A future challenge to Pakistan exports
Dec 29 - Jan 04, 1998
Contrary to the concept in vogue that Pakistan has a very narrow export base, mainly supported by the cotton and textile sector, the actual number of traditional and non-traditional exportable items has reached1951 mark. This suggests that the view that our exports need to be diversified is generally overemphasized.
A vast majority of these exportable items have already carved a place for themselves in the export market. The need of the hour is to expand the volume of foreign trade.
However the emerging trade scenario at the global level has brought challenges to Pakistan's export sector. On the one hand, under the conclusion of Uruguay Round, an efforts is being made to dismantle both tariff and non-tariff barriers of liberalize world trade, while certain provisions of the WTO, ISO-9000 and forthcoming ISO-14000 have started to pose a serious threat of restricting the exports of the country, on the other hand.
The export sector has already a bitter experience of facing a ban by the United States on import of surgical goods from Pakistan two years back because of what the US described "lack of quality certification". It is worth to mention here that quality-wise surgical goods of Sialkot are immaculate and recognised the world over. Germany imports these surgical instruments from Pakistan without label of "Made in Pakistan" and after pasting label of its own country re-exports them which are acceptable by every country. This naturally evokes the feelings being discriminated amongst our export industry.
Another good example of restriction of foreign trade under WTO agreement is the allegation or propaganda of child labour against Pakistan which brought the hand-knotted carpet industry to a virtual halt.
A few years ago Pakistan was the second largest exporter of hand-knotted carpets in the world. It is a pity that now this cottage industry has been relegated to the background.
Another source of foreign exchange earning is the marine fish catch. At present Pakistan is exporting 10 to 12 percent of the catch which earns around 2 percent of the total export proceeds. In some cases, we export more than most of our competitors quantity-wise but in terms of value we are lagging far behind because of quality difference, caused by dumping of industrial waste, effluent, sewerage, burnt lubricating oil and other waste in coastal fishing areas.
The issues like child labour, environment, quality standards such as ISO-9000 and ISO-14000, have started sounding the note of warning for our major exports including textiles and leather sectors, followed by the conditions set by the market forces, especially the European Union. These countries are now demanding that the textile and leather goods should carry the certification marks of the International Standard Organization (ISO), regarding pollution free environment at the factory premises, where the product is manufactured. The chemicals and dyes used in the process of bleaching, dying and printing should be unharmful to the health.
At the moment, the most important environmental and health issue in textile trade, and leather industry, is the legislation on azo dyes. AZO dyes are commonly used for colouring textiles and leather. Some of the azo dyes, according to latest research findings, may form carcinogenic amines. It is feared amongst the importing countries that import of products containing azo dyes may release toxic amines. Its use was first prohibited in Germany from April 1, 1996.
The ban on azo dyes is applicable to all products which come into contact with the skin for prolonged period, like textile garments. Netherlands have also introduced similar legislation from August 1996. The import of garments, footwear and bed-linen containing banned azo dyes is completely prohibited. Other countries in Europe, Such as Sweden, France and Denmark are also preparing legislation on azo dyes.
The exporters of the textiles and garments, leather and leather made-ups have been advised by the importing countries to have their products tested, if they want to export to Germany, The Netherlands and in the future other countries of the EU as well.
In order to limit the loss in competitiveness arising, from liberalization and the possible threat of eco-protectionism, the government will have to take measures at both the domestic and global levels. It is important that the social costs of production, including environmental externalities, be incorporated in the price structure of the goods and services to be traded in order to ascertain the true costs and benefits to be derived from trade, is the consensus prevailing among the export circles.
Pakistan has been fixing its annual export target at about $10 billion for the last many years but has failed to realize it even once. The major factor behind the stagnant growth in exports is of course lack of research and development work for improvement in quality of our products.
The textile units operating all major industrial areas of the city, have no arrangements for treatment of their toxic effluent at primary level within their factory premises. So much so, even the industrial areas, where these units are located, do not have the teatment plants for their poisonous effluent and the entire untreated industrial waste of the Landhi-Korangi, SITE, North Karachi and Federal B Area industrial zones, which in terms of volume approximately estimated around 35 million gallon, is being drained out into sea every day.
Although the textile industry has grown at a much faster rate in Pakistan and at present around 8.5 million spindles, a large number of looms, over 2000 small and big industrial units inolved in dying, printing and finishing of textile products are in operation, however, the the factor of envrionmental marketing of the textile industry was completely ignored. At present our textile sector fetches around $5.5 billion per annum and have the potential to make a three time increase in this volume of foreign exchange earnings. Similarly our leather sector earns around 600 million dollar a year and have the capacity to rise to one billion dollars. We will have to protect these major source of earnings by making them quality conscious. This state of ignorance led to piling up formidable challenges to our textile products because of immense toxicological and environmental factors. The question of eco-standards and eco-lablels, in the apparel and textile industry shall be fast assuming great significance for surviving in the export business. Unfortunately, a vast majority of smaller textile units in the unorganized sector lack detailed information and the ability to change their process to cope with international eco requirements. Although the government on its part has passed the environment protection bill and has formed Environmental POrotection Council, headed by the Prime Minister, yet a lot of ground has still to be covered. The environment protection Act will provide mechanism for the enforcement and compliance with the National Environment Quality Standard(NEQS) but the desired results could only be possible when an environment freindly culture is created among the society as a whole.
Sheharyar Kamal, the Project Director of Environmental Management Project for Korangi Tanneries, disclosed a hair raising story about the ignorance of the people of the environmental problems or their cruality to make money. He said that seven or eight poultary feed producers have illegally set up their factories in the tannery area. They collect shaving powder of the tanned hides and skin thrown outside the tanneries and use it as the basic ingredient for preparing poultary feed. This solid waste contains a large portion of chromium which is highly toxic and dangerous to health. The feed they are producing with the solid waste of tanneries mixed with chromium is supplied all over the city. They are making money at the cost of human life. Such elements deserve immediate and examplary punishment.
We will have to change the image of a producer of cheap products, if we have to survive in the face of the hard competition ensuing fast with the globalization of trade under WTO.
An ugly example of the irresponsible attitude of our exporters was highlighted the other day by Dr.Mohammad Hussain, a US based Pakistani trader. He had imported footballs from a Sialkot sports manufacturer namely Khawaja Mohammad Anwar. The goods, he despatched in April this year were quite different from the specimen on which the export orders were placed and of sub-standard quality.
The matter was brought to the notice of the Export Promotion Bureau, but to remedial action was taken except a letter to say sorry on this highly criminal act. Dr. Hussain said such acts were more harmful in damaging the reputation of the country and the manufacturers of this country. He has moved his case to the Prime Minister.
The requirement of quality and environment certificates and labels, will now enhance the competition among the exporting countries, as these tests of quality and environment will distinguish their products from competitors in a positive way.