happening since the two countries entered into a strategic dialogue in the aftermath of 9/11.


The trouble is that these discussions are not about ‘aid not trade’ but about ‘aid through trade’. Pakistan wants a preferential access to the United States market like, for example, Bangladesh. Such access is given to the poorest or the least developed countries. Since it is aid by another name, it has to be begged for, like aid. Unlike normal trade, this aid through trade has a price. Pakistan’s case requires special pleading as we are not — or not yet — among the least developed countries of the world. It is similar to the access being granted, hopefully, by the European Union under GSP-plus. There was a long list of conditions that had to be fulfilled before reaching this stage. The dialogue with the Unites States has a long way to go. For the moment, the “two leaders directed their senior officials to develop a joint action plan to expand trade and investment flows between the United States and Pakistan over the next five years and expressed their intention to hold the third US-Pakistan Economic Opportunities Conference in the next year”. This reminds one of the umpteen numbers of conferences and foreign visits led by former president Asif Ali Zardari to promote, guess what, trade not aid. The real action lies elsewhere. The US-Pakistan joint statement noted as much: “Both leaders affirmed their commitment to the multilateral trading system and to a successful ninth Ministerial Conference of the World Trade Organisation in Bali.”

Aid, they say, is for the needy. Trade is for those seeking long-term cooperative arrangements. But aid through trade is confusion worse confounded. The United States has provided aid through trade to poor and ‘friendly’ states in a number of forms. Most arrangements have increased dependence.

Published in The Express Tribune, November 8^th, 2013.